Which of the Following Describes the Correct Treatment of Incentive

question 25

Multiple Choice

Which of the following describes the correct treatment of incentive stock options (ISOs) granted when ASC 718 (a codification of FAS 123R) does not apply?

• A) Financial accounting-no expense; tax-no deduction
• B) Financial accounting-no expense; tax-deduct bargain element at exercise
• C) Financial accounting-expense value over vesting period; tax-no deduction
• D) Financial accounting-expense value over vesting period; tax-deduct bargain element at exercise

---

Definitions:

CCA Deductions

Refers to Capital Cost Allowance deductions in taxation, allowing businesses to claim depreciation on tangible capital assets.

CCA Tax Shield

Refers to the decrease in taxable income for businesses in Canada due to Capital Cost Allowance, which allows for the depreciation of tangible property to be deducted from taxable income.

Terminated Project

A project that has been ended prior to its completion due to various reasons such as feasibility, costs, or changes in strategy.

Demand-Pull Inflation

Inflation that occurs when aggregate demand in an economy outweighs aggregate supply, leading to an increase in prices.