Which of the Following Statements Regarding Nonqualified Stock Options (NQOs)

question 136

Multiple Choice

Which of the following statements regarding nonqualified stock options (NQOs) is false?

• A) If ASC 718 (a codification of FAS 123R) applies, book-tax differences associated with NQOs may be either permanent or temporary.
• B) In a given year when ASC 718 applies, if the value of the options that vest is greater than the bargain element of options exercised, the book-tax difference for that year is unfavorable.
• C) Before ASC 718 applied, no expense recognition was required for NQOs for financial accounting purposes.
• D) If ASC 718 does not apply, all stock option-related book-tax differences are temporary.

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