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On January 1, 2005 [before the adoption of ASC 718 (a codification of FAS 123R)], Net Optimizers Inc. granted 1,000 nonqualified stock options (NQOs) valued at $.05 per option. Each option entitles the owner to purchase one share of stock for $1. These options vest at 10 percent per year for ten years. On December 31, 2014, 300 options are exercised when the stock price is $5. In 2014, what is the book-tax difference associated with the stock options? Is it favorable or unfavorable? Is it permanent or temporary?
Deductive Reasoning
An approach to reasoning where the outcome is derived by the alignment of various premises assumed to be accurate.
Sex Hormones
Chemical substances produced by the endocrine system that regulate sexual development, reproductive functions, and secondary sexual characteristics.
Estrogen
A group of steroid hormones that play a key role in the development and regulation of female reproductive and secondary sexual characteristics.
Inverse Relationship
A correlation where an increase in one variable leads to a decrease in another variable, or vice versa.
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