This Year, Nilo Inc

question 69

Multiple Choice

This year, Nilo Inc. granted nonqualified stock options to 230 employees. For financial statement purposes, Nilo recorded a $179,200 expense for the estimated value of the options. As a result of this transaction, Nilo has a:

• A) Temporary favorable book/tax difference
• B) Temporary unfavorable book/tax difference
• C) Permanent favorable book/tax difference
• D) Permanent unfavorable book/tax difference

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Definitions:

Substitute Checks

Paper copies created from an original check that are legally equivalent for banking purposes, allowing for electronic processing.

Truncate

To shorten something by cutting off a part of it, commonly used in the context of modifying data, strings, or numerical values in computing.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money, either on demand or at a set time.

Stock Certificate

A physical document that represents ownership of shares in a company.