Mirasol Corporation Granted an Incentive Stock Option to Employee Josephine

question 72

Multiple Choice

Mirasol Corporation granted an incentive stock option to employee Josephine two years ago.The option price was $150 and the FMV of the Mirasol stock was also $150 on the grant date.The option allowed Josephine to purchase 160 shares of Mirasol stock.Josephine exercised the option this year when the stock's FMV was $250.Unless otherwise stated,assume Josephine is a qualifying employee.The results of the above transactions to Mirasol Corporation will be

• A)no compensation deduction.
• B)a compensation deduction of $16,000 on the grant date.
• C)a tax preference item of $16,000 on the exercise date.
• D)a compensation deduction of $16,000 on the exercise date.

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Definitions:

Evaluating Alternative Solutions

The process of systematically comparing different options or strategies to determine the best course of action.

Benefits

Advantages or positive outcomes that come from certain actions or policies.

Costs

Costs represent the monetary value required for the production of goods or services, including expenses related to materials, labor, and overhead.

Timeliness

The quality of occurring at a favorable or useful time, especially in the context of making decisions or taking actions without unnecessary delay.