Martin Corporation Granted a Nonqualified Stock Option to Employee Caroline

question 63

Multiple Choice

Martin Corporation granted a nonqualified stock option to employee Caroline on January 1,2011. The option price was $150,and the FMV of the Martin stock was also $150 on the grant date.The option allowed Caroline to purchase 1,000 shares of Martin stock. The option itself does not have a readily ascertainable FMV. Caroline exercised the option on August 1,2014 when the stock's FMV was $250. Caroline sells the stock on September 5,2015 for $300 per share. Martin Corporation will be allowed a deduction of

• A)$150,000 in 2011.
• B)$100,000 in 2014.
• C)$50,000 in 2015.
• D)$100,000 in 2014 and $50,000 in 2015.

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Definitions:

Supply Decreases

A condition in the market where the quantity of a product or service available for sale declines, which can lead to higher prices.

Quantity Supplied

is the amount of a good or service that producers are willing and able to sell at a given price over a specified period of time.

Supply Increased

A situation in which the quantity of a good or service that producers are willing and able to offer for sale rises, possibly leading to lower prices.

Demand Increased

A situation where the desire or need for a product or service rises, leading to potentially higher prices and/or increased production.