In 2008,Merlin Received the Right to Acquire 1,200 Shares of Noble

question 78

Multiple Choice

In 2008,Merlin received the right to acquire 1,200 shares of Noble Corporation stock through the company's incentive stock option plan at an exercise price of $17 per share.On January 4,2012,Merlin exercises the option when the fair market value of the stock is $22 per share.Which of the following is(are) correct statements?
I.Noble can deduct $6,000 as compensation expense in 2012.
II.Merlin does not recognize any income but must include $6,000 as a tax preference item in computing his alternative minimum taxable income.

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Student t Distribution

A probability distribution used in statistics when estimating the mean of a normally distributed population in situations where the sample size is small and population standard deviation is unknown.

Parameter v

This seems to be a typographical error or a non-standard term. If "Parameter" was intended, it refers to a value that characterizes a population in statistics. NO.

Mean E(t)

The expected value of a random variable at time t, reflecting the average outcome if an experiment were repeated many times.

Degrees of Freedom

The number of independent values in a statistical calculation that are free to vary.