Under US GAAP, a Deferred Tax Asset for Stock Options

question 131

Multiple Choice

Under U.S. GAAP, a deferred tax asset for stock options:

• A) is created for the cumulative amount of the fair value of the options the company has recorded for compensation expense.
• B) is the portion of the options' intrinsic value earned to date times the tax rate.
• C) is the tax rate times the fair value of all the options.
• D) isn't created if the award is "in the money;" that is, it has intrinsic value.

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Definitions:

Administrative Expense

Costs related to the general operation of a company that are not directly tied to a specific business activity, such as salaries of executive personnel, office supplies, and utilities.

Direct Materials

Raw materials that are directly incorporated into a finished product and can be directly attributed to the product manufacturing process.

Factory Building

A type of commercial real estate designed for manufacturing processes, assembly, and storing materials and goods used and produced by industrial and manufacturing operations.

Rent Expense

The cost incurred by a company for using or occupying property or equipment for business operations.