On January 1, 2005 [Before the Adoption of ASC 718]

question 80

Essay

On January 1, 2005 [before the adoption of ASC 718], Net Optimizers Inc. granted 1,000 nonqualified stock options (NQOs) valued at $.05 per option. Each option entitles the owner to purchase one share of stock for $1. These options vest at 10 percent per year for ten years. On December 31, 2016, 300 options are exercised when the stock price is $5. In 2016, what is the book-tax difference associated with the stock options? Is it favorable or unfavorable? Is it permanent or temporary?

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Definitions:

WBCs

White blood cells, components of the immune system that defend the body against both infectious disease and foreign materials.

Infection

The invasion and multiplication of microorganisms such as bacteria, viruses, and parasites that are not normally present within the body.

Abnormal PTT

Refers to an unusual partial thromboplastin time, indicating potential bleeding disorders or issues with blood clotting.

Blood Urea Nitrogen

A measure of the amount of urea nitrogen, a waste product from the breakdown of protein, in the blood, which can indicate kidney function.