FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- Fortune Brands granted options on January 1, 2024, that allows the recipient to purchase 15.0 million of the company's $1 par common shares within the next eight years, but not before December 31, 2026 (the vesting date). The exercise price is the market price of the shares on the date of grant, $17 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. Ignoring taxes, what is the effect on earnings in the year after the options are granted to executives? Note: Round your answer to 1 decimal place. Multiple Choice O $60.0 million $90.0 million $0 $20.0 millionarrow_forwardNewmont Corp grants stock options to its top executives. On January 1, 2021, 24 million options were granted, each giving the executive owning them the right to acquire five $1 par common shares. The exercise price is the market price on the grant date – $30 per share ($120 per option). Options vest on January 1, 2025. They cannot be exercised before that date and will expire on December 31, 2027. The fair value of the 24 million options, estimated by an appropriate option pricing model, is $42 per option. Ignore income tax. Newmont's compensation expense in 2021 for these stock options was: (Round your answer to nearest whole dollar amount.) rev: 04_13_2020_QC_CS-207906 Multiple Choice $504 million. $1,008 million. $252 million. $0.arrow_forwardOrange Inc. issued 20,000 nonqualified stock options valued at $20,000 (in total). The options vest over two years-half in 2019 (the year of issue) and half in 2020. One thousand options are exercised in 2020 with a bargain element on each option of $6. What is the 2020 book-tax difference associated with the stock options? Part I: A) $15,000 favorable B) $ 6,000 favorable C) $15,000 unfavorable D) $ 4,000 unfavorable Part II: What is the permanent difference related to this exercise of 1,000 option?arrow_forward
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