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Granted non-qualified stock option

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Six years ago, Corporation granted a nonqualified stock option to employee to buy 5,000 shares of Rollo stock at $15 per share for six years. At the date of grant, Corp. stock was selling on the AMEX for $14.75 per share. This year, employee exercised the option when the price was $45.10 per share.

a. How much compensation income did employee recognize in the year the option
was granted?
b. How much compensation income did employee recognize in the year he exercised
the option?
c. Did Rollo have any tax consequences from the option in the year of grant or in the
year of exercise?

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Solution Summary

Granted non-qualified stock options are analyzed. How much compensation income did employees recognize in the year the option granted is discussed.

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a. No compensation recognized in the years of the option was granted.

b. Compensation ...

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