James is offered 1,000 options on Jan 1, 2020. The exercise price is $5. In 2022, he exercises all 1,000 options when the price was $8. In 2024, he sells all 1,000 when the price was $12. Assume the options are ISOs. What is the income reported in 2022?

James is offered 1,000 options on Jan 1, 2020. The exercise price is $5. In 2022, he exercises all 1,000 options when the price was $8. In 2024, he sells all 1,000 when the price was $12. Assume the options are ISOs. What is the income reported in 2022?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

James is offered 1,000 options on Jan 1, 2020. The exercise price is $5. In 2022, he exercises all 1,000 options when the price was $8. In 2024, he sells all 1,000 when the price was $12. Assume the options are ISOs. What is the income reported in 2022?

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