June Inc. issued 9,000 nonqualified stock options valued at $27,000 (in total--$3 each). Each option entitles holder to purchase one share of stock at $5 per share. The options vest over three years - one-third in 2016 year of issue), one-third in 2017, and one-third in 2018. Three thousand options are exercised in 2017 at a tim when the stock price of the stock is $9. What is the 2017 book-tax difference associated with the stock optic (assume ASC 718 applies to the options)? $3,000 favorable $1,500 unfavorable $6,000 favorable

June Inc. issued 9,000 nonqualified stock options valued at $27,000 (in total--$3 each). Each option entitles holder to purchase one share of stock at $5 per share. The options vest over three years - one-third in 2016 year of issue), one-third in 2017, and one-third in 2018. Three thousand options are exercised in 2017 at a tim when the stock price of the stock is $9. What is the 2017 book-tax difference associated with the stock optic (assume ASC 718 applies to the options)? $3,000 favorable $1,500 unfavorable $6,000 favorable

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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On January 1, 2020, Hage Corporation granted incentive stock options to purchase 26,000 of its common shares at $7 each. The options are exercisable after one year. The market price of common averaged $8 per share during the quarter ending on March 31, 2021. There was no change in the 220,000 shares of outstanding common stock during the quarter ended March 31, 2021. Net income for the quarter was $9,068. The number of shares to be used in computing diluted earnings per share for the quarter is: (Round your final answer to whole number.)
Franklin Company had 100 shares of common stock issued and outstanding at December 31, 2017. On July 1, 2018, Ferris issued a 10 percent stock dividend. Unexercised stock options to purchase 20 shares of common stock (adjusted for the 2018 stock dividend) at $20 per share were outstanding at the beginning and end of 2018. The average market price of Franklin’s common stock (which was not affected by the stock dividend) was $25 per share during 2018. The ending market price was $40. Net income for the year ended December 31, 2018, was $2,200. What was Franklin’s 2018 diluted earnings per share, rounded to the nearest cent?
During all of 2018 Dawson Manufacturing Company had 950,000 shares of common stock outstanding. On June 30, 2018, the company issued 10,000 7 percent convertible bonds at par. The maturity value of each bond is $1,000. Each bond is convertible into 20 shares of common stock. None were converted during 2018. Dawson also had 60,000 stock warrants outstanding for all of 2018. The option price is $10 per share. The market price of the common stock was $40 on December 31, 2018, and the average market price for 2018 was $30. Dawson reported a net income of $3,650,000 for 2018. Assume the company had a 40 percent income tax rate. (a) Compute the basic earnings per share. (b) Compute diluted earnings per share (ignore the order of incremental dilutive effect). Show your works. (c) In addition to the above capital structure, assume that Dawson issued 28,000 shares of $100 par, 10% cumulative preferred stock, par $100, sold at 110 on Jan. 1, 2018.…
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During 2020, Empresas ABC issued 4,000 preferred shares with a par value of $ 10 to $ 11 each. Each preferred share can be exchanged at the option of the holder (investor) for three common shares of ABC with a par value of $ 1. In August 2021, all preferred shares were exchanged. At that time the market value of the common stock was $ 5 per share. What amount must ABC credit to the Capital account contributed in excess of the value for common shares? a. $32,000 b. $48,000 c. 0 d. $44,000
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