Questions 20 to 23 are based on the following information: On January 1, 2016, Telespace Inc. grants 12 million stock options to its employees. The stock options have exercise price of $20, which is equal to the grant-date price. All options will vest in three years. The grant date fair value of the options is $15 per option. All 12

Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter15: Shareholders’ Equity: Capital Contributions And Distributions
Section: Chapter Questions
Problem 19E
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How much is the cash that Telespace will collect from its employees when they exercise all vested stock options on January 2, 2019? Answer is $240 million. Please explain the reasoning and calculations
million options are expected to vest. On January 2, 2019, all 12 million vested options are
exercised when the stock price is $60. The applicable tax rate for all periods is 30%. The
company has sufficient taxable income for the stock option tax deductions to reduce income
taxes payable in all periods.
Transcribed Image Text:million options are expected to vest. On January 2, 2019, all 12 million vested options are exercised when the stock price is $60. The applicable tax rate for all periods is 30%. The company has sufficient taxable income for the stock option tax deductions to reduce income taxes payable in all periods.
Questions 20 to 23 are based on the following information:
On January 1, 2016, Telespace Inc. grants 12 million stock options to its employees. The
stock options have exercise price of $20, which is equal to the grant-date price. All options
will vest in three years. The grant date fair value of the options is $15 per option. All 12
Transcribed Image Text:Questions 20 to 23 are based on the following information: On January 1, 2016, Telespace Inc. grants 12 million stock options to its employees. The stock options have exercise price of $20, which is equal to the grant-date price. All options will vest in three years. The grant date fair value of the options is $15 per option. All 12
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