Question #17 - Reading 9 Employee Compensation - Post-Employment and Share-Based

Reading: Reading 9 Employee Compensation - Post-Employment and Share-Based

PDF File: Reading 9 Employee Compensation - Post-Employment and Share-Based.pdf

Page: 6

Status: Correct

Correct Answer: A

Shared Context

- The change in stock-holder's equity at the end of 20X1 on account of the share-based compensation is closest to: A) $133,333. B) $0. C) $222,833.

Question

For this question only, assume that the stock price on the settlement date is $18.50. This will most likely result in a(n):

Answer Choices:

A. tax shortfall

B. extraordinary loss

C. tax windfall

Explanation

If the stock price on the settlement date ($18.50) is greater than the price on the grant date ($16), it will result in a tax windfall as a higher expense would be deductible for tax purposes.

Actions

Practice Flashcards