Five years ago, Devin Corporation granted Laura nonqualified stock options to buy 1,000 shares of Devin stock at $22 per share exercisable for six years.At the date of grant, the stock was selling for $19 per share.Laura exercised the options this year when the market price was $28 per share.How much income must Laura recognize from the exercise of the options?

Question

Quizplus · Accepted Answer

Laura must recognize income equal to the difference between the market price at the time of exercise ($28) and the exercise price ($22), multiplied by the number of shares (1,000). This calculation is ($28 - $22) * 1,000 = $6,000.

Five Years Ago, Devin Corporation Granted Laura Nonqualified Stock Options