Harris Corporation granted Tyler 1,000 stock appreciation rights in 2014 when the stock was selling for $25 per share.In 2019, when the stock is selling for $60 per share, Tyler exercises these rights.How much income does Tyler recognize and in which year?

Question

Quizplus · Accepted Answer

Tyler recognizes $35,000 in 2019 because stock appreciation rights allow him to benefit from the increase in stock value ($60 - $25 = $35 per share) without requiring him to invest his own money. Since he has 1,000 rights, the total income recognized is 1,000 * $35 = $35,000, and this income is recognized in the year he exercises the rights, which is 2019.

Harris Corporation Granted Tyler 1,000 Stock Appreciation Rights in 2014