eBay's footnote regarding employee stock compensation details the grant of 2 million options during the year of 2015, the fair-value of which was computed as $6.84.
If the options have, on average, a four-year vesting schedule and the company faces a 35% tax rate on income, what affect would this option grant have on eBay's accounts in 2015?
A) $1,197,000 increase to deferred tax asset, $1,197,000 decrease to tax expense
B) $4,788,000 increase to deferred tax asset, $4,788,000 decrease to tax expense
C) $1,197,000 decrease to deferred tax asset, $1,197,000 increase to tax expense
D) $4,788,000 decrease to deferred tax asset, $4,788,000 increase to tax expense
E) Indeterminable since the number of options exercised is unknown.
Correct Answer:
Verified
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