Which of the following describes the correct treatment of incentive stock options (ISOs) granted when ASC 718 (a codification of FAS 123R) applies?
A) Financial accounting-no expense; tax-no deduction
B) Financial accounting-no expense; tax-deduct bargain element at exercise
C) Financial-expense value over vesting period; tax-no deduction
D) Financial-expense value over vesting period; tax-deduct bargain element at exercise

Question

Quizplus · Accepted Answer

Under ASC 718, companies must recognize an expense for the fair value of stock options over the vesting period. For ISOs, there is no tax deduction for the company when the options are exercised.

Which of the Following Describes the Correct Treatment of Incentive