Turner,a successful executive,is negotiating a compensation plan with his potential employer.The employer has offered to pay Turner a $720,000 annual salary,payable at the rate of $60,000 per month.Turner counteroffers to receive a monthly salary of $50,000 ($600,000 annually)and a $180,000 bonus in 5 years when Turner will be age 65.
A)If the employer accepts Turner's counteroffer,Turner will recognize $65,000 ($780,000 $\div$ 12)each month.
B)If the employer accepts Turner's counteroffer,Turner will be in constructive receipt of $60,000 per month.
C)If the employer accepts Turner's counteroffer,Turner will be in constructive receipt of $60,000 per month and the $180,000 bonus.
D)If the employer accepts Turner's counteroffer,Turner will recognize as gross income $50,000 per month and $180,000 in year 5.
E)None of the above.

Question

Turner,a successful executive,is negotiating a compensation plan with his potential employer.The employer has offered to pay Turner a $720,000 annual salary,payable at the rate of $60,000 per month.Turner counteroffers to receive a monthly salary of $50,000 ($600,000 annually)and a $180,000 bonus in 5 years when Turner will be age 65.
A)If the employer accepts Turner's counteroffer,Turner will recognize $65,000 ($780,000 $\div$  12)each month.
B)If the employer accepts Turner's counteroffer,Turner will be in constructive receipt of $60,000 per month.
C)If the employer accepts Turner's counteroffer,Turner will be in constructive receipt of $60,000 per month and the $180,000 bonus.
D)If the employer accepts Turner's counteroffer,Turner will recognize as gross income $50,000 per month and $180,000 in year 5.
E)None of the above.

Quizplus · Accepted Answer

If the employer accepts Turner's counteroffer, he will receive a monthly salary of $50,000 ($600,000 annually) and a $180,000 bonus in year 5. He will recognize as gross income $50,000 per month and $180,000 in year 5, as the bonus will be deferred until that year. Therefore, Option D is the correct answer. Option A is incorrect as Turner will not recognize $65,000 each month as he has negotiated for a lower monthly salary. Option B is incorrect as Turner will not be in constructive receipt of $60,000 per month. Option C is incorrect as the bonus will be deferred until year 5.

Turner,a Successful Executive,is Negotiating a Compensation Plan with His Potential ÷\div÷

Turner,a Successful Executive,is Negotiating a Compensation Plan with His Potential $\div$