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Business, 25.11.2019 21:31 KA115

Reginald bank offered its chief investment officer (cio) 5,000 options to purchase company stock at $5/share on january 1, year 1. the stock was selling at the same price in the public market that day. assume that reginald bank estimates the value of the options on the grant date is $10/share. the vesting period was 50 percent for year 1 and 50 percent for year 2. on december 31, year 2, the stock was worth $7/share, but the cio believed that stock prices were going up; so she waited until december 31, year 3 to exercise all her options and turn around and sell the shares the same day when the stock price was $15/share. if year 1 is 2000, year 2 is 2001, and year 3 is 2002 and the above options are non-qualified stock options (nqos): what is the amount of expense will reginald bank recognize in its income statement for financial reporting in 2000, 2001, and 2002? what is the amount of deduction for reginald bank related to the stock options in 2000, 2001, and 2002? what amount of book-tax differences (btd) will reginald bank have in 2000, 2001, and 2002 related to the stock options? is it favorable or unfavorable? is it temporary or permanent? b. repeat a. parts i.-iii. if instead year 1 is 2014, year 2 is 2015, and year 3 is 2016.

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