Several years ago, the Johnson Co. granted options on 5,000shares of its common stock. The fair market value of each option onthe grant date was $3 per share. The exercise price is $2. The taxrate (all years) is 20%. The options are exercised at the end ofthe current year. At the beginning of the current year "Paid-incapital tax effect of stock options" had a credit balance of$10,000 1.What is the ending balance of Paid-in capital tax effectof stock options if the fair market value of the stock on theexercise date was $3 per share ( See textbook p. 1134-5 Case b. )?2.What is the balance of Paid-in capital tax effect of stockoptions at the end of the current year if the fair market value ofJohnson's stock on the exercise date was $11 per share (textbookCase a. )? 3.What is the ending Paid-in capital tax effect of stockoptions, if the market price of the stock on the exercise date is$5.
Several years ago, the Johnson Co. granted options on 5,000shares of its common stock. The fair market value of each option onthe grant date was $3 per share. The exercise price is $2. The taxrate (all years) is 20%. The options are exercised at the end ofthe current year. At the beginning of the current year "Paid-incapital tax effect of stock options" had a credit balance of$10,000 1.What is the ending balance of Paid-in capital tax effectof stock options if the fair market value of the stock on theexercise date was $3 per share ( See textbook p. 1134-5 Case b. )?2.What is the balance of Paid-in capital tax effect of stockoptions at the end of the current year if the fair market value ofJohnson's stock on the exercise date was $11 per share (textbookCase a. )? 3.What is the ending Paid-in capital tax effect of stockoptions, if the market price of the stock on the exercise date is$5.
