Essay
On January 1, 2014, Gail (an executive) receives a warrant to purchase one share of stock at $70 and on the same date the fair market value of the stock is $100. The warrant has no restrictions and has a readily ascertainable fair market value on a stock exchange of $30. She exercises the warrant on May 15, 2014, and sells the stock for $200 on December 20, 2017.
a.Calculate the amount Gail would recognize in 2014, if any.
b.Calculate the amount Gail would recognize in 2017, if any.
c.Suppose she sells the warrant in 2018 for $39. What amount would Gail recognize?
Correct Answer:
Verified
Correct Answer:
Verified
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