Recent Lessons

Show all results for ""

Feature Overview

Ace your exams with our all-in-one platform for creating and sharing quizzes and tests.

Free Tools

Explore our collection of AI-powered tools designed to boost your productivity.

Flashcards

Automatically turn your notes into digital flashcards.

Share, Export & Embed

Share with classmates or export to Excel and your learning management system.

Stats & Reporting

Auto-grading quizzes and tests with detailed stats and reports.

Mobile Apps

The smarter way to study – wherever you are.

Pricing Schools Business

Features Free Tools Pricing Schools Business

5 Questions

0 Views

Stock Options for Employees

Choose a study mode

Play Quiz

Study Flashcards

Spaced Repetition

Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which of the following describes a stock option's primary function?

It immediately transfers ownership of company stock to the employee.

It grants an employee the right to purchase company shares at a specific price. (correct)

It forces the employee to purchase the company's stock.

It obligates an employee to sell their shares back to the company at a predetermined price.

Why do companies offer stock options to employees?

To discourage employee 'buy-in' of ownership.

To decrease the company's tax liability.

To align employee interests with company performance and foster a sense of ownership. (correct)

To reduce employee salaries without affecting morale.

When is the stock option benefit included in an employee's taxable income if the corporation is publicly traded?

In the year the employee disposes of (sells) the shares purchased through the option.

In the year the options are granted to the employee.

In the year the employee exercises the options and purchases the shares. (correct)

In the year the employee becomes eligible for retirement.

An employee working for a CCPC exercises their stock options in 2023 but disposes of the shares in 2025. In which year is the stock option benefit included in their income?

<p>2025, the year the shares were disposed of. (C)</p> Signup and view all the answers

What is the 'option price' related to stock options?

<p>The price at which the employee is entitled to purchase shares. (B)</p> Signup and view all the answers

Flashcards

Stock Option

A contract allowing an employee to buy shares at a set price.

Option Price

The specific price at which an employee can purchase shares.

Stock Option Benefit

The income an employee gains when exercising stock options.

Public Corporation Exercise

Employees include stock option benefits in income when they buy shares.

Signup and view all the flashcards

CCPC Income Inclusion

Employees of a CCPC can defer income until they sell shares.

Signup and view all the flashcards

Study Notes

Stock Options for Employees

Stock options allow company employees to buy a predetermined number of company shares at a fixed price (option price).
Companies often offer stock options as part of employee compensation.
Offering stock options encourages employee investment and ownership involvement.
Stock option benefits are considered employment income.
For publicly traded companies, the stock option benefit is recognized in the year the employee exercises the option (buys the shares).
Employees of a Canadian-controlled private corporation (CCPC) can delay recognizing the stock option benefit until the year they sell (dispose) of the shares.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz explores the concept of stock options as a form of employee compensation. It covers how stock options work, their benefits, and the tax implications for employees in both publicly traded companies and Canadian-controlled private corporations. Test your knowledge on this important aspect of employee ownership and engagement.