On 1 May 2009, Mr. Lee's employer granted Mr. Lee a right to acquire 10,000 shares in
Question:
On 1 May 2009, Mr. Lee's employer granted Mr. Lee a right to acquire 10,000 shares in Hong Kong Stone Limited at $30 per share, and the option had to be exercised on or before 31 March 2012. In order to signify his acceptance of the grant of the option, Mr. Lee paid $100 to his employer on 5 May 2009. Mr. Lee exercised the share options in August 2010 and gave the requisite share price of $30 to his employer, and obtained 10,000 shares from Hong Kong Stone Limited when the shares of Hong Kong Stone Limited rose to $100 per share. Mr. Lee sold the 10,000 shares for $108 per share in October 2011.
You are required to advise Mr. Lee on the assessable income arising from the above events.
Principles of Accounting
ISBN: 978-1133626985
12th edition
Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson