Question

Audrey was granted stock appreciation rights in 10,000 shares of company stock when the share price was $50. If she exercised her rights when the share price was $70, how much income, if any, must she recognize at that time?

Answer 1

The income of Audrey is $200000 after an increase of share from $50 to $70.

Audrey will earn $200000 if she sells all the shares when the share price is $70 because there is $20 increase occur from the time when she receives the share until now. When she receives the share, its price is $50.

But after sometime when the share price increases and reaches up to $70 so we can conclude that the income of Audrey is $200000 after an increase of share from $50 to $70.

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