1. The CEO of Owl Co. exercises 15,000 of 20,000 stock options granted 3 years ago with an exercise price of $20 when the market price was $18. The options were exercisable over 10 years after a 3-year service period, for common stock with a $2 par value and current market price of $25, valued at the grant date at $100,000 using Black Scholes pricing model. How much will Owl's total stockholders' equity increase on their balance sheet based on the entry recorded for this exercise?
$225,000
$300,000
$195,000
$255,000
2. Owl Co. reports a net operating loss of $500,000 on their 2020 Form 1120 and makes no election regarding this NOL. Owl's 2020 book income is $1,000,000 higher than its taxable income. Total taxable income on their 2018 and 2019 returns was $350,000 with 40% tax rates. Taxable Income estimated in 2021 is $700,000 with a 30% estimated rate. How will Fox's GAAP financial statements change based on Fox's adjusting entry for taxes at 2020 year-end?
Assets will increase by $150,000 & Net Income will increase by $150,000
Assets will increase by $185,000 & Net Income will increase by $185,000
Assets will increase by $150,000 & Net Income will decrease by $150,000
Assets will increase by $185,000 & Net Income will decrease by $185,000