Solved Assignments 5-2 Show transcribed image text 2. (Example 5-2) fly By Night Inc.?s stock is currently selling at $

  

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5-2Show transcribed image text 2. (Example 5-2) fly By Night Inc.?s stock is currently selling at $20.00 per share. Joe fly, the CEO, has options to buy 500,000 shares at $30.00 per share that expire at the end of this year. Joe feels that if the traditional accounting method is used, implementing the deferred payment sales program will push the stock?s price about halfway toward the level it was at two years ago which was about $60.00. (That method recognizes the entire price and cost of a sold item on the income statement at the time of sale.) If the installment sales technique is used the price of the stock will probably be unchanged but may even go down a little. How much will Joe make on her stock option if she can pressure fly By Night?s auditors into allowing the traditional method. If Joe fly of the previous problem is also a founder of the company and has retained 10 million shares of its stock, how much of a difference will the auditors? decision make in her personal wealth outside of the stock option?

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