Compensation expense for the year

Reference no: EM1356435

Karl Stick is president of Stock Company. He also owns 100 percent of its stock. Karl's salary is $120,000. At the end of the year, Karl was paid a bonus of $100,000 because the firm had a good year. Stock Company deducted $220,000 as compensation expense for the year. Upon audit, $80,000 of the deduction was disallowed. How could this happen? How would you advise Stock Company?

What are the three most important things to consider when investing, what would you tell them? Why

Reference no: EM1356435

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Compensation expense for the year : Karl Stick is president of Stock Corporation. He also owns 100% of its stock. Karl's salary is $120,000. At the end of the year, Karl was paid a bonus of $100,000 because the firm had a good year.

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