on july 1 2007 jordan corp granted employees share based payments in the form of com 605413

On July 1, 2007, Jordan Corp. granted employees share-based payments in the form of compensatory stock options. How should Jordan account for the outstanding options in calculating earnings per share for 2007 if the options are not antidilutive?

1. Include the options in the denominator of basic and diluted earnings per share for the entire year.
2. Include the options in the denominator of diluted earnings per share for the entire year.
3. Include the options in the denominator of diluted earnings per share weighted by number of months outstanding.
4. Ignore the options in the calculation of diluted earnings per share.