Accounting for Stock Options
The board of directors of Muir Company adopted a fixed stock option plan to supplement the salaries of certain executives of the company. Options to buy common stock were granted as follows:
|
|
Number |
Exercise |
Price of Shares |
Option Value at |
Date |
Employee |
of Shares |
Price |
at Date of Grant |
Date of Grant |
Jan. 1, 2005 |
D. R. Call |
80,000 |
$30 |
$32 |
$ 9 |
Jan. 1, 2006 |
J. K. Neilson |
45,000 |
38 |
41 |
10 |
Jan. 1, 2007 |
B. D. Gwynn |
25,000 |
43 |
47 |
11 |
Options are nontransferable and can be exercised beginning three years after date of grant, provided the executive is still employed by the company. Stock options were exercised as follows:
|
|
Number of |
Price of Shares at |
Date |
Employee |
Shares |
Date of Exercise |
Dec 31, 2008 |
D R Call |
80,000 |
$48 |
Dec 31, 2009 |
J K Neilson |
45,000 |
43 |
Dec 31, 2010 |
B D Gwynn |
25,000 |
49 |
Stock of the company has a $1 par value. The accounting period for the company is the calendar year.
Instructions:
1. Provide all entries that would be made on the books of Muir relative to the stock option plan for the period 2005 to 2010 inclusive.
2. Prepare the required note disclosure relative to the stock option plan for the year 2007 and for the year 2009.