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accounting for stock options the board of directors of muir company adopted a fixed 692536

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.

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