Accounting for stuck options. Lowe Corporation grants stock options to its managerial employees on December 31 of each year. Employees may acquire one share of common stock with each stock option. Lowe Corporation sets the exercise price equal to the market price of its common stock on the date of the grant. Employees must continue working for two years after the date of the grant before the options vest and employees can exercise them. This two-year period is the period of benefit. Exhibit 14.9 presents information for the stock options granted by Lowe Corporation on December 31 of each year.
Calculate the effect of the stock options on net income before income taxes for 2008 to2012.

Transcribed Image Text:

Lowe Corporation Stock Option Data (Problem 33) EXHIBIT 14.9 Exercise Price Options Granted at End of Year Fair Value Year per Share per Option 2008 ...... $18 5,000 $2.40 6,000 $22 $3.00 2009 7,000 $25 $3.14 2010 $30 $3.25 2011 B,000 $38 $5.33 2012 9,000