Accounting for stuck options. The Procter & Gamble Company (P&G 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 P&G 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 14.10 presents information for the stock options granted by P&G on December 31 of each year.
Calculate the effect of the stock options on net income before income taxes for 2004 to2008.

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Procter & Gamble Company Stock Option Data (Problem 34) EXHIBIT 14.10 Options Granted at End of Year Exercise Price Fair Value per Option per Share Year $35.75 $10.99 2003 35,759 $51.06 $12.50 2004 40,866 $53.75 $14.34 2005 29,100 33,904 2006 $59.97 $16.30 2007 33,091 $63.33 $17.29