Case 15-6 Effects of stock options On January 1, 2016, as an incentive to improved performance of duties, Recycling Corp adopted a qualified stock option plan to grant corporate executives nontransferable stock options to 500,000 shares of its unissued $1 par value common stock. The options were granted on May 1, 2016, at $25 per share, the market price on that date. All the options were exercisable one year later and four years thereafter, providing that grantee was employed by the corporation at the date of exercise. The market price of this stock was $40 per share on May 1, 2017. All options were exercised before December 31, 2017, at times when the market price varied between $40 and $50 per share.

Required: a. What information on this option plan should be presented in the financial statements of Recycling Corporation at

i)December 31, 2016

ii)December 31, 2017?

Give specific numbers and specific financial statements and accounts impacted.