Weaver Industries implements a new share-based compensation plan in 2009. Under the plan, the company's CEO and CFO each will receive non-qualified stock options to purchase 200,000, no par shares. The options vest ratably (1/3 of the options each year) over three years, expire in 10 years, and have an exercise (strike) price of $18 per share. Weaver uses the Black-Scholes model to estimate a fair-value per option of $12. The company's tax rate is 40%.
(a) Use the financial statement effects template to record the compensation expense related to these options for each year 2009 through 2011. Include the effects of any anticipated deferred tax benefits.