Dominquez SA establishes a share-appreciation rights program that entitles its new president Dan Scott to receive cash for the difference between the market price of the shares and a pre-established price of R$30 (also market price) on December 31, 2017, on 40,000 SARs. The date of grant is December 31, 2017, and the required employment (service) period is 4 years. Scott exercises all of the SARs in 2023. The fair value of the SARs is estimated to be R$6 per SAR on December 31, 2018; R$9 on December 31, 2019; R$15 on December 31, 2020; R$8 on December 31, 2021; and R$18 on December 31, 2022.
Instructions
a. Prepare a 5-year (2018-2022) schedule of compensation expense pertaining to the 40,000 SARs granted to Scott.
b. Prepare the journal entry for compensation expense in 2018, 2021, and 2022 relative to the 40,000 SARs.