On January 1, 2000, Rye Co. established a stock appreciation rights plan for its executives. They could

Question:

On January 1, 2000, Rye Co. established a stock appreciation rights plan for its executives. They could receive cash at any time during the next four years equal to the difference between the market price of the common stock and a preestablished price of $16 on 180,000 SARs. The market price is as follows: 12/31/00—$21; 12/31/01—$18; 12/31/02—$19; 12/31/03—$20. On December 31, 2002, 40,000 SARs are exercised, and the remaining SARs are exercised on December 31, 2003.

Instructions

(a) Prepare a schedule that shows the amount of compensation expense for each of the four years starting with 2006.

(b) Prepare the journal entry at 12/31/07 to record compensation expense.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...