(Note: This is a variation of E 19–29, modified to allow settlement in cash.)
As part of its stock-based compensation package, International Electronics granted 24 million stock appreciation rights (SARs) to top officers on January 1, 2021. At exercise, holders of the SARs are entitled to receive cash or stock equal in value to the excess of the market price at exercise over the share price at the date of grant. The SARs cannot be exercised until the end of 2024 (vesting date) and expire at the end of 2026. The $1 par common shares have a market price of $46 per share on the grant date. The fair value of the SARs, estimated by an appropriate option pricing model, is $3 per SAR at January 1, 2021. The fair value re-estimated at December 31, 2021, 2022, 2023, 2024, and 2025, is $4, $3, $4, $2.50, and $3, respectively. All recipients are expected to remain employed through the vesting date.

Required:
1. Prepare any appropriate journal entry to record the award of SARs on January 1, 2021.
2. Prepare the appropriate journal entries pertaining to the SARs on December 31, 2021–December 31, 2024.
3. The SARs remain unexercised on December 31, 2025. Prepare the appropriate journal entry on that date.
4. The SARs are exercised on June 6, 2026, when the share price is $50, and executives choose to receive the market price appreciation in cash. Prepare the appropriate journal entry(s) on that date.