On January 1, 2021, Stephanie Place Inc. established a cash-settled stock appreciation rights plan for its executives,
Question:
On January 1, 2021, Stephanie Place Inc. established a cash-settled stock appreciation rights plan for its executives, the details of which are listed below:
■ 180,000 stock appreciation rights (SARs) were granted.
■ Each SAR entitled the executives to receive cash equal to the difference between the market price of the common shares and a benchmark price of $16.
■ The SARs vested after three years of service; they expired on December 31, 2026.
■ On January 1, 2024, 80,000 SARs are exercised. The market price of the shares remained at $20.
■ On January 1, 2025, 60,000 SARs are exercised. The market price of the shares remained at $22.
■ The remaining SARs expired.
■ Pertinent stock-related data are set out below:
Required:
a. Complete the schedule below showing the amount of compensation expense for each of the six years, starting with 2021. If necessary, refer to the example illustrated in Exhibit 14-21 for guidance.
b. Prepare the journal entry at December 31, 2021, to record compensation expense.
c. Prepare the journal entry at January 1, 2024, to record the partial exercise of the SARs.
d. Prepare the journal entry at January 1, 2025, to record the partial exercise of the SARs.
e. Prepare the journal entry at December 31, 2026, to record compensation expense.
Exhibit 14-21
Step by Step Answer:
ANSWER a Schedule of Compensation Expense for Each of the Six Years CashSettled Stock Appreciation R...View the full answer
