Accounting for Stock Appreciation Rights (SARs) Based on PPT. 16-78

Clark Industries, Inc. establishes a share-appreciation rights plan on January 1, 2018. The plan entitles executives to receive cash at the date of exercise for the difference between the market price of the stock and the pre-established price of $60 on 10,000 SARs. The service period runs for two years (2018201).

The value of the SARs at the end of each of year (2018-2020) are as follows:

Quantity of stock:		10,000
Pre-existing price of stock		$40
Value of SAR's at 12/31/18		$12
Value of SAR's at 12/31/19		$28
Value of SAR's at 12/31/20		$20

Requirement: Record the journal entries for the three-year period (2018-2020) to record compensation expense relative to the SARs (Note: Three Journal entries required)

Journal Entry at 12/31/18:		DR	CR
Compensation Expense
Liability under Stock Appreciation Plan
Journal Entry at 12/31/19:		DR	CR
Compensation Expense
Liability under Stock Appreciation Plan
Journal Entry at 12/31/20:		DR	CR
Liability under Stock Appreciation Plan
Compensation Expense