As part of its stock-based compensation package, International Electronics granted 25 million stock appreciation rights (SARs) to top officers on January 1, 2018. 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 2021 (vesting date) and expire at the end of 2023. The $1 par common shares have a market price of $51 per share on the grant date. The fair value of the SARs, estimated by an appropriate option pricing model, is $4.0 per SAR at January 1, 2018. The fair value re-estimated at December 31, 2018, 2019, 2020, 2021, and 2022, is $5.0, $4.0, $4, $1.5, and $3.00, respectively. All recipients are expected to remain employed through the vesting date. Required: 1. to 3. Prepare the appropriate journal entries pertaining to the SARS on January 1, 2018 and December 31, 2018-December 31, 2021. The SARs remain unexercised on December 31, 2022, prepare the appropriate entry. 4. The SARs are exercised on June 6, 2023, when the share price is $55, and executives choose to receive the market price appreciation in cash. Prepare the appropriate journal entry(s) on that date. Complete this question by entering your answers in the tabs below. Req 1 to 3 Reg 4 Prepare the appropriate journal entries pertaining to the SARS on January 1, 2018 and December 31, 2018 - December 31, 2021. The SARs remain unexercised on December 31, 2022, prepare the appropriate entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 2 decimal places (i.e., 5,550,000 should be entered as 5.50).) Show less View transaction list View journal entry worksheet Debit Credit No 1 Date General Journal January 01, 2018 No journal entry required December 31, Compensation expense 2018 25.00 LiabilitySAR plan 2.00 December 31, 2019 125.00 Compensation expense Liability-SAR plan December 31, 2020 Compensation expense Liability-SAR plan December 31, 2021 LiabilitySAR plan Compensation expense December 31, 2022 Compensation expense LiabilitySAR plan Req 1 to 3 Req 4 > Req 1 to 3 Req 4 The SARs are exercised on June 6, 2023, when the share price is $55, and executives choose to receive the market price appreciation in cash. Prepare the appropriate journal entry(s) on that date. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) View transaction list View journal entry worksheet Debit Credit No 1 Date June 06, 2023 General Journal Compensation expense Liability-SAR plan 2 June 06, 2023 Liability-SAR plan Cash Req 1 to 3 Req4
