At the end of its fiscal year, December 31, 2020, Sandhill Limited issued 217,000 share appreciation rights to its officers that entitled them to receive cash for the difference between the fair value of its shares and a pre-established price of $12. The fair value fluctuated as follows: December 31, 2021. $18; December 31, 2022 $11; December 31, 2023 $25; and December 31, 2024, $23. An options pricing model determined that the fair value of all 217,000 SARs fluctuated as follows: December 31, 2021, $1.265,000; December 31, 2022. $0: December 31, 2023. $2,654,000, and December 31, 2024 $2,170,000. The required service period is four years, and the exercise period is three years from the end of the service period. The company recognizes the SARS in its financial statements. Assume that Sandhillfollows IFRS. Your answer is partially correct. Prepare a schedule that shows the amount of compensation expense that is allocable to each year that is affected by the share appreciation rights plan. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45).) ) Schedule of Compensation Expense - Share Appreciation Rights (217,000) () Fair Value Pre- established Price Cumulative Compensation Recognizable Percentage Accrued Compensa Accrued to Date Date $ $ 12/31/21 $18 1085000 $13 12/31/22 11 13 O 12/31/23 25 13 2604000 75 12/31/24 23 13 2170000 100 e Textbook and Media List of Accounts Your answer is partially correct Prepare the entry at December 31, 2024, to record compensation expense, if any, in 2024. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required select "No Entry for the account titles and entero for the amounts.) Account Titles and Explanation Debit Credit Compensation Expense Contributed Surplus - Stock Options e Textbook and Media List of Accounts Your answer is partially correct. Prepare the entry at January 1, 2025, assuming that all 217,000 SARs are exercised on that date, and that fair value of the shares on that date is $21. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) Account Titles and Explanation Debit Credit Contributed Surplus - Stock Options Cash e Textbook and Media List of Accounts Your answer is correct. If the firm accounted for SARs using ASPE, would the calculation of compensation expense for 2022 reflect the drop in fair value of the shares to below the pre-established price of $13 per share? No At the end of its fiscal year, December 31, 2020, Sandhill Limited issued 217,000 share appreciation rights to its officers that entitled them to receive cash for the difference between the fair value of its shares and a pre-established price of $12. The fair value fluctuated as follows: December 31, 2021. $18; December 31, 2022 $11; December 31, 2023 $25; and December 31, 2024, $23. An options pricing model determined that the fair value of all 217,000 SARs fluctuated as follows: December 31, 2021, $1.265,000; December 31, 2022. $0: December 31, 2023. $2,654,000, and December 31, 2024 $2,170,000. The required service period is four years, and the exercise period is three years from the end of the service period. The company recognizes the SARS in its financial statements. Assume that Sandhillfollows IFRS. Your answer is partially correct. Prepare a schedule that shows the amount of compensation expense that is allocable to each year that is affected by the share appreciation rights plan. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45).) ) Schedule of Compensation Expense - Share Appreciation Rights (217,000) () Fair Value Pre- established Price Cumulative Compensation Recognizable Percentage Accrued Compensa Accrued to Date Date $ $ 12/31/21 $18 1085000 $13 12/31/22 11 13 O 12/31/23 25 13 2604000 75 12/31/24 23 13 2170000 100 e Textbook and Media List of Accounts Your answer is partially correct Prepare the entry at December 31, 2024, to record compensation expense, if any, in 2024. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required select "No Entry for the account titles and entero for the amounts.) Account Titles and Explanation Debit Credit Compensation Expense Contributed Surplus - Stock Options e Textbook and Media List of Accounts Your answer is partially correct. Prepare the entry at January 1, 2025, assuming that all 217,000 SARs are exercised on that date, and that fair value of the shares on that date is $21. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) Account Titles and Explanation Debit Credit Contributed Surplus - Stock Options Cash e Textbook and Media List of Accounts Your answer is correct. If the firm accounted for SARs using ASPE, would the calculation of compensation expense for 2022 reflect the drop in fair value of the shares to below the pre-established price of $13 per share? No
