On 1 July 2019 Gold Coast Ltd provides its managing director with a share-based incentive according to which she is offered a bonus that is calculated as 100 000 times the increase in the fair value of the entity's share price above $5.00. When the bonus was offered the share price was $4.50. If the managing director does not leave the organization the accrued entitlement will be paid after three years. However, if she leaves the organization the accrued entitlement will be paid out upon departurethat is, the benefit will not be forfeited.

Other Information

• The share price at 30 June 2020 is $4.00.
• The share price at 30 June 2021 is $5.50.
• The share price at 30 June 2022 is $6.00.
• The managing director stays for three years and is paid the bonus on 1 July 2022.

Required:

1. Calculate the amount of incentive payable at the end of the year
2. Prepare the journal entries that would appear in the accounting records of Gold Coast Ltd to account for the issue of the share appreciation rights.