Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2016, Luanda Ltd. established a stock appreciation rights plan for its executives. This plan entitles them to receive cash at any time

On January 1, 2016, Luanda Ltd. established a stock appreciation rights plan for its executives. This plan entitles them to receive cash at any time during the next four years for the difference between the market price of its common shares and a pre-established price of $20, on 50,000 SARs. Market prices of the shares are as follows:
January 1, 2016 $35 per share
December 31, 2016 $38 per share
December 31, 2017 $30 per share
December 31, 2018 $33 per share
Compensation expense relating to the plan is to be recorded over a four-year period beginning January 1, 2016. On December 31, 2018, 8,000 SARs are exercised by executives.
What amount of compensation expense should Luanda recognize for calendar 2018?
a) 237,500
b) 162,500
c) 487,500
d) 65,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Audit Process Principles Practice And Cases

Authors: Iain Gray, Louise Crawford, Stuart Manson

7th Edition

1473760186, 9781473760189

More Books

Students also viewed these Accounting questions

Question

How we can improve our listening skills?

Answered: 1 week ago

Question

How do artifacts affect interaction between members of the team?

Answered: 1 week ago