1. On January 1, 2018, Slinko, Inc. established a stock appreciation rights (SAR) plan for its executives. At the end of a 3-year vesting period, executives are entitled to a cash payment equal to the difference between the market price of the common stock and a pre-established price of $70 on 50,000 SARs. The stock prices for each year end are as follows:

• January 1, 2018 $70
• December 31, 2018 $74
• December 31, 2019 $73
• December 31, 2020 $78

On February 15, 2021, the cash payment is made to all executives. The SARs vest evenly over the 3-year period.

Instructions

1. Determine the 2018 compensation expense and record the related journal entry.
2. Determine the total compensation expense that will be recognized over the life of the SARs. (IT IS NOT NECESSARY DETERMINE THE COMPENSATION EXPENSE FOR EACH YEAR).
3. Prepare the journal entry at February 15, 2021 to record the payment to executives for the SARs (assume all prior annual compensation expense entries are properly recorded). Compensation Expense