Question
On January 1, 2019, as a form of executive compensation, Wadlin Corporation grants share appreciation rights to Robert Brandt. These rights entitle Brandt to receive
On January 1, 2019, as a form of executive compensation, Wadlin Corporation grants share appreciation rights to Robert Brandt. These rights entitle Brandt to receive cash equal to the excess of the quoted market price over a $15 option price for 2,000 shares of the companys common stock on the exercise date. The service period is 3 years (which Brandt is expected to complete), and the rights must be exercised within 5 years. Brandt exercises his rights on December 31, 2022. The fair value per SAR was as follows: 12/31/19, $3.00; 12/31/20, $4.20; 12/31/21, $4.00; and 12/31/22, $5.00. The quoted market price per share of common stock was $20 on December 31, 2022.
Required:
| 1. | Prepare a schedule to compute the compensation expense related to this SAR plan for 2019 through 2022. |
| 2. | Prepare the December 31, 2022, journal entry related to this SAR plan. |
| CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wadlin Corporation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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2. Prepare the journal entry on December 31, 2022, to recognize the SAR compensation expense for 2022 and to record the exercise of the rights.
General Journal Instructions
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GENERAL JOURNAL
| DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT | |
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| 1 |
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1. Prepare a schedule to compute the compensation expense related to this SAR plan for 2019 through 2022.
Additional Instructions
| WADLIN CORPORATION |
| SAR Annual Compensation Expense |
| 2019-2022 |
| 1 | Date | Fair Value per SAR | Estimated Total Compensation Cost | Fraction Accrued | Total Compensation Expense to Date | Accrued Compensation Expense to Date | Yearly Compensation Expense |
| 2 | 12/31/19 |
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| 1/3 |
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| 3 | 12/31/20 |
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| 2/3 |
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| 4 | 12/31/21 |
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| 3/3 |
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| 5 | 12/31/22 |
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| 3/3 |
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| 6 |
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