On January 1, 2018, Company A established cash settled share appreciation plan for 25 executives of the company. Each executive received 10,000 rights. The benchmark price established was $ 30. Each executive had the right to receive cash for share appreciation over the benchmark price. The plan expires on December 31, 2022. The rights vest after 3 year years (December 31, 2020).

- At the end of 2018 2 executives leave and it is expected that 5 more will leave.

- At the end of 2019 3 more executives leave and it is expected that 3 more will leave.

- At the end of 2020 4 more executives have left.

- At the end of 2020 8 executives exercise their rights.

- At the end of 2021 4 executives exercise their rights.

- At the end of 2022 1 executive exercises their rights.

SAR fair value and market price information is as follows:

- December 31, 2018 FV=$3.10 MP = $ 31.40

- December 31, 2019 FV=$3.90 MP = $ 32.10

- December 31, 2020 FV=$4.55 MP = $ 32.75

- December 31, 2021 FV=$5.35 MP = $ 34.00

- December 31, 2022 FV=$3.25 MP = $ 33.25

Prepare journal entries for the years above. (Below is the solution - could someone tell me how to get these numbers?)

 

X V fr R23 A B D E F G H I J K 2 Year Actual Expected Fair Total Opening 3 Value Liability Liability Expense Journal entry 4 2018 23 18 3.10 186,000.00 0.00 186,000.00 Dr Compensation expense Cr SARS liability 5 186,000.00 186,000.00 6 2019 17 3.90 442,000.00 186,000.00 256,000.00 7 Dr Compensation expense Cr SARS liability 8 256,000.00 256,000.00 2020 16 na 4.55 728,000.00 442,000.00 286,000.00 10 Dr Compensation expense Cr SARS liability 11 286,000.00 286,000.00 12 2020 Exercise of rights Dr SARS Liability 220000 13 14 Cr Cash 220000 508,000.00 15 2020 Must revalue liability for 8 left 16 8.00 4.55 364,000.00 508,000.00 -144,000.00 17 Dr SARS liability Cr Compensation expense 18 144,000.00 144,000.00 19 2021 Exercise of rights Dr SARS Liability 160000 20 21 Cr Cash 160000 204,000.00 22 2021 Must revalue liability for 4 left 23 4.00 5.35 214,000.00 204,000.00 10,000.00 24 25 Dr Compensation expense 10,000.00 Cr SARS liability 26 27 28 29 30 10,000.00 2020 Exercise of rights and expiration of liability Dr SARS Liability 214,000.00 Cr Compensation expense Cr Cash 181,500.00 32,500.00 20 9, 7 00