On January 1, Year 1, ABC Co. granted 10 Share Appreciation Rights to its CFO entitling her to receive cash for the difference between the market price of its stock and a pre-established price of $20. The service period is 2 years, and the 10 SARs would expire after Year 8. The tax rate is 20% every year. On Date 1 of Year 5, the CFO exercised all 10 SARs when the market price of ABC stock is trading at $50.

The fair value for each SAR is $12 on the date of the grant. The fair value of each SAR at the end of the first four years is as follows:

12/31/Year 1: $10; 12/31/Year 2: $8;

12/31/Year 3: $5; 12/31/Year 4: $11.

REQUIRED: 

What is the total compensation expense for this SAR grant?

In Year 3, the company should (Debit or Credit?) DTA by?

How much cash should the company pay its CFO when she exercised her SARs?

If the SARs grant is not settled in cash, but settled in Equity (meaning ABC will pay its CFO stock instead of cash when she exercise), what would be the total compensation expense?