Problem 2

On January 1, 2016, the Wiseguy Corporation granted 50,000 stock appreciation rights (SARs) to the company's president, Henry Hill. Henry will be entitled to receive cash or common stock or some combination of cash and common stock for the difference between the quoted market price at the date of exercise and a $20 option price per SAR. It is assumed that Henry will elect to receive cash when he exercises his SARs. The service period is three years, and he may exercise his SARs during the period January 1, 2019, through December 31, 2020. The market prices per share of Wiseguy Corporation's common stock are as follows:

January 1, 2016	$22.00
December 31, 2016	26.00
December 31, 2017	29.00
December 31, 2018	27.50
December 31, 2019	27.00
December 31, 2020	29.00

On December 31, 2020, Henry Hill exercises his 5,000 SARs and elects to receive cash.

a.	Prepare the journal entries to record each year's compensation expense related to the SARs.
b.	Prepare the December 31, 2020 entry to record the exercise of the 50,000 SARs.

Date	Account Titles	Debit	Credit