Question
Share Appreciation Rights On January 1, 2016, as a form of executive compensation, Wadlin Corporation grants share appreciation rights to Robert Brandt. These rights entitle
Share Appreciation Rights
On January 1, 2016, 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 5,000 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, 2019. The fair value per SAR was as follows: 12/31/16, $3.00; 12/31/17, $4.20; 12/31/18, $4.00; and 12/31/19, $5.00. The quoted market price per share of common stock was $20 on December 31, 2019.
Required:
1. | Prepare a schedule to compute the compensation expense related to this SAR plan for 2016 through 2019. |
2. | Prepare the December 31, 2019, journal entry related to this SAR plan. |
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Wadlin Corporation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Prepare the journal entry on December 31, 2019, to recognize the SAR compensation expense for 2019 and to record the exercise of the rights. Additional Instruction
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GENERAL JOURNAL
DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT | |
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Prepare a schedule to compute the compensation expense related to this SAR plan for 2016 through 2019. Additional Instructions
Wadlin Corporation |
SAR Annual Compensation Expense |
2016-2019 |
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 | 12/31/16 | 1/3 |
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3 | 12/31/17 | 2/3 | |||||
4 | 12/31/18 | 3/3 | |||||
5 | 12/31/19 | 3/3 | |||||
6 |
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