Question

On December 31, 2016, Sage Company issues 124,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $10. The fair value of the SARs is estimated to be $5 per SAR on December 31, 2017; $2 on December 31, 2018; $10 on December 31, 2019; and $9 on December 31, 2020. The service period is 4 years, and the exercise period is 7 years. Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan.

Date Fair Value Cumulative Compensation Recognizable Percentage Accrued Compensation Accrued to Date Expense 2017 Expense 2018 Expense 2019 Expense 2020

vertical going down chart- 12/31/17 12/31/18 12/31/19 12/31/20

Answer 1

Sage Company 124000 Schedule of Compensation Expense Affected by Stock Appreciation Rights Cumulative Date Fair Value Compensation 31.12.2017 5 620000 Expense Expense Expense Expense 2017 2018 2019 2020 155000 -31000 31.12.2018 2 248000 Percentage Compensation Accrued Accrued to Date 25% 155000 -31000 50% 124000 806000 75% 930000 186000 100% 1116000 806000 31.12.2019 10 1240000 186000 31.12.2020 9 1116000