Question

Pina Company establishes a stock-appreciation rights program that entitles its new president Ben Davis to receive...

Pina Company establishes a stock-appreciation rights program that entitles its new president Ben Davis to receive cash for the difference between the market price of the stock and a pre-established price of $32 (also market price) on December 31, 2016, on 25,400 SARs. The date of grant is December 31, 2016, and the required employment (service) period is 4 years. President Davis exercises all of the SARs in 2022. The fair value of the SARs is estimated to be $6 per SAR on December 31, 2017; $10 on December 31, 2018; $14 on December 31, 2019; $6 on December 31, 2020; and $17 on December 31, 2021.

1.

Prepare a 5-year (2017–2021) schedule of compensation expense pertaining to the 25,400 SARs granted president Davis. (If the compensation decreases from prior year enter the amount as a negative number in the table e.g. -25,000 or (25,000).)

Date

Fair Value

Cumulative Compensation Recognizable

Percentage Accrued

Compensation Accrued to Date

Expense 2017

Expense 2018

Expense 2019

Expense 2020

Expense 2021

2.

Prepare the journal entry for compensation expense in 2017, 2020, and 2021 relative to the 25,400 SARs

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Answer #1

Date 12/3114 2131119 21300 1125400x Fair valut Fair value Cumulative Percentage compensation Expense expense Expense Expense2. Journal Entry 2017 Compensation Expense 38100 Liability under stocle Appreciation Plan 38100 2020 114300 Liability under s

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