CALCULATOR PRINTER VERSTONBACK sage Company issues 127,000 stock appreciation ri

Question

CALCULATOR PRINTER VERSTONBACK sage Company issues 127,000 stock appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock lished priceof %10. The fair value of the SARs is per SAR on 2017. The service period is 4 years, and the exercise period is 7 years. edule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan. (IY Percentage Compensation Expense Expense Expense 2016 Expense 2017 Recognizable Accrued Accrued to Date 2014 2015 he eey at Decenmber 31 Credit account tties are automaticaly Indented when amount is entered

Explanation / Answer

Date Fair value Cumulative compensation Recognizable Percentage Accrued Compensation Accrued To date Expense 2014 Expense 2015 Expense 2016 Expense 2017 12/31/14 4 508000 25% 127000 (127000*4) Less:Compensation recognized 0 127000 12/31/15 1 127000 50% 63500 (127000*1) Less:Compensation recognized 127000 -63500 12/31/16 10 1270000 75% 952500 (127000*10) Less:Compensation recognized 63500 889000 12/31/17 9 1143000 100% 1143000 (127000*9) Less:Compensation recognized 952500 190500 Journal Entry Year Account titles and Explanation Debit Credit 2017 Compensation expense 190500 Liability under stock appreciation rights 190500 Liability under stock appreciation rights 1143000 Cash 1143000

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