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E16-30B (Stock Appreciation Rights)Olympia Company establishes a stock appreciation rights program that entitles its new CEO to receive cash for the difference between the market price of the stock and a pre-established price of $20 (also market price) on

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E16-30B (Stock Appreciation Rights)Olympia Company establishes a stock appreciation rights program that entitles its new CEO to receive cash for the difference between the market price of the stock and a pre-established price of $20 (also market price) on December 31, 2013, on 50,000 stock appreciation rights. The date of grant is December 31, 2010, and the required employment (service) period is 3 years. The CEO exercises all of the SARs on December 31, 2013. The market value of the stock fluctuates as follows: $19 on December 31, 2014, $23 on December 31, 2015, and $25 on December 31, 2016.;Instructions;(a) Prepare a 3-year (2014?2016) schedule of compensation expense pertaining to the 50,000 SARs granted the CEO.;(b) Prepare the journal entry for compensation expense in 2014, 2015, and 2016 relative to the 50,000 SARs.;(c) Prepare the entry for the exercise of the SARs on December 31, 2016.

 

Paper#78508 | Written in 18-Jul-2015

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