For stock appreciation rights (SARs)compensation plans where the employee is expected to receive cash on the exercise date, the account that is credited in the year-end adjusting journal entry to recognize the compensation expense is
A)Deferred Compensation
B)SAR Compensation Payable
C)Common Stock Option Warrants: SARs
D)Compensation Expense

Question

Quizplus · Accepted Answer

The account that is credited in the year-end adjusting journal entry to recognize the compensation expense for SARs where the employee is expected to receive cash on the exercise date is SAR Compensation Payable. This is because the company owes the employee cash for the value of the SARs, and therefore SAR Compensation Payable represents the liability the company has to pay out the compensation.

For Stock Appreciation Rights (SARs)compensation Plans Where the Employee Is