On January 1st, 20x1, 20,000 units of stock appreciation rights were granted to JKL Inc's 200
employees, each of which received 100 units which accrue evenly over the following three years.The rights allow the employees to receive cash compensation for any stock price increase on December 31st, 20x3, if they are still with the company at that time.
The cash to be distributed is the difference between the fair value of the share and the reference price of $5 per share.Cumulative retention rates are expected to be 80% and 70% for 20x1 and 20x2 respectively.Twenty employees forfeited their rights in 20x1 and thirty forfeited their rights in 20x2.On December 31st, 20x3 there were 150 employees working for JKL Inc.
The following data applies to JKL's SARS plan:
Required:
Prepare the required journal entries for 20x1, 20x2 and 20x3 to record the compensation expense and ultimate cash payout related to the company's SARS plan.

Question

On January 1st, 20x1, 20,000 units of stock appreciation rights were granted to JKL Inc's 200
employees, each of which received 100 units which accrue evenly over the following three years.The rights allow the employees to receive cash compensation for any stock price increase on December 31st, 20x3, if they are still with the company at that time.
The cash to be distributed is the difference between the fair value of the share and the reference price of $5 per share.Cumulative retention rates are expected to be 80% and 70% for 20x1 and 20x2 respectively.Twenty employees forfeited their rights in 20x1 and thirty forfeited their rights in 20x2.On December 31st, 20x3 there were 150 employees working for JKL Inc.
The following data applies to JKL's SARS plan:
   Required:
Prepare the required journal entries for 20x1, 20x2 and 20x3 to record the compensation expense and ultimate cash payout related to the company's SARS plan.

Quizplus · Accepted Answer

The Answer of On January 1st, 20x1, 20,000 units of stock appreciation rights were granted to JKL Inc's 200
employees, each of which received 100 units which accrue evenly over the following three years.The rights allow the employees to receive cash compensation for any stock price increase on December 31st, 20x3, if they are still with the company at that time.
The cash to be distributed is the difference between the fair value of the share and the reference price of $5 per share.Cumulative retention rates are expected to be 80% and 70% for 20x1 and 20x2 respectively.Twenty employees forfeited their rights in 20x1 and thirty forfeited their rights in 20x2.On December 31st, 20x3 there were 150 employees working for JKL Inc.
The following data applies to JKL's SARS plan:
   Required:
Prepare the required journal entries for 20x1, 20x2 and 20x3 to record the compensation expense and ultimate cash payout related to the company's SARS plan.

On January 1st, 20x1, 20,000 Units of Stock Appreciation Rights