On January 1, 2014, the Jim Corporation granted 50,000 stock appreciation rights (SARs) to the company's president, Jim Darling. Jim will be entitled to receive cash or common stock or some combination of cash and common stock for the difference between the quoted market price at the date of exercise and a $20 option price per SAR. It is assumed that Jim will elect to receive cash when he exercises his SARs. The service period is three years, and he may exercise his SARs during the period January 1, 2017, through December 31, 2018. The market prices per share of Jim Corporation's common stock are as follows:
On December 31, 2018, Jim Darling exercises his 5,000 SARs and elects to receive cash.
Required:
a.Prepare the journal entries to record each year's compensation expense related to the SARs.
b.Prepare the December 31, 2018 entry to record the exercise of the 50,000 SARs.

Question

On January 1, 2014, the Jim Corporation granted 50,000 stock appreciation rights (SARs) to the company's president, Jim Darling. Jim will be entitled to receive cash or common stock or some combination of cash and common stock for the difference between the quoted market price at the date of exercise and a $20 option price per SAR. It is assumed that Jim will elect to receive cash when he exercises his SARs. The service period is three years, and he may exercise his SARs during the period January 1, 2017, through December 31, 2018. The market prices per share of Jim Corporation's common stock are as follows:  
On December 31, 2018, Jim Darling exercises his 5,000 SARs and elects to receive cash.
Required:
a.Prepare the journal entries to record each year's compensation expense related to the SARs.
b.Prepare the December 31, 2018 entry to record the exercise of the 50,000 SARs.

Quizplus · Accepted Answer

The Answer of On January 1, 2014, the Jim Corporation granted 50,000 stock appreciation rights (SARs) to the company's president, Jim Darling. Jim will be entitled to receive cash or common stock or some combination of cash and common stock for the difference between the quoted market price at the date of exercise and a $20 option price per SAR. It is assumed that Jim will elect to receive cash when he exercises his SARs. The service period is three years, and he may exercise his SARs during the period January 1, 2017, through December 31, 2018. The market prices per share of Jim Corporation's common stock are as follows:  
On December 31, 2018, Jim Darling exercises his 5,000 SARs and elects to receive cash.
Required:
a.Prepare the journal entries to record each year's compensation expense related to the SARs.
b.Prepare the December 31, 2018 entry to record the exercise of the 50,000 SARs.

On January 1, 2014, the Jim Corporation Granted 50,000 Stock