At the end of its fiscal year, December 31, 2011, Beckford Limited issued 200,000 stock appreciation rights to its officers that entitled them to receive cash for the difference between the market price of its stock and a pre-established price of $12. The market price fluctuated as follows: December 31, 2012, $15; December 31, 2013, $11; December 31, 2014, $21; December 31, 2015, $19. The service period is four years and the exercise period is seven years. The company recognizes the SARs in its financial statements. Assume that the entity follows ASPE.
Instructions
(a) Prepare a schedule that shows the amount of compensation expense that is allocable to each year that is affected by the stock appreciation rights plan.
(b) Prepare the entry at December 31, 2015, to record compensation expense, if any, in 2015.
(c) Prepare the entry at December 31, 2015, assuming that all 200,000 SARs are exercised.