NR Enterprises, Inc. granted stock appreciation rights (SARs) to its key employees on January 2, 2015. These
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NR Enterprises, Inc. granted stock appreciation rights (SARs) to its key employees on January 2, 2015. These SARs allow the employees to receive cash at the end of the vesting period for the difference between the market price of the stock on the exercise date and the pre- established price of $ 55. NR granted 200,000 of these SARs. Employees must complete a three-year service (vesting) period in order to receive the cash. The fair value of the SARs on December 31, 2015, is $ 7 per SAR. The fair value on December 31, 2016, is $ 13 per SAR and the fair value on December 31, 2017, is $ 11 per SAR. The company estimates that there will not be any forfeiture of the rights. a. How much compensation expense, if any, should NR recognize in 2015, 2016, and 2017? b. What is the journal entry to record this compensation expense? (Ignore the effect of income taxes.)
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a Under US GAAP the compensation expense is measured at fair value The fair value should be me...View the full answer
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