Dominquez Company establishes a share-appreciation rights program that entitles its new president Dan Scott to receive cash for the difference between the market price of the shares and a pre-established price of R\($30\) (also market price) on December 31, 2013, on 40,000 SARs.

The date of grant is December 31, 2013, and the required employment (service) period is 4 years. Scott exercises all of the SARs in 2019. The fair value of the SARs is estimated to be R\($6\) per SAR on December 31, 2014; R\($9\) on December 31, 2015; R\($15\) on December 31, 2016; R\($8\) on December 31, 2017; and R\($18\) on December 31, 2018.

Instructions

(a) Prepare a 5-year (2014–2018) schedule of compensation expense pertaining to the 40,000 SARs granted to Scott.

(b) Prepare the journal entry for compensation expense in 2014, 2017, and 2018 relative to the 40,000 SARs.