Fiar Company started a share appreciation plan on January 1, 2015, when it granted 100,000 rights to its executives. The pre-established price is $ 20 per share, which is the market value of the shares at January 1, 2015. The vesting period is three years. The plan expires on January 1, 2018. Fiar’s closing market price for the years ended December 31, 2015, through 2018 are as follows: All SARs are exercised on January 1, 2018, when the market price is $ 21.
Date Closing Market Price
December 31, 2015……………….$ 22.00
December 31, 2016……………….$ 23.00
December 31, 2017……………….$ 21.60
Required
a. What is the compensation expense in 2015, 2016, and 2017?
b. Prepare the journal entries to record the plan.