Question: Instead of a fixed compensatory share option plan, Wright Company is considering providing its key executives with a plan that involves share appreciation rights (SAR).

Instead of a fixed compensatory share option plan, Wright Company is considering providing its key executives with a plan that involves share appreciation rights (SAR).

Required
1. Explain what is meant by an SAR plan.
2. Identify the key differences between accounting for an SAR plan and a fixed compensatory share option plan.
3. Briefly summarize the steps in accounting for an SAR plan (assume that the executive is expected to receive cash on the date of exercise).

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