Parsons Limited established a share appreciation rights program that entitled its new president, Brandon Sutton, to receive cash for the difference between the shares' fair value and a pre-established price of $32 (also fair value on December 31, 2016), on 50,000 SARs. The date of grant is December 31, 2016, and the required employment (service) period is four years. The president exercised all of the SARs on December 31, 2021. The shares' fair value fluctuated as follows: December 31, 2017, $36; December 31, 2018, $39; December 31, 2019, $45; December 31, 2020, $36; and December 31, 2021, $48. The company recognizes the SARs in its financial statements. Assume that Parsons follows ASPE.

Instructions

(a) Prepare a five-year (2017 to 2021) schedule of compensation expense pertaining to the 50,000 SARs granted to Brandon Sutton.

(b) Prepare the journal entry for compensation expense in 2017, 2020, and 2021 relative to the 50,000 SARs.

(c) From the perspective of the employee, contrast the features of a share appreciation right to the features of a compensatory stock option.

(d) Discuss what a performance-type compensation plan is, giving examples.