San Juan Corporation established a stock option plan that provides for cash payments to employees based on
Question:
San Juan Corporation established a stock option plan that provides for cash payments to employees based on the appreciation of stock prices from an established option price. The plan was instituted on January 1, 2011, and provides benefits to employees who work for the succeeding three years. Cash payments to employees will be made on January 1, 2014, and will equal the excess of the stock price over the option price on that date. In total, 10,000 of these cash stock appreciation rights (SARs) were granted to employees.
The option price established for the stock is $10 per share. The market price of San Juan stock on selected dates in 2011–2013 was as follows:
January 1, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15
December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Prepare the journal entries on San Juan’s books for the years 2011, 2012, 2013, and 2014 related to this plan.
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen