IT Solutions Ltd. has a cash-settled SARs program for employees. These employees will receive a cash payment
Question:
IT Solutions Ltd. has a cash-settled SARs program for employees. These employees will receive a cash payment after five years of service, calculated as the excess of share price over $7.50. In early 20X1, employees in total are granted 60,000 units in the program.
The fair value of one SARs unit is estimated at $1 at the end of 20X1, $3 at the end of 20X2, and $2 at the end of 20X3. Estimated retention is 90% at the end of 20X1, 88% at the end of 20X2, and 75% at the end of 20X3. The payment is made at the end of 20X5.
Required:
Provide the journal entry to be recorded with respect to the SARs program at the end of 20X1, 20X2, and 20X3.
Step by Step Answer:
Intermediate Accounting Volume 2
ISBN: 9781260881240
8th Edition
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel