Question: Fiar Company started a share appreciation plan on January 1, 2018, when it granted 100,000 rights to its executives. The vesting period is 3 years.

Fiar Company started a share appreciation plan on January 1, 2018, when it granted 100,000 rights to its executives. The vesting period is 3 years. The rights are settled for cash. The plan expires on January 1, 2021. The SARs fair value for the years ended December 31, 2018, through 2020 are as follows:
Date Closing Market Price
December 31, 2018 ............................... $2.00
December 31, 2019 ............................... 3.00
December 31, 2020 ............................... 1.60
January 1, 2021 ...................................... 1.00

All SARs are exercised on January 1, 2021, when the fair value is $1.

Required

a. What is the compensation expense in 2018, 2019, and 2020?

b. Prepare the journal entries to record the plan.

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a The compensation expense is 66667 in 2018 133333 in 2019 and 40000 in 2020 The fair value at ea... View full answer

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