Togo Incorporation started a share appreciation plan on January 1, 2022, when it granted 50,000 rights to its executives. The vesting period is 2 years. The stock appreciation rights are settled for cash. The plan expires on January 1, 2024. The fair value of Togo’s SARs for the years ended December 31, 2022 and 2023, are as follows:

All rights are exercised on January 1, 2024, when their fair value is $7 and the market price of the stock is $35 per share. What is the compensation expense in 2022 and in 2023? Prepare the journal entries to record the SAR plan.

Transcribed Image Text:

Date December 31, 2022 December 31, 2023 Fair Value $6 $7