On January 1, 2019, Smith Inc. granted 6,500 Stock Appreciation Rights (SAR) to its executives, exercisable 2
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Question:
On January 1, 2019, Smith Inc. granted 6,500 Stock Appreciation Rights (SAR) to its executives, exercisable 2 years after grant date (unless employment is terminated) and prior to 8 years from grant date. The executives are to receive cash at exercise date for the excess of the market price over the pre-established base price of $25. The year-end fair values of each SAR were $3, 5.50, and $4.80 in 2019, 2020 and 2021 respectively. The executives exercise their SARs on 8/7/22 when the market price was $32 per share.
- Prepare a properly labeled schedule to determine the amount of compensation expense for each of the four years.
- Prepare the journal entries at 12/31/19, 12/31/20, 12/31/21, and 8/7/22.
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