Question

On December 31, 2013, Larkspur Company issues 127,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $10. The fair value of the SARs is estimated to be $4 per SAR on December 31, 2014; $1 on December 31, 2015; $10 on December 31, 2016; and $9 on December 31, 2017. The service period is 4 years, and the exercise period is 7 years.

Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan. (If the compensation decreases from prior year enter the amount as a negative number in the table e.g. -25,000 or (25,000).) Date Fair Value Cumulative Compensation Recognizable Percentage Accrued Compensation Accrued to Date Expense 2014 Expense 2015 Expense 2016 Expense 2017 12/31/14 $ $ % $ $ $ $ $ 12/31/15 % 12/31/16 % 12/31/17 % $ SHOW LIST OF ACCOUNTS LINK TO TEXT

Prepare the entry at December 31, 2017, to record compensation expense, if any, in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS LINK TO TEXT

Prepare the entry on December 31, 2017, assuming that all 127,000 SARs are exercised. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit

Answer 1

2.

Date	General Journal	Debit	Credit
31/12/2017	Compensation Expense	$190500
	Stock Appreciation Plan		$190500

3.

Date	General Journal	Debit	Credit
31/12/2017	Stock Appreciation Plan	$1143000
	Cash		$1143000