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On January 1, 2020, Sweet Corporation granted its president a share appreciation rights (SARs) package covering...

On January 1, 2020, Sweet Corporation granted its president a share appreciation rights (SARs) package covering employment over a three-year period. The package was based on SARs increases for 20,100 shares over the fair value on January 1, 2020 of $17 per common share. The SARs package to be paid in cash at the end of the third year (i.e., December 31, 2022).

The fair values of the Sweet shares were as follows:

December 31, 2020 $19/share
December 31, 2021 $22/share
December 31, 2022 $20/share


Prepare the journal entries to record the Share Appreciation Rights (SARs) package, and the payment on December 31, 2022 assuming that Sweet follows ASPE.

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Expert Solution

Date Account title Debit $ Credit $
Dec 31, 2020 Compensation expense $      40,200
Liability for appreciation right $      40,200
[To provide for the Compensation expense]
Dec 31, 2021 Compensation expense $      60,300
Liability for appreciation right $      60,300
[To provide for the Compensation expense]
Dec 31, 2022 Liability for appreciation right $      40,200
Compensation expense $      40,200
[To provide for the Compensation expense]
Dec 31, 2022 Liability for appreciation right $      60,300
Cash $      60,300
[To record the exercise of rights]

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ekkarill92 answered 1 year ago
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