Question
In: Accounting
Capulet company establishes a stock-appreciation rights program that entitles its new president Ben Davis to receive...
Capulet company establishes a stock-appreciation rights program that entitles its new president Ben Davis to receive cash for the difference between the market price of the stock and a pre-established price of $30 (also market price) on December 31, 2013, on 30,000 SARS. The date of the grand is December 31, 2013, and the required employment (service) period is 4 years. President Davis exercises all of the SARs in 2019. The fair value of the SARs is estimated to be $6 per SAR on December 31, 2014; $9 on December 31, 2015; $15 on December 31, 2016; $6 on December 31, 2017; and $18 on December 31, 2018.
Prepare a 5-year (2014-2018) schedule of compensation expense pertaining to the 30,000 SARs granted President Davis.
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Expert Solution
| Date | Fair Value | Cumulative Compensation Recognizable | Cumulative Compensation Recognizable | Percentage Accrued | Compensation Accrued to Date | Expense 2014 | Expense 2015 | Expense 2016 | Expense 2017 | Expense 2018 | |||
| 12/31/2014 | $6 | 30000*6 | $180,000 | for 4 years | 25% | $ 45,000 | $ 45,000 | ||||||
| PLUS | $ 95,000 | ||||||||||||
| 12/31/2015 | 9 | 30000*9 | $270,000 | for 3 years | 50% | $135,000 | $ 95,000 | ||||||
| $ 202,500 | |||||||||||||
| 12/31/2016 | 15 | $450,000 | for 2 year | 75% | $337,500 | $ 202,500 | |||||||
| ($157,500) | |||||||||||||
| 12/31/2017 | 6 | $180,000 | for 1 year | 100% | $180,000 | ($157,500) | |||||||
| $360,000 | |||||||||||||
| 12/31/2018 | 18 | $540,000 | 100% | 540000 | $ 360,000 | ||||||||
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