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.

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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