For the past several years, the stewardship of the Chief Operating Officer (COO) of ABC Company is responsible for its successful operations. In the last year's operations, however, there was a slight decline in ABC's revenue figures. In order to motivate the COO to obtain greater positive operations for the company, the board of directors approved a share appreciation plan to take effect on January 1,2019. The COO was issued share appreciation rights exercisable for one year beginning January 1,2021 provided that the officer is still in the employ of the company at the date of exercise. The share appreciation rights provides for a cash payment equal to the excess of ABC's share price over P 50. The equivalent number of shares for share appreciation rights will be based on the level of sales of the company at the date of exercise as follows: Level of sales Equivalent shares granted 10,000 12,000 P 100,000,000 to P 200,000,000 Over P 200 million Actual sales achieved by ABC Company and the share prices at the end of each year as follows: Year Sales Share price 2019 P 120,000,000 P 77 2020 250,000,000 75 How much is the compensation expense recognized in the accounts for the year ended December 31,2019?

For the past several years, the stewardship of the Chief Operating Officer (COO) of ABC Company is responsible for its successful operations. In the last year's operations, however, there was a slight decline in ABC's revenue figures. In order to motivate the COO to obtain greater positive operations for the company, the board of directors approved a share appreciation plan to take effect on January 1,2019. The COO was issued share appreciation rights exercisable for one year beginning January 1,2021 provided that the officer is still in the employ of the company at the date of exercise. The share appreciation rights provides for a cash payment equal to the excess of ABC's share price over P 50. The equivalent number of shares for share appreciation rights will be based on the level of sales of the company at the date of exercise as follows: Level of sales Equivalent shares granted 10,000 12,000 P 100,000,000 to P 200,000,000 Over P 200 million Actual sales achieved by ABC Company and the share prices at the end of each year as follows: Year Sales Share price 2019 P 120,000,000 P 77 2020 250,000,000 75 How much is the compensation expense recognized in the accounts for the year ended December 31,2019?

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter17: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 45P

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