How much is the compensation expense recognized in the accounts for the year ended December 31,2020? For the past several years, the stewardship of the Chief Operating Officer (COO) of ABC Company isresponsible for its successful operations. In the last year's operations, however, there was a slight declinein ABC's revenue figures.In order to motivate the COO to obtain greater positive operations for the company, the board ofdirectors approved a share appreciation plan to take effect on January 1,2019. The COO was issuedshare appreciation rights exercisable for one year beginning January 1,2021 provided that the officer isstill in the employ of the company at the date of exercise. The share appreciation rights provides for acash payment equal to the excess of ABC's share price over P 50. The equivalent number of shares forshare appreciation rights will be based on the level of sales of the company at the date of exercise asfollows:Level of salesEquivalent shares granted10,00012,000P 100,000,000 to P 200,000,000Over P 200 millionActual sales achieved by ABC Company and the share prices at the end of each year as follows:YearSalesShare priceP 77P 120,000,000250,000,0002019202075How much is the compensation expense recognized in the accounts for the year ended December31,2019?

ABC Company has offered a share appreciation plan to its COO for motivating him to perform better.…

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Business

Accounting

How much is the compensation expense recognized in the accounts for the year ended December 31,2020

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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