How much should the company recognized as compensation expense for 2021? * In order to boost the sales of ABC & Co., the board of directors approved a share appreciation plan for its Chief Operating Officer. The plan was granted on January 1, 2020 and is exercisable for one year beginning January 1, 2022, provided that the COO is still employed at the date of its exercise. The plan compensates the COO for a cash payment equal to the excess of XYZ's share price over the pre-determined price of P50. Equivalent shares to be granted will be dependent upon the level of annual sales of the company on the date of exercise, as follows: • 100 million to 200 million sales: 10,000 shares • Over 200 million sales: 12,000 shares Actual sales achieved by XYZ, and the share price of the company's shares at the end of each year are below: Share Price Sales | 120 million 250 million Year 2020 2021 P77 P75 O P 900,000 O P 165,000 O P 135,000 O P 300,000

How much should the company recognized as compensation expense for 2021? * In order to boost the sales of ABC & Co., the board of directors approved a share appreciation plan for its Chief Operating Officer. The plan was granted on January 1, 2020 and is exercisable for one year beginning January 1, 2022, provided that the COO is still employed at the date of its exercise. The plan compensates the COO for a cash payment equal to the excess of XYZ's share price over the pre-determined price of P50. Equivalent shares to be granted will be dependent upon the level of annual sales of the company on the date of exercise, as follows: • 100 million to 200 million sales: 10,000 shares • Over 200 million sales: 12,000 shares Actual sales achieved by XYZ, and the share price of the company's shares at the end of each year are below: Share Price Sales | 120 million 250 million Year 2020 2021 P77 P75 O P 900,000 O P 165,000 O P 135,000 O P 300,000

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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