On December 31, 2010, Belmonte Company issues 150,000 stock appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of P10. The fair value of the SARs is estimated to be P4 per SAR on December 31, 2011; P1 on December 31, 2012; P10 on December 31, 2013; and P9 on December 31, 2014. The service period is 4 years, and the exercise period is 7 years. Instructions a. Prepa
On December 31, 2010, Belmonte Company issues 150,000 stock appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of P10. The fair value of the SARs is estimated to be P4 per SAR on December 31, 2011; P1 on December 31, 2012; P10 on December 31, 2013; and P9 on December 31, 2014. The service period is 4 years, and the exercise period is 7 years. Instructions a. Prepa
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On December 31, 2010, Belmonte Company issues 150,000 stock appreciation rights to its officers entitling them
to receive cash for the difference between the market price of its stock and a pre-established price of P10. The
fair value of the SARs is estimated to be P4 per SAR on December 31, 2011; P1 on December 31, 2012; P10 on
December 31, 2013; and P9 on December 31, 2014. The service period is 4 years, and the exercise period is 7
years.
Instructions
a. Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the
stock-appreciation rights plan.
b. Prepare the entry at December 31, 2014, to record compensation expense, if any, in 2014.
c. Prepare the entry on December 31, 2014, assuming that all 150,000 SARs are exercised.
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