On January 1, 2018, SARS Co. grants 100 cash share appreciation rights to each of its 500 employees, on condition that the employees remains employed in the company for the next three years. During 2018, 30 employees leave. The entity estimates that a further 60 will leave during 2019 and 2020. During 2019, 20 employees leave and the entity estimates that a further 27 will leave during 2020. During 202, 18 employees leave. At the end of 2020, 100 employees exercise their share appreciation rights, another 150 employees exercise their share appreciation rights at the end of 2021 and the remaining employees exercise their share appreciation rights at the end of 2022. The entity estimates the fair value of the share appreciation rights at the end of each year in which a liability exists as shown below. At the end of 2020, all share appreciation rights held by the remaining employees vest. The intrinsic values of the share appreciation rights at the date exercise (which equal to the cash paid out) at the end of years 2020,2021, and 2022 are also shown below:

On January 1, 2018, SARS Co. grants 100 cash share appreciation rights to each of its 500 employees, on condition that the employees remains employed in the company for the next three years. During 2018, 30 employees leave. The entity estimates that a further 60 will leave during 2019 and 2020. During 2019, 20 employees leave and the entity estimates that a further 27 will leave during 2020. During 202, 18 employees leave. At the end of 2020, 100 employees exercise their share appreciation rights, another 150 employees exercise their share appreciation rights at the end of 2021 and the remaining employees exercise their share appreciation rights at the end of 2022. The entity estimates the fair value of the share appreciation rights at the end of each year in which a liability exists as shown below. At the end of 2020, all share appreciation rights held by the remaining employees vest. The intrinsic values of the share appreciation rights at the date exercise (which equal to the cash paid out) at the end of years 2020,2021, and 2022 are also shown below:

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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