On January 1, 2020, DEF Co. granted its president 50,000 share appreciation rights. The rights are exercisable immediately and expire on December 31, 2021. On exercise, the president is entitled to receive cash for the excess of the share market price on exercise date over the market price on grant date. The president did not exercise any of the rights in 2020. The market price of the share was P100 on January 1, 2020 and P115 on December 31, 2021. The president exercised the rights on December 31, 2021 when the market price was P110. As a result of the share appreciation rights, FAITH Co. shall recognize gain on reversal of share appreciation rights in 2021 at?

On January 1, 2020, DEF Co. granted its president 50,000 share appreciation rights. The rights are exercisable immediately and expire on December 31, 2021. On exercise, the president is entitled to receive cash for the excess of the share market price on exercise date over the market price on grant date. The president did not exercise any of the rights in 2020. The market price of the share was P100 on January 1, 2020 and P115 on December 31, 2021. The president exercised the rights on December 31, 2021 when the market price was P110. As a result of the share appreciation rights, FAITH Co. shall recognize gain on reversal of share appreciation rights in 2021 at?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Togo Incorporation started a share appreciation plan on January 1, 2022, when it granted 50,000…

A: Lets understand the basics. Share appeciation right is given to employees to encourage the efforts…

Q: As part of its stock-based compensation package, International Electronics (IE) granted 46 million…

A: Stock appreciation rights are the compensation plans provided in the form of rights to receive cash…

Q: On July 1, 2021, JKJ Corporation purchased 100 common shares of JMK Ltd. at $20 per share. JKJ…

A: Solution: As shares are expected to be sold with in a year, therefore investment should be…

Q: On January 1, Year 1. Tec Corporation grants share appreciation rights to its CEO. Under the plan,…

A: Share appreciation rights represent a plan by a company to award a bonus to their employees or…

Q: On Jan. 1, 2020, Terra Company established a share appreciation rights plan for the executives. The…

A: calculation of compensation income are as follows

Q: As part of its stock-based compensation package, International Electronics granted 52 million stock…

A: Req 1 to 3: 1. **January 1, 2024:** - To record the granting of SARs: ``` Stock…

Q: On January 1, 2020, investor X has an investment in 20% of the investee’s outstanding shares at a…

A: According to the given question, we are required to compute the goodwill and prepare the journal…

Q: On January 1, 2023, Sarasota Corporation granted its president a share appreciation rights (SARS)…

A: As per IFRS 2 Share based payments, the compensation expense is to be debited over the vesting…

Q: Aero Ltd (Aero) has granted 700 share appreciation rights to each of its 400 employees on 1 January…

Q: On December 31, 2016, Wesley Inc. granted 4,000 share appreciation rights (SARs) to its employees.…

A: In the above question we have asked to pass journal entries in relation to share appreciate right…

Q: Advise the directors of Shildon plc on the accounting treatment of the SARS in the year ended 30…

A: Share Appreciation Rights (SARs) is a form of incentive compensation granted to employees. SARs are…

Q: Sandhill Inc. owns shares of Teal Corporation stock. At December 31, 2020, the securities were…

A: Journal entry is the act of keeping records of transactions in an accounting journal. The accounting…

Q: On January 1, 2024, Fanny Services granted 24 million of its $1 par common shares to executives,…

A: Calculation of Effect of Restricted Stock Units Effect of Restricted Stock Units per year =…

Concept explainers

Employee Benefits

In an organization employees are the most important resource and most important asset. They can lead an organization to the sky or can be the reason for unsuccessful of business. Therefore, it is very much important that employees of an organization should be satisfied by the environment of the organization and most importantly with the salary, wages incentives, etc.

Question

100%

On January 1, 2020, DEF Co. granted its president 50,000 share
appreciation rights. The rights are exercisable immediately and expire on
December 31, 2021. On exercise, the president is entitled to receive cash
for the excess of the share market price on exercise date over the market
price on grant date. The president did not exercise any of the rights in
2020. The market price of the share was P100 on January 1, 2020 and P115
on December 31, 2021. The president exercised the rights on December 31,
2021 when the market price was P110. As a result of the share appreciation
rights, FAITH Co. shall recognize gain on reversal of share appreciation
rights in 2021 at?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Accounting for Employee Compensations and Benefits

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Isadore Bell Company granted 8 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $3 per share on January 1, 2021, the grant date. When calculating diluted EPS at December 31, 2022, what will be the net increase in the denominator of the EPS fraction if the market price of the common shares averaged $4 per share during 2022?
On January 1, 2023, Pyxis Company issued share appreciation rights to its president exercisable for one year beginning January 1, 2025 provided that the president is still in the employ of the company at that date of exercise. Each right provides for a cash payment equal to the excess of the entity’s share price over P50. The equivalent number of shares for share appreciation rights will be based on the level of sales at the date of exercise. The number of equivalent shares is 20,000 if the level of sales is P4,000,000 to P6,000,000 and 30,000 shares if the level of sales is over P6,000,000. The actual sales achieved totaled P5,000,000 in 2023 and P7,000,000 in 2024. The share prices are P70 in 2023 and P65 in 2024. What is the compensation expense for 2023? ANSWER: 200,000 What is the compensation expense for 2024? ANSWER: 150,000 Show full solution
2. On January 1, 2019, AB Company exchanges 10,000 shares of its common stock for all of the net assets of CD, Inc. Each of the NT's shares has a $5 par value and a $40 fair value. AB also paid $35,000 as direct out- of-pocket costs. Several of CD’s accounts have fair values that differ from their book values on this date: Book Values Fair Values $ 85,000 65,000 100,000 $ 83,000 125,000 180,000 160,000 45,000 Receivables Trademarks Furniture and Fixture Research and development Notes payable -0- 40,000 Precombination January 1, 2019, book values for the two companies are as follows: AB CD 9,000 85,000 65,000 100,000 105,000 $ 364,000 Cash $ 50,000 120,000 300,000 640,000 $ Receivables Trademarks Furniture and Fixture Equpiment (net) 320,000 Totals $ 1,430,000 Accounts Payable Notes Payable Common stock Additional paid-in capital Retained earnings 2$ 100,000 $ 34,000 60,000 50,000 30,000 190,000 $ 364,000 270,000 400,000 30,000 630,000 $ 1,430,000 Totals Assume that this combination is…
Pearl Inc. owns shares of Martinez Corporation stock. At December 31, 2020, the securities were carried in Pearl’s accounting records at their cost of $821,000, which equals their fair value. On September 21, 2021, when the fair value of the securities was $1,333,000, Pearl declared a property dividend whereby the Martinez securities are to be distributed on October 23, 2021, to stockholders of record on October 8, 2021.Prepare all journal entries necessary on those three dates. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
U the common shares is $165 each and market price of the preferred is $230 each. (Round to nearest dollar.) b. Prepare the journal entry for the issuance when only the market price of the common stock is known and it is $170 per share. E14.6 (LO 1, 2) (Stock Issuances and Repurchase) Lindsey Hunter Corporation is authorized to issue 50,000 shares of $5 par value common stock. During 2025, Lindsey Hunter took part in the following selected transactions. a. Issued 5,000 shares of stock at $45 per share, less costs related to the issuance of the stock totaling $7,000. b. Issued 1,000 shares of stock for land appraised at $50,000. The stock was actively traded on a national stock exchange at approximately $46 per share on the date of issuance. c. Purchased 500 shares of treasury stock at $43 per share. The treasury shares purchased were issued in 2021 at $40 per share. d. Retired the treasury shares purchased in part (c). Instructions Prepare the journal entries to record these…