s part of its stock-based compensation package, International Electronics granted 61 million stock appreciation rights (SARS) to top officers on January 1, 2024. • At exercise, holders of the SARS are entitled to receive cash or stock equal in value to the excess of the market price at exercise over the share price at the date of grant. • The SARS cannot be exercised until the end of 2027 (vesting date) and expire at the end of 2029. The $1 par common shares have a market price of $65 per share on the grant date. The fair value of the SARS, estimated by an appropriate option pricing model, is $5.00 per SAR at January 1, 2024. The fair value re-estimated at December 31, 2024, 2025, 2026, 2027, and 2028, is $6.00, $5.00, $6, $2.00, and $5.00, respectively. • All recipients are expected to remain employed through the vesting date. Required: to 3. Prepare the appropriate journal entries pertaining to the SARS on January 1, 2024 and December 31, 2024-December 31, 2027. The SARS remain unexercised on December 31, 2028, prepare the appropriate entry. . The SARS are exercised on June 6, 2029, when the share price is $72, and executives choose to receive the market price ppreciation in cash. Prepare the appropriate journal entry(s) on that date. Complete this question by entering your answers in the tabs below.
s part of its stock-based compensation package, International Electronics granted 61 million stock appreciation rights (SARS) to top officers on January 1, 2024. • At exercise, holders of the SARS are entitled to receive cash or stock equal in value to the excess of the market price at exercise over the share price at the date of grant. • The SARS cannot be exercised until the end of 2027 (vesting date) and expire at the end of 2029. The $1 par common shares have a market price of $65 per share on the grant date. The fair value of the SARS, estimated by an appropriate option pricing model, is $5.00 per SAR at January 1, 2024. The fair value re-estimated at December 31, 2024, 2025, 2026, 2027, and 2028, is $6.00, $5.00, $6, $2.00, and $5.00, respectively. • All recipients are expected to remain employed through the vesting date. Required: to 3. Prepare the appropriate journal entries pertaining to the SARS on January 1, 2024 and December 31, 2024-December 31, 2027. The SARS remain unexercised on December 31, 2028, prepare the appropriate entry. . The SARS are exercised on June 6, 2029, when the share price is $72, and executives choose to receive the market price ppreciation in cash. Prepare the appropriate journal entry(s) on that date. Complete this question by entering your answers in the tabs below.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:As part of its stock-based compensation package, International Electronics granted 61 million stock appreciation rights (SARs) to top
officers on January 1, 2024.
• At exercise, holders of the SARS are entitled to receive cash or stock equal in value to the excess of the market price at exercise
over the share price at the date of grant.
• The SARS cannot be exercised until the end of 2027 (vesting date) and expire at the end of 2029.
• The $1 par common shares have a market price of $65 per share on the grant date.
• The fair value of the SARS, estimated by an appropriate option pricing model, is $5.00 per SAR at January 1, 2024.
• The fair value re-estimated at December 31, 2024, 2025, 2026, 2027, and 2028, is $6.00, $5.00, $6, $2.00, and $5.00,
respectively.
• All recipients are expected to remain employed through the vesting date.
Required:
.to 3. Prepare the appropriate journal entries pertaining to the SARS on January 1, 2024 and December 31, 2024-December 31, 2027.
The SARS remain unexercised on December 31, 2028, prepare the appropriate entry.
. The SARS are exercised on June 6, 2029, when the share price is $72, and executives choose to receive the market price
appreciation in cash. Prepare the appropriate journal entry(s) on that date.
Complete this question by entering your answers in the tabs below.
Req 1 to 3
Req 4
Prepare the appropriate journal entries pertaining to the SARS on January 1, 2024 and December 31, 2024-December 31, 2027. The
SARS remain unexercised on December 31, 2028, prepare the appropriate entry.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round
intermediate calculations. Enter your answers in millions rounded to 2 decimal places (i.e., 5,550,000 should be entered as 5.50).
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Journal entry worksheet
<
1
2
Record the award of 61 million SARS on January 1, 2024 when the market
price of the stock is $65 per share and the fair value of the SARS is $5.00 per
SAR.
3 4 5 6
Note: Enter debits before credits.
Date
January 01, 2024
Record entry
General Journal
Clear entry
Debit
Credit
View general journal
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