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Sheridan Limited established a SARS program that entitled its new president, Carol Garcia, to receive cash for the difference between the Sheridan common shares' fair value and a pre-established price of $33 (also fair value on December 31, 2022), on 43,000 SARs. The date of grant is December 31, 2022, and the required employment (service) period is four years. The common shares' fair value fluctuated as follows: December 31, 2023, $36; December 31, 2024, $39; December 31, 2025, $46; December 31, 2026, $36; and December 31, 2027, $49. Sheridan recognizes the SARS in its financial statements. Carol exercised half of the SARS on June 1, 2028, when the share price was $47. Assume that Sheridan follows ASPE. (c) Prepare the entry at June 1, 2028, for the exercise of the SARS.

Sheridan Limited established a SARS program that entitled its new president, Carol Garcia, to receive cash for the difference between the Sheridan common shares' fair value and a pre-established price of $33 (also fair value on December 31, 2022), on 43,000 SARs. The date of grant is December 31, 2022, and the required employment (service) period is four years. The common shares' fair value fluctuated as follows: December 31, 2023, $36; December 31, 2024, $39; December 31, 2025, $46; December 31, 2026, $36; and December 31, 2027, $49. Sheridan recognizes the SARS in its financial statements. Carol exercised half of the SARS on June 1, 2028, when the share price was $47. Assume that Sheridan follows ASPE. (c) Prepare the entry at June 1, 2028, for the exercise of the SARS.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Question 3 Sheridan Limited established a SARS program that entitled its new president, Carol Garcia, to receive cash for the difference between the Sheridan common shares' fair value and a pre-established price of $33 (also fair value on December 31, 2022), on 43,000 SARs. The date of grant is December 31, 2022, and the required employment (service) period is four years. The common shares' fair value fluctuated as follows: December 31, 2023, $36; December 31, 2024, $39; December 31, 2025, $46; December 31, 2026, $36; and December 31, 2027, $49. Sheridan recognizes the SARS in its financial statements. Carol exercised half of the SARS on June 1, 2028, when the share price was $47. Assume that Sheridan follows ASPE. (c) Prepare the entry at June 1, 2028, for the exercise of the SARS. Date Account Titles and Explanation 06/01/28 Liability under Share Appreciation Rights Plans Cash (F) Compensation Expense Number of SARS granted and vested (A) Number of SARS exercised on June 1, 2028 (B) Pre-established price (C) Share price as on June 1, 2028 (D) Debit Difference b/w share price on June 1, 2028 and pre-established price (E = D-C) Amount of SARS Exercised - Cash (F= E*B) $ ess $ Credit 301,000 43,000 21,500 33 47 14 $ $ 301,000
Transcribed Image Text:Question 3 Sheridan Limited established a SARS program that entitled its new president, Carol Garcia, to receive cash for the difference between the Sheridan common shares' fair value and a pre-established price of $33 (also fair value on December 31, 2022), on 43,000 SARs. The date of grant is December 31, 2022, and the required employment (service) period is four years. The common shares' fair value fluctuated as follows: December 31, 2023, $36; December 31, 2024, $39; December 31, 2025, $46; December 31, 2026, $36; and December 31, 2027, $49. Sheridan recognizes the SARS in its financial statements. Carol exercised half of the SARS on June 1, 2028, when the share price was $47. Assume that Sheridan follows ASPE. (c) Prepare the entry at June 1, 2028, for the exercise of the SARS. Date Account Titles and Explanation 06/01/28 Liability under Share Appreciation Rights Plans Cash (F) Compensation Expense Number of SARS granted and vested (A) Number of SARS exercised on June 1, 2028 (B) Pre-established price (C) Share price as on June 1, 2028 (D) Debit Difference b/w share price on June 1, 2028 and pre-established price (E = D-C) Amount of SARS Exercised - Cash (F= E*B) $ ess $ Credit 301,000 43,000 21,500 33 47 14 $ $ 301,000
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