Chapter 16, Problem 30E

To determine

Stock Appreciation Rights: Excess of market price of the share over the pre established price on the exercise date is called share appreciation. Stock appreciation rights gives an employee the right to receive compensation equal to the appreciation in the share. The accounting of these rights is based on how the company classifies this right: as a liability or as equity.

To prepare: To prepare journal entries for stock appreciation rights and compensation schedule.

Given Information: Pre established price: $30.

SARs: 30,000.

Period is 4 years.

Fair value: $6 per SAR on December 31, 2014;

    : $9 on December 31, 2015;

    :$15 on December 31, 2016;

    : $6 on December 31, 2017;

    :$18 on December 31, 2018.