Question

Exercise 16-29 On December 31, 2013, Marigold Company issues 153,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre- established price of $9. The fair value of the SARS is estimated to be $5 per SAR on December 31, 2014; $2 on December 31, 2015; $9 on December 31, 2016; and $8 on December 31, 2017. The service period is 4 years, and the exercise period is 7 years. x Your answer is incorrect. Try again. Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan. (If the compensation decreases from prior year enter the amount as a negative number in the table e.g. -25,000 or (25,000).) Date Fair Value Cumulative Compensation Recognizable Percentage Accrued Compensation Accrued to Date Expense 2014 Expense 2015 Expense 2016 Expense 2017 12/31/14 12/31/15 III 12/31/16 billion 12/31/17 SHOW LIST OF ACCOUNTS

Answer 1

Answer Preparation of schedule that shows the amount of compensation expense allocable to each year affected by the stock- appreciation rights plan. Cumulative Percentage Compensation Expenses Expenses Expenses Expenses Date Fair Value Compensation Accrued Accrued to Date 2014 | 2015 2016 2017 Recognizable Dec, 31 2014 $765,000 25% $191,250 $191,250 ($38,250) ($38,250) Dec, 31 2015 $306,000 50% $153,000 $5 $879,750 $879,750 Dec, 31 2016 $1,377,000 75% $1,032,750 $191,250 $191,250 Dec, 31 2017 $1,224,000 100% $1,224,000

Explanations Dec, 31 2014 Cumulative Compensation Recognizable = $5 x 153,000 = $765,000 Percentage Accrued = 1/4 = 25% Compensation Expense = $765,000 x 25% = $191,250 Expenses Recognized = $191,250 Dec, 31 2015 Cumulative Compensation Recognizable = $2 x 153,000 = $306,000 Percentage Accrued = 2/4 = 50% Compensation Expense = $306,000 x 50% = $153,000 Expenses Recognized = $153,000 - $191,250 (Expenses Recognized Earlier) = ($38,250) Dec, 31 2016 Cumulative Compensation Recognizable = $9 x 153,000 = $1,377,000 Percentage Accrued = 3/4 = 75% Compensation Expense = $1,377,000 x 75% = $1,032,750 Expenses Recognized = $1,032,750 - $191,250 - (38,250) (Expenses Recognized Earlier) = $879,750 Dec, 31 2017 Cumulative Compensation Recognizable = $8 x 153,000 = $1,224,000 Percentage Accrued = 4/4 = 100% Compensation Expense = $1,224,000 x 100% = $1,224,000 Expenses Recognized = $1,224,000 - $191,250 - (38,250) - $879,750 (Expenses Recognized Earlier) = $191,250