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On January 1, 2017, Cable Corporation issues 11,500 stock-appreciation rights to its key executives. The terms of the plan state that the holders of the rights will receive a cash payment equal to the difference between the market price of the
stock on the date of exercise and the pre-established price of $10 per share. There is a three-year vesting period and the rights may be exercised on January 1, 2020. The rights expire on January 1, 2022. The closing market prices follow:
December 31, 2017
$13 per share
December 31, 2018
$16 per share
December 31, 2019
$14 per share
What is the appropriate journal entry when the stock appreciation rights are exercised on January 1, 2020 when the market price is $14 per share?
A. Cash
APIC - SAR
16,100
16,100
B. Compensation Expense
161,000
Obligation under SAR Plan
161,000
C. Obligation under SAR Plan
46,000
Cash
46,000
D. Obligation under SAR Plan
Deferred Compensation
Click to select your answer.
161,000
161,000