SHARE APPRECIATION RIGHT.

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A.

2021 (200 employees)

Accrued salaries payable

Salaries

Share appreciation rights not yet exercised 60,000

Multiply: FV 148
Accrued liability- December 31, 2020 8,800,000

Salaries
Cash

Share appreciation rights exercised 40,000

(200 employees x 200 shares)
Multiply: Intrinsic value 145
Total: 5,800,000

2022 (300 employees)

Accrued salaries payable

Salaries
Cash

Share appreciation rights exercised 60,000

(300 employees x 200 shares)
Multiply: Intrinsic value 148
Total: 8,800,000
Accrued liability- December 31, 2021 (8,800,000)

Net compensation expense for 2022 0

B.

2018

Salaries
Accrued salaries payable

MV on Dec. 31, 2018 360

Predetermined price 300
Excess 60
Multiply: No. of shares (200 x 500 employees) 100,000
Total compensation 6,000,000

Compensation for 2018 (6,000,000 x

C.
1. FV of share alternative (25,000 x P48) 1,200,000
FV of liability on grant date (20,000 x P51) 1,020,000
FV of Equity Component 180,000
2. 2018
12-31 Salaries (180,000x 3) 60,000
Share options outs. 60,000
12-31 Salaries 360,000
Accrued salaries payable 360,000

Share basis 20,000

Multiply: FV 54
Total 1,080,000

Accrued liability 2018 (1,080,000x1/3) 360,000

2019
12-31 Salaries 60,000
Share options outs. 60,000
12-31 Salaries 520,000
Accrued salaries payable 520,000

Share basis 20,000

Multiply: FV 66
Total 1,320,000

Accrued liability 2019 (1,320,000x2/3) 880,000

Accrued liability 2018 (360,000)

Compensation expense for 2019 520,000

2020
12-31 Salaries 60,000
Share options outs. 60,000
12-31 Salaries 420,000
Accrued salaries payable 420,000

Share basis 20,000

Multiply: FV 65
Accrued liability 2020 1,300,000
Accrued liability 2019 (880,000)

Compensation expense 420,000

3. 2020 (Cash alt.)

12-31 Accrued salaries payable 1,300,000
Share salaries payable 180,000
Cash 1,300,000
Share premium 180,000
4. 2020 (Share alt.)
12-31 Accrued salaries payable 1,300,000
Share options outstanding 180,000
Cash (25,000 x P30) 750,000
Share premium 730,000