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Chapter 13
Share-based Payments (Part 2)

NAME: Date:
Professor: Section: Score:

QUIZ:
Use the following information for the next five questions:
Lightning Company granted 5,000 share appreciation rights (SARs) to employees for services on
January 1, 2008. Employees earn a cash payment equal to the appreciation in the share price between
January 1, 2008 and December 31, 2010. The share appreciation rights vest on December 31, 2010.
Date Fair value of each SAR No. of SARs expected to vest
1-Jan-08 10 4,500
31-Dec-08 12 4,500
31-Dec-09 21 4,750
31-Dec-10 18 4,850

1. What is the journal entry on January 1, 2008?

2. What is the journal entry on December 31, 2008?

3. What is the journal entry on December 31, 2009?

4. What is the journal entry on December 31, 2010?

5. What amount of ‘Salaries payable’ is recognized as of December 31, 2009?

“Therefore encourage one another and build each other up, just as in fact you are doing.” – (1 Thessalonians 5:11)

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ANSWERS:
1. Answer: None.

2. Answer:
Salaries expense (4,500 x 12 x 1/3) 18,000
Accrued salaries payable 18,000

3. Answer:
Salaries expense (4,750 x 21 x 2/3) – 18K 48,500
Accrued salaries payable 48,500

4. Answer:
Salaries expense 20,800
(4,850 x 18 x 3/3) – 18K – 48.5K
Accrued salaries payable 20,800

5. Answer: (4,750 x ₱21 x 2/3) = 66,500