Accounting 301 Quiz- Dilutive Securities and EPS 10 points Name 1. Futuristic Pr

Question

Accounting 301 Quiz- Dilutive Securities and EPS 10 points Name 1. Futuristic Products Company established a stock appreciation rights (SARs) program which entitles esident Jill Castleberry to receive cash for the difference between the market price of the its new pr stock and a preestablished price 2014 and requires the president remain in her position during 2015, 2016 and 2017. As of January 1, 2018, the SARs are exercisable for 3 years before 2, 2020. The company has adopted the fair value method of expensing its SARs to employees and it of $30 a share on 20,000 shares. The date of grant is December 31, they lapse. Jill exercises the SARs on January has run the Black-Scholes pricing model for them. The company controller has also updated the pricing model through the date that the SARs were exercised. The "total fair value (i.e., the preestablished price has not the updated runs) are shown below. been deducted yet) for all SARs per the original run of the model (and Date Estimated Total Fair Value of SARs /per share 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 21/31/2019 1/2/2020 $30 36 39 45 36 48 48 A. Prepare a Schmensation Expense pertaining to the SARs for the period 2015- 2020. B. Prepare the journal entry for compensation expense in 2014, 2018, and 2019

Explanation / Answer

Futuristic Product Company Date Estimated Fair Value of SARs/per share predetermined price Difference(X) No. of shares (Y) Value of SARs (A)=X*Y Compensation already recognised till Previous year(B) from column D Compensation Expenses to be recognised C=A-B Cumulative Compensation expenses to be recognised (D) 12/31/2014 30 30 0 20000 0 0 0 0 12/31/2015 36 30 6 20000 120000 0 120000 120000 12/31/2016 39 30 9 20000 180000 120000 60000 180000 12/31/2017 45 30 15 20000 300000 180000 120000 300000 12/31/2018 36 30 6 20000 120000 300000 0 300000 12/31/2019 48 30 18 20000 360000 300000 60000 360000 01/02/2020 48 30 18 20000 360000 360000 0 360000 01/02/2020 Cash to be given to President Jill Castleberry    = 360000 Date/S. N. Accounts Title & Explanation Debit Credit Amount in $ Amount in $ 2014 No Jounal entry required 2018 No Jounal entry required 2019 Employee's Compensation Expense 60000 Provision for employee's compensation 60000 To record the compensation expensation towards SARs. As per Policy of chegg, we can not answer more than 1 questions I apologize for the same Thank You

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