How much should the company recognized as compensation expense for 2021? * In order to boost the sales of ABC & Co., the board of directors approved a share appreciation plan for its Chief Operating Officer. The plan was granted on January 1, 2020 and is exercisable for one year beginning January 1, 2022, provided that the COO is still employed at the date of its exercise. The plan compensates the COO for a cash payment equal to the excess of XYZ's share price over the pre-determined price of P50. Equivalent shares to be granted will be dependent upon the level of annual sales of the company on the date of exercise, as follows: • 100 million to 200 million sales: 10,000 shares • Over 200 million sales: 12,000 shares Actual sales achieved by XYZ, and the share price of the company's shares at the end of each year are below: Share Price Sales | 120 million 250 million Year 2020 2021 P77 P75 O P 900,000 O P 165,000 O P 135,000 O P 300,000
How much should the company recognized as compensation expense for 2021? * In order to boost the sales of ABC & Co., the board of directors approved a share appreciation plan for its Chief Operating Officer. The plan was granted on January 1, 2020 and is exercisable for one year beginning January 1, 2022, provided that the COO is still employed at the date of its exercise. The plan compensates the COO for a cash payment equal to the excess of XYZ's share price over the pre-determined price of P50. Equivalent shares to be granted will be dependent upon the level of annual sales of the company on the date of exercise, as follows: • 100 million to 200 million sales: 10,000 shares • Over 200 million sales: 12,000 shares Actual sales achieved by XYZ, and the share price of the company's shares at the end of each year are below: Share Price Sales | 120 million 250 million Year 2020 2021 P77 P75 O P 900,000 O P 165,000 O P 135,000 O P 300,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter19: Accounting For Post Retirement Benefits
Section: Chapter Questions
Problem 7P
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Transcribed Image Text:How much should the company recognized as compensation expense for 2021? * G
In order to boost the sales of ABC & Co., the board of directors approved a share appreciation
plan for its Chief Operating Officer. The plan was granted on January 1, 2020 and is exercisable
for one year beginning January 1, 2022, provided that the COO is still employed at the date of
its exercise. The plan compensates the COO for a cash payment equal to the excess of XYZ's
share price over the pre-determined price of P50. Equivalent shares to be granted will be
dependent upon the level of annual sales of the company on the date of exercise, as follows:
• 100 million to 200 million sales: 10,000 shares
• Over 200 million sales: 12,000 shares
Actual sales achieved by XYZ, and the share price of the company's shares at the end of each
year are below:
Year
Share Price
P77
Sales
120 million
250 million
2020
2021
P75
O P 900,000
O P 165,000
O P 135,000
O P 300,000
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