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What amount should be recognized as gain on reversal of share appreciation rights in 2021? *see attached a. 1,600,000 b. 1,200,000 c. 400,000 d. 0

What amount should be recognized as gain on reversal of share appreciation rights in 2021? *see attached a. 1,600,000 b. 1,200,000 c. 400,000 d. 0

SWFT Essntl Tax Individ/Bus Entities 2020
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter17: Business Tax Credits And The Alternative Minimum Tax
Section: Chapter Questions
Problem 5CE
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What amount should be recognized as gain on reversal of share appreciation rights in 2021?
*see attached


a. 1,600,000
b. 1,200,000
c. 400,000
d. 0

On Jan. 1, 2020, Rukawa Company granted the chief executive officer (CEO) 80,000 share appreciation rights for past services. The rights are exercisable immediately and expire on Dec. 31, 2021. On exercise, the CEO is entitled to receive cash for the excess of the share market price on exercise date over the market price on grant date. The CEO did not exercise any of the rights in 2020. The CEO exercised the rights on Dec. 31, 2021 when the market price was Php115. The market price of the share was Php100 on Jan. 1, 2020 and Php120 on Dec. 31, 2020.
Transcribed Image Text:On Jan. 1, 2020, Rukawa Company granted the chief executive officer (CEO) 80,000 share appreciation rights for past services. The rights are exercisable immediately and expire on Dec. 31, 2021. On exercise, the CEO is entitled to receive cash for the excess of the share market price on exercise date over the market price on grant date. The CEO did not exercise any of the rights in 2020. The CEO exercised the rights on Dec. 31, 2021 when the market price was Php115. The market price of the share was Php100 on Jan. 1, 2020 and Php120 on Dec. 31, 2020.
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