them stock appreciation rights.docx - them stock appreciation rights Under these arrangements the employees do not have to buy shares but are rewarded

them stock appreciation rights.docx - them stock...

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them stock appreciation rights. Under these arrangements, the employees do not have to buy shares but are rewarded just as if they owned them. For example, an executive might be entitled to receive a cash payment after four years equal in amount to the increase in the value of 10,000 shares of stock. As an alternative, part or all of the compensation might be paid with shares. In accounting for such stock appreciation right (SAR) agreements, the company should accrue a liability and recognize expense over the term of service. At the end of this service
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Unformatted text preview: period, the liability will be settled with cash or stock or both. The example below shows the calculation of the annual expense under a plan offered by the Sample Company. The agreement is entered into on December 31, 2018, and holds that the employee will receive a cash payment on January 2, 2023, equal in amount to the difference between the present market value of 10,000 shares and their value on December 31, 2022. The employee must work for Sample throughout the four years....
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