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ST granted 1,000 share appreciation rights (SARs) to its 100 employees on 1 December 20X7. To be eligible, employees must remain employed for 3 years from the grant date.In the year to 30 November 20X8, 10 staff left and a further 20 were expected to leave over the following two years. The fair value of each SAR was $12 at 1 December 20X7 and $15 at 30 November 20X8.
What is the accounting entry to record this transaction for the year to 30 November 20X8?
Suggested Answer: D
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33 comments · newest first
PR
Precious
11 months ago
So, is it really $280,000? That seems low.
LO
Lorean
11 months ago
Definitely not B, that doesn't make sense!
WH
Whitley
12 months ago
Wait, how do we account for the staff leaving?
MA
Matilda
12 months ago
I think the correct entry is A.
MA
Mabel
1 year ago
The fair value of SARs increased from $12 to $15.
ME
Merilyn
1 year ago
I think the total expense should be based on the number of employees remaining, but I can't recall if we should use the fair value at the grant date or the current fair value.
GL
Glory
1 year ago
I feel like the answer should involve the fair value at the grant date, but I'm confused about whether to credit liabilities or equity.
RO
Royce
1 year ago
This question reminds me of a similar practice one we did on share-based payments. I think we need to consider the vesting period and the number of employees still eligible.
AN
Antonette
1 year ago
I remember we discussed how to calculate the total expense based on the fair value of the SARs, but I'm not sure about the impact of the employees leaving.
KA
Katina
1 year ago
I'm a bit confused by the terminology here. I'll need to review my notes on MVPN before I can confidently answer this.
GE
Georgiana
1 year ago
I'm feeling pretty confident about this. Based on the information provided, it seems clear that the issue is a delivery gap where the staff are failing to provide the "quick, in-and-out service" that was promised. I'll select D.
LA
Lasandra
1 year ago
This seems like a tricky question. I'll need to think carefully about the best approach to ensure IT governance is adopted consistently across the enterprise.
LI
Lina
1 year ago
I'm a bit confused by the wording of the question. What exactly do they mean by "supporting geographically disparate users"? I'll need to read it over a few times to make sure I understand the context.
ID
Idella
1 year ago
Ah, the joys of share appreciation rights. It's like a treasure hunt, but instead of finding gold, you're trying to find the right accounting entry. Good thing I have my trusty calculator and a sense of humor!
DI
Dierdre
1 year ago
This is just like the time I had to explain compound interest to my grandma. Accounting can be a real brain-teaser, but at least it's not as bad as trying to figure out how to split the dinner bill with friends!
YA
Yasuko
1 year ago
C) Dr Staff costs $280,000, Cr Non-current liabilities $280,000
TA
Tamar
1 year ago
B) Dr Staff costs $350,000, Cr Equity $350,000
RO
Ronnie
1 year ago
A) Dr Staff costs $350,000, Cr Non-current liabilities $350,000
CA
Candida
1 year ago
Alright, time to channel my inner accountant! I'm going with option D, since it seems to match the information provided in the question.
GR
Gracia
1 year ago
Hmm, I'm not sure. Maybe I should have paid more attention in my accounting classes. This question is making my head spin!
ST
Stevie
1 year ago
Wait, why are we recording a liability? Isn't this a share appreciation rights plan? I think option B is the right answer, where the expense is recorded in equity.
AU
Audry
1 year ago
I think option C is the correct answer. The question mentions that the fair value of each SAR increased from $12 to $15, so the total liability should be $280,000 (20 employees x $15 per SAR).
AV
Avery
1 year ago
Option C: Dr Staff costs $280,000, Cr Non-current liabilities $280,000
FE
Felice
1 year ago
So, the total liability should be $280,000 for the 20 employees.
AR
Aretha
1 year ago
I agree, the fair value of each SAR increased to $15.
MI
Michel
1 year ago
I think option C is the correct answer.
NI
Nickolas
2 years ago
Why do you think it's C?
DU
Dulce
2 years ago
I disagree, I believe the answer is C.
NI
Nickolas
2 years ago
I think the answer is A.
TA
Tamar
2 years ago
Because the total cost of SARs granted should be recognized as staff costs, not as a liability.
SH
Shayne
2 years ago
Why do you think it's C?
TA
Tamar
2 years ago
I disagree, I believe the correct answer is C.
SH
Shayne
2 years ago
I think the answer is A.