Source - Analyst Notes
On January 1, 2003, Unified Systems granted its division managers 100,000 stock appreciation rights. The SARs are exercisable no sooner than December 31, 2006 and expire on January 1, 2010. Unpon exercise, the division managers can elect to receive cash or common stock equal to the excess of the stock’s market price on the exercise date over the market price on the grant date. The market price of Unified’s stock was as follows:
January 1, 2003: $30.
December 31, 2003: $34.
December 31, 2004: $36.
As a result of the stock appreciation rights, what liability should Baddour recognize in its 2004 balance sheet?
A. $0.
B. $300,000.
C. $800,000.作者: SFoyil 时间: 2013-4-10 23:09
C! No idea why : (
Explanation is next
Explanation: Liability on December 31, 2004 = ($18 - 15) x 400,000 x 2/3.
If anyone can clarify this, cause I am totally lost. My idea was
(36-30) * 100,000 / 2 = 300,000
Where numbers like 18 and 15 come from?…
