Acc423 Intermediate Accounting: BE16-16 Ferraro, Inc. established a stock appreciation rights (SAR)

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Acc423 Intermediate Accounting

BE16-16
Ferraro, Inc. established a stock appreciation rights (SAR) program on January 1, 2012, which entitles executives to receive cash at the date of exercise for the difference between the market price of the stock and the pre-established price of $20 on 5,000 SARs. The required service period is 2 years. The fair value of the SAR’s are determined to be $4 on December 31, 2012, and $9 on December 31, 2013.
Compute Perkins’ compensation expense for 2012 and 2013.
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