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Xander Company issued 60,000 SARs entitling the holder to receive the difference between the market...

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Accounting

Xander Company issued 60,000 SARs entitling the holder to receive the difference between the market price at the time of exercise and $25. The fair value of each SAR on the date of grant was $7. The vesting period is 3 years. The SARs are exercised in the 5th year when the market price is $72. Which of the following is true?

a. The liability at the time of exercise is 60,000 x (72 25).

b. The company pays upon exercise 60,000 x 25.

c. The company receives at the time of exercise 60,000 x 72.

d. The liability at the end of the first year is 60,000 x 7.

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