The Allowance for Doubtful Accounts, which is reported on the balance sheet as a deduction from accounts receivable, is based on an estimate of bad debts. Estimating bad debts is an application of the Group of answer choices Materiality constraint. Revenue recognition principle. Matching principle. Verifiability characteristic.

On december 31, 2013, coronado company issues 173,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $10. the fair value of the sars is estimated to be $5 per sar on december 31, 2014; $2 on december 31, 2015; $10 on december 31, 2016; and $8 on december 31, 2017. the service period is 4 years, and the exercise period is 7 years. prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan.