Facebook Inc. included the following disclosure note in an annual report: Share-
ID: 2399935 • Letter: F
Question
Facebook Inc. included the following disclosure note in an annual report:
Share-Based Compensation (in part)
. . . . compensation expense related to these grants is based on the grant date fair value of the RSUs and is recognized on a straight-line basis over the applicable service period.
The following table summarizes the activities for our unvested RSUs for the year ended December 31, 2015:
Required:
1. Assuming a four-year vesting period, how much compensation expense did Facebook report in the year ended December 31, 2016, for the restricted stock units granted during the year ended December 31, 2015?
2. Based on the information provided in the disclosure note, prepare the journal entry that summarizes the vesting of RSUs during the year ended December 31, 2015. (Facebook’s common shares have a par amount per share of $0.000006.)
(in thousands) Weighted Average
Grant Date Fair Value Unvested at December 31, 2014 138,055 $ 55.89 Granted 31,507 82.15 Vested (46,434 ) 49.19 Forfeited (6,719 ) 51.19 Unvested at December 31, 2015 116,409 $ 65.95
Explanation / Answer
compensation cost of RSU = FMV per share + No. of shares awarded
FMV (Fair Market Value) = $82.15
No. of Shares Awarded = 31,507
Compensation Cost of RSUs = $82.15 * 31,507 = $2,588,300
Expense Allocation for each year = Total Compensation cost / Vesting Period
Vesting Period = 4yrs
Hence Expense Allocation for each year = $2,588,300/4yrs = $647,075
2. Journal Entry :
Date Accounts and explanation Debit Credit 31-Dec-15 Paid-in-capital -(restricted stock)(46,434,000*49.19) 2279445060 Common stock(46434000*0.000006) 278.604 Paid-In-Capital (excess of par) 2279445339Related Questions
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