The Peach Corporation provides restricted stock to certain executives. Under the

Question

The Peach Corporation provides restricted stock to certain executives. Under the plan, the company granted 30 million shares on January 1, 2013, which vest in four years. The fair value of the shares is $14. No forfeitures are anticipated. Ignore taxes. You must show your work for credit. (2 points).

Required:

1. Determine the total compensation cost pertaining to the restricted stock

2. Prepare the appropriate journal entry (if any) to record the award of restricted stock on January 1, 20133.

3. Prepare the appropriate journal entry (if any) to record compensation expense on December 31, 2013.

Explanation / Answer

Ans 1 Total compenation expense 30 million*$14 420 Million Ans 2 No entry is required Ams 3 31 Dec 2013 Dr Cr Compensation Expense (420/4) 105 Pais in capital-Restricted Stock 105 (the vesting period is 4 years so expenses divided among four years and credited to paid in capital-restricted stock)

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