On January 1, 2018, VKI Corporation awarded restricted stock units (RSUs) repres

Question

On January 1, 2018, VKI Corporation awarded restricted stock units (RSUs) representing 12 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within three years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. On the grant date, the shares had a market price of $2.50 per share. Required: 1. Determine the total compensation cost pertaining to the RSUs. 2. to 6. Prepare the appropriate journal entries.

Explanation / Answer

1 Total compensation cost = 12*2.5 = $30 million 2 No entry is made on the grant date 3-5 Compensation expense 10           Paid-in capital—restricted stock 10 6 Paid-in capital—restricted stock 30           Common stock 12           Paid-in capital—excess of par 18

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