Answer:
1.$45 million
2. No journal entry required
3. Dr Compensation expense $15 million
Cr paid in capital - restricted stock $15 million
4. Dr Compensation expense $15 million
Cr Paid in capital - restricted stock $15 million
5. Dr Compensation expense $15 million
Cr Paid in capital - restricted stock $15 million
6. Dr Paid in capital - restricted stock $45 million
Cr Common stock $5 million
Cr Paid in capital - excess of par $40 million
Explanation:
1. Calculation to Determine the total compensation cost pertaining to the RSUs.
Total compensation cost pertaining to the RSUs
=$9.00 fair value per share × 5 million shares represented by RSUs granted
Total compensation cost pertaining to the RSUs=$45 million
Therefore the total compensation cost pertaining to the RSUs will be $45 million
2. Preparation of the appropriate journal entry to record the award of RSL's on January 1, 2021.
No Journal entry required
3. Preparation of the appropriate journal entry to record compensation expense on December 31, 2021.
Dr Compensation expense $15 million
($45 million/3 years )
Cr Paid in capital - restricted stock $15 million
4. Preparation of the appropriate journal entry to record compensation expense on December 31, 2022.
Dr Compensation expense $15 million
Cr Paid in capital - restricted stock $15 million
($45 million/3 years )
5. Preparation of the appropriate journal entry to record compensation expense on December 31, 2023.
Dr Compensation expense $15 million
Cr Paid in capital - restricted stock $15 million
($45 million/3 years )
6. Preparation of the appropriate journal entry to record the lifting of restrictions on the RSUs and issuing shares at December 31, 2023.
Dr Paid in capital - restricted stock $45 million
Cr Common stock $5 million
Cr Paid in capital - excess of par $40 million
($45 million-$5 million)
