Question

On January 1, 2020, Green Corporation granted 28,000 shares of restricted $13 par value common stock to its CFO. The market price of the common stock on that date was $21 per share and the CFO must stay in the employ of the company through December 31, 2021. What amount of compensation expense for these shares should be recorded by Green on December 31, 2020

Answer 1

The correct answer is $588000

Explanation:

As the restricted shares provided to the employees are recorded at the market value. The restricted shares have a vesting period which means the employee cannot sell the stock right away, for example the CFO might have to wait for 2 years before being able to sell the stock. Generally, the company will debit deferred revenue expense with the amount of $588000 currently and write off over the vesting period.

Amount of compensation expense that needs ot be recorded by Green on the december 31,2020 is $588000.

( 28000 shares multiply with $21 per share).