Answer:
1. December 31, 2018
Dr Compensation expense $150 million
Cr Paid-in capital - restricted stock $150 million
2. December 31, 2019
Dr Compensation expense $132 million
Cr Paid-in capital - restricted stock $132 million
3. December 31, 2020
Dr Compensation expense $141 million
Cr Paid-in capital-restricted stock $141 million
Explanation:
1. to 3. Preparation of the appropriate journal entry to record compensation expense on December 31, 2018. December 31, 2019. and December 31, 2020
1. Preparation of the appropriate journal entry to record compensation expense on December 31, 2018
First step is to determine the Total compensation expense
Total compensation =$15 per share x 30 million options granted = $450 million total comp.
1.Preparation of the appropriate journal entry to record compensation expense on December 31, 2018
December 31, 2018
Dr Compensation expense $150 million
($450 million/3 years )
Cr Paid-in capital - restricted stock $150 million
(To record compensation expense)
2. Preparation of the appropriate journal entry to record compensation expense on December 31, 2019
December 31, 2019
Dr Compensation expense $132 million
[($450 million*94%*(2/3))-$150 million]
(100%-6%=94%)
Cr Paid-in capital - restricted stock $132 million
(To record compensation expense)
3. Preparation of the appropriate journal entry to record compensation expense on December 31, 2020
December 31, 2020
Dr Compensation expense $141 million
[($450 million*94%)-$150 million -$132 million]
Cr Paid-in capital-restricted stock $141 million
(To record compensation expense)
