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.
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.

Answer 1

Answer and Explanation:

1. The computation of the total compensation cost is

= 30 million shares × $14

= $420 million

2. No journal entry is required

3, The journal entry is

Compensation Expense ($420 ÷ 4)  $105    

         To Paid in capital-Restricted Stock  $105

(Being the compensation expense is recorded)

In this way it should be done and the same is relevant