(1)
Restricted stock: These are the share-based awards provided as compensation plans provided as incentives to the employees which include right to receive the shares and are restricted to employees’ extended tenure. The two variants of restricted stock are restricted stock awards, and restricted stock units.
Restricted stock units (RSUs): RSU is a right of the employee to receive a certain number of shares of stock of the company as a performance incentive, or usual compensation, or signing bonus.
The compensation cost of RSUs
(2)
To prepare:
(3)
Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.
Debit and credit rules:
- Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in
stockholders’ equity accounts. - Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.
To journalize: The entry for compensation expense on December 31, 2018
(4)
The new compensation cost of RSUs, if 10% of shares are forfeited
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INTERMEDIATE ACCOUNTING W/CONNECT
- Che Exercise 19-22 (Static) EPS; restricted stock (LO19-11] As part of its executive compensation plan, Vertovec Inc. granted 54,000 of its no-par common shares to executives, subject to forfelture if employment is terminated within three years. Vertovec's common shares have a market price of $5 per share on January 1, 2020, the grant date of the restricted stock award, as well as on December 31, 2021. 800,000 shares were outstanding at January 1, 2021. Net income for 2021 was $120,000. Required: Compute Vertovec's basic and diluted earnings per share for the year ended December 31, 2021. (Enter your answers In thousands.) Numerator Denominator Earnings per Share Basic Diluted 排 1 of 3 Next > Prevarrow_forwardExercise 19-25 (Static) EPS; new shares; contingent agreements [LO19-6, 19-12] Anderson Steel Company began 2021 with 600,000 shares of common stock outstanding. On March 31, 2021, 100,000 new shares were sold at a price of $45 per share. The market price has risen steadily since that time to a high of $50 per share at December 31. No other changes in shares occurred during 2021, and no securities are outstanding that can become common stock. However, there are two agreements with officers of the company for future issuance of common stock. Both agreements relate to compensation arrangements reached in 2020. The first agreement grants to the company president a right to 10,000 shares of stock each year the closing market price is at least $48. The agreement begins in 2022 and expirés in 2025. The second agreement grants to the controller a right to 15,000 shares of stock if she is still with the firm at the end of 2029. Net income for 2021 was $2,000,000. Required: Compute Anderson…arrow_forwardExercise 19-11 (Static) Employee share purchase plan; Microsoft [LO19-3] Microsoft Corporation's disclosure notes for the year ending June 30, 2020, included the following regarding its $0.00000625 par common stock: Employee Stock Purchase Plan-We have an ESPP for all eligible employees. Shares of our common stock may be purchased by employees at three-month intervals at 90% of the fair market value on the last trading day of each three-month period. Employees may purchase shares having a value not exceeding 15% of their gross compensation during an offering period. Employees purchased the following shares during the periods presented: (Shares in millions) Year Ended June 30, Shares purchased 2018 13 $76.40 Average price per share. $142.22 As of June 30, 2020, 96 million shares of our common stock were reserved for future issuance through the ESPP. No Required: Prepare the journal entry that summarizes Microsoft's employee share purchases for the year ending June 30, 2020. Note: If no…arrow_forward
- Exercise 19-11 (Static) Employee share purchase plan; Microsoft [LO19-3] Microsoft Corporation's disclosure notes for the year ending June 30, 2020, included the following regarding its $0.00000625 par common stock Employee Stock Purchase Plan-We have an ESPP for all eligible employees. Shares of our common stock may be purchased by employees at three-month intervals at 90% of the fair market value on the last trading day of each three-month period. Employees may purchase shares having a value not exceeding 15% of their gross compensation during an offering period. Employees purchased the following shares during the periods presented: (Shares in millions) Year Ended June 30, Shares purchased Average price per share. 2020 9 2019 11 $142.22 2018 13 $104.85 $76.40 As of June 30, 2020, 96 million shares of our common stock were reserved for future issuance through the ESPP Required: Prepare the journal entry that summarizes Microsoft's employee share purchases for the year ending June 30,…arrow_forwardExercise 18-11 (Algo) Retirement of shares [LO18-5] In 2024, Borland Semiconductors entered into the transactions described below. In 2021, Borland had issued 170 million shares of its $1 par common stock at $29 per share. Required: Assuming that Borland retires shares it reacquires, record the appropriate journal entry for each of the following transactions: Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). 1. On January 2, 2024, Borland reacquired 13 million shares at $28.00 per share. 2. On March 3, 2024, Borland reacquired 13 million shares at $31 per share. 3. On August 13, 2024, Borland sold 1 million shares at $37 per share. 4. On December 15, 2024, Borland sold 2 million shares at $31 per share. View transaction listarrow_forwardItem 1 Item Details When the financial controller was providing details on the employee share schemes at Knappa, it was identified that share options granted to the production staff on 1 July 2022 were not accounted for in the year ended 30 June 2023 financial statements. On 1 July 2022, 1,000 share options were granted to each of Knappa's 30 production employees, on the condition that the employees remain with the company for the next two years and that the share price increases from $26.50 per share on 1 July 2022 to $35 per share on 30 June 2024. If the share price target at 30 June 2024 is achieved, the share options can be exercised at any time over the subsequent 12 months (ie up to 30 June 2025). The fair value of each share option at the grant date was $5.60. You have obtained the following information: Year Number of employees who departed during the year No of employees expected to depart in future years 30.06.2023¹ 30.06.2024 1. This information was obtained at 30 June 2023;…arrow_forward
- Case 2On January 1, 2018, Olaf company granted share options to key employees to supplement their compensation. The options given were 200,000 ordinary shares of P10 par value at an option price of P15 per share. The market price of this share on January 1, 2018 was P20. The fair value of each share option on January 1, 2018 is P8. The options were exercisable beginning January 1, 2018 and expire on December 31, 2020. On December 31, 2018, all share options were exercised. What is the entry to record the compensation expense in 2018 and the entry to record upon exercise?arrow_forwardItem3 Item 3 Feldmann Corporation permits any of its employees to buy shares directly from the company through payroll deduction. There are no brokeragefees and shares can be purchased at a 10% discount. During 2024, employees purchased 26 million shares; during this same period, the shares had a marketprice of S20 per share at the end of the year. Feldmann's 2024 pretax earnings will be reduced by: Multiple Choice S52 million. S468 million. S520 million. SO .arrow_forwardProblem 25-19 (IFRS) Years. The agreement reguired the entity to pay cash based Precember 31, 2021, Jester Company modified the agreemént and canceled the 50.000 share appreciation rights. Instead, Jester Company granted 50,000 share options provided Chat the employees remain with the entity for the next two years. On this date, the fair value of the share option is P7o. 2020 and P130 on December 31, 2021. BWo-year period. The option price is P110 and the par value is P100. The options are exercisable at the end of the remaining On December 31, 2023, only 40,000 share options were exercised and 10,000 options were forfeited. 1. What is the compensation expense for 2020? а. 250,000 b. 500,000 400,000 d. 300,000 с. 2. What is the compensation expense for 2021? 1,000,000 b. 1,500,000 750,000 500,000 a. с. d. 3. What is the compensation expense for 2022? a. 2,625,000 b. 1,750,000 875,000 d. C. 500,000 What is the compensation expense for 2023? 2,800,000 b. 2,400,000 900,000 d. a. с.…arrow_forward
- Help Save & E Che Problem 19-1 (Algo) Stock options; forfeiture; exercise [LO19-2] On October 15, 2020, the board of directors of Ensor Materials Corporation approved a stock option plan for key executives. On January 1, 2021, 30 million stock options were granted, exercisable for 30 million shares of Ensor's $1 par common stock. The options are exercisable between January 1, 2024, and December 31, 2026, at 80% of the quoted market price on January 1, 2021, which was $15. The fair value of the 30 million options, estimated by an appropriate option pricing model, is $5 per option. Ensor chooses the option to recognize forfeitures only when they occur. Ten percent (3 million) of the options were forfeited when an executive resigned in 2022. All other options were exercised on July 12, 2025, when the stock's price jumped unexpectedly to $30 per share. Required: 1. When is Ensor's stock option measurement date? 2. Determine the compensation expense for the stock option plan in 2021.…arrow_forwardQuestion 7 During 2020, Crane Company purchased 91000 shares of Novak Corporation common stock for $1370000 as an equity investment. The fair value of these shares was $1299000 at December 31, 2020. Crane sold all of the Novak stock for $16 per share on December 3, 2021, incurring $67000 in brokerage commissions. Crane Company should report a realized gain on the sale of stock in 2021 of $86000. $19000. $157000. $90000.arrow_forwardQuestion 6 On June 1, 2020, Ping Corp. purchased 10,000 of Pong’s 50,000 outstanding shares at a price of P6.00 per share. Pong had earnings of P3,000 per month during 2020 and paid dividends of P10,000 on March 1, 2020 and P12,500 on December 1, 2020. The fair value of Pong’s shares was P6.50 per share on December 31, 2020. Which statement is correct? Group of answer choices Assuming that the investment is FVTOCI, the total effect on Ping’s profit or loss for the year ended December 31, 2020 is P7,500. Assuming that the investment is an associate, the total effect on Ping’s profit or loss for the year ended December 31, 2020 is P3,600. After all closing entries for 2020 are completed, the effect of the increase in fair value on total shareholders' equity would be the same amount under the FVTOCI and FVTPL approaches. Assuming that the investment is FVTPL, the total effect on Ping’s profit or loss for the year ended December 31, 2020 is P2,500.arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning