Question:
The question is not complete. What you need to determine was not stated. Below is the necessary calculation for your question.
(a) Determine the total compensation cost pertaining to the RSU
(b) Prepare the appropriate journal entry to record compensation expenses on December 31, 2013
Answer:
(a) Total compensation cost = $9,000,000
Step-by-step explanation:
Given data;
Total number of shares = 4,000,000
Fair market value = $22.50
(a) Total compensation cost:
Total compensation cost is calculated using the formula;
Total compensation cost = fair market value * number of shares
= 22.50 * 4,000,000
=$90,000,000
For each year, the compensation cost becomes;
=$90,000,000/3 years
=$30,000,000
(b) See the prepared journal below
Date Particulars Debit Credit
Dec. 31 Compensation expenses $30,000,000
Paid in capital $30,000,000
(restricted stock)
To record compensation expenses