Question

On January 2, 2019, Dekker Company grants each of its 15 new employees 200 restricted share units. Each of the time-vested restricted share units entitles the employee to receive one share of Dekker common stock if they remain an employee of the company for 2 years. On January 2, 2019, shares of Dekker’s $2 par value common are trading at $52 per share. Dekker estimates that 12 of the 15 employees will complete 2 years of service with the company. At the end of 2020, Dekker reported that four employees left the company before completing the service period.

Required:

1.	Prepare a schedule of Dekker’s computations for its restricted share unit plan for 2019 and 2020.
2.	Prepare all journal entries for the restricted share unit plan for 2019 and 2020.

Answer 1

Solution:

Date	Particulars	Debit	Credit
31-Dec-19	Compensation Expense (124,800 * 1/2)	62,400
	Common stock		62,400
31-Dec-19	Compensation Expense (114,400 - 62,400)	52,000
	Paid-in capital from Restricted Share Units		52,000
31-Dec-19	Paid-in Captial from Restricted Share Units (200 × 11 × $52)	114,400
	Common Stock (2,200 × $2 par value)		4,400
	Additional Paid-in Captial on Common Stock		110,000

Analysis	2019	2020
Estimated (actual) total compensation cost	124,800	114,400
Fraction of service period expired	1/2	2/2
Estimated Compensation expense to date	62,400	114,400
Previously Recognized Compensation Expense	0	-62,400
Current-Period compensation expense	62,400	52,000