Question

BigTech, Inc. included the following disclosure note in an annual report:

Share-Based Compensation (in part)

. . . compensation expense related to these grants is based on the grant date fair value of the RSUs and is recognized on a straight-line basis over the applicable service period.

The following table summarizes the activities for our unvested RSUs for the year ended December 31, 2017:

	Number of Shares (in thousands)						Weighted Average Grant Date Fair Value
Unvested at December 31, 2016			114,444					$	21.52
Granted			54,057						31.67
Vested			(48,250	)					17.10
Forfeited			(15,567	)					25.45
Unvested at December 31, 2017			104,684					$	28.00

Required:

1. Assuming a four-year vesting period, how much compensation expense did BigTech report in the year ended December 31, 2018, for the restricted stock units granted during the year ended December 31, 2017?
2. Based on the information provided in the disclosure note, prepare the journal entry that summarizes the vesting of RSUs during the year ended December 31, 2017. (BigTech’s common shares have a par amount per share of $0.000006.)

Answer 1

Required 1 :

Compensation Expense = $ 427,996,298

Explanation is given below :

Total compensation expenses = $ 31.67 * 54,057,000 shares

Total compensation expenses = $ 1711,985,190

This above Total compensation expenses is over the 4 year vesting

i.e $ 1711,985,190 / 4 years = $ 427,996,298 (rounded )

Hence, the expenses for RSU's granted is the appropriate portion of $ 427,996,298

depends on date the RSU's were issued.

Date	General journal	Debit	Credit
Dec 31,2017	Paid in capital - Restricted stock($17.10*48,250,000 shares)	$ 825,075,000
	Common stock ($0.000006*48,250,000 shares )		$ 289.50
	Paid in capital-in excess of par ($825,075,000 -$ 289.50)		$ 825,074,710.50
	(To record summarizes the vesting of RSU'S during the year December 31,2017