Question

Exercise 19-3 Restricted stock units; Friend Connection (LO19-1] Friend Connection 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, 2015: Value Unvested at December 31, 2014 Granted Vested Forfeited Unvested at December 31, 2015 Unvested RSUS Weighted Average Number of Shares Grant Date Fair (in thousands) 114.644 $21.54 54,152 31.91 (48,350) 17.12 (15,667) 25.47 104.779 $ 28.10 Required: 1. Assuming a four-yearvesting period, how much compensation expense did Friend Connection report in the year ended December 31, 2016, for the restricted stock units granted during the year ended December 31, 2015? 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, 2015. (Friend Connection's common shares have a par amount per share of $0.000006. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assuming a four-year vesting period, how much compensation expense did Friend Connection report in the year ended December 31, 2016, for the restricted stock units granted during the year ended December 31, 2015? (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).) Compensation expense million Required 1 Required 2 >

Answer 1

Answer:

Compute the expense reported by incorporation F for the year ended Dcember 31, 2016

total compensation cost of RSUs = (Fair market value per RSU x Number of RSUs awarded to executives)
=$31.91 x 54152000 shares
=$1,727,990,320

Expense allocated each year = (Total compensation cost of RSUs/Vesting period)
=$1727990320/4 years
=$431,997,580

2.) Journalise the restricted share transaction for vested shares on Dcember 31, 2015

Date	Particulars	Debit ($)	Credit ($)
31 December 2015	Paid-in-capital-restricted stock	$827,752,000
	Common stock		$290.1
	Paid-in-capital-Excess of par		$827751709.9
	(To record paid-in-capital of vested shares)

Working Notes:

Compute the paid in capital of stock options amount

Paid-in-capital amount = (Fair market value per share x Number of shares vested)
=$17.12 x 48350000 shares
=$827,752,000

Compute the common stock amount.

Common stock = (par calue per share x Number of shares vested)
=$0.000006 x 48350000 shares
=$290.1

Compute the paid in capital excess of par amount

paid in capital excess of par value = (Paid in capital value - Common stock value)
=$827752000 - $290.1
=$827751709.9