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: Unvested at December 31, 2016 Granted Vested Forfeited Unvested at December 31, 2017 Number of Shares (in thousands) 116, 844 55,252 (49,450) (16,767) 105,879 Weighted Average Grant Date Fair Value $ 21.76 34.46 17.34 25.69 $ 29.20 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

Part 1

Compensation expense

$476

million

Part 2

No.	Date	General journal	Debit	Credit
1	December 31, 2017	Paid-in capital - restricted stock (49450000*17.34)	857463000
		Common stock (49450000*0.000006)		297
		Paid-in capital - excess of par		857462703

Total compensation is expensed over the four-year vesting period = 55252000*34.46 = 1904 million

Each year compensation expense = 1904/4 = $476 million