Question

As part of its stock-based compensation package, on January 1, 2018, Weldon Well Supplies granted restricted stock units (RSUs) representing 100,000 $1 par common shares. At exercise, holders of the RSUs are entitled to receive cash or stock equal in value to the market price of those shares at exercise. The RSUs cannot be exercised until the end of 2021 (vesting date) and expire at the end of 2023. The $1 par common shares have a market price of $6.9 per share on the grant date. The fair value at December 31, 2018, 2019, 2020, 2021, and 2022, is $17.8, $13.8, $17.8, $11.8, and $13.8, respectively. All recipients are expected to remain employed through the vesting date. The RSUs are exercised on June 6, 2023, when the share price is $14.8, and executives choose to receive cash. Required: 1. to 4. Prepare the appropriate journal entries.

Answer 1

event	date	General journal	Debit	Credit
1	December 31, 2018	Compensation Expense (100*17.8)/4	445
		Liability-SAR plan		445
2	December 31, 2019	Compensation Expense (100*13.8)*2/4	690
		Liability-SAR plan		690
3	December 31, 2020	Compensation Expense ((100*17.8)*3/4)-445-690)	200
		Liability-SAR plan		200
4	December 31, 2021	Liability-SAR plan ((100*11.8)-445-690-200)	155
		Compensation Expense		155