Question

On January 1, 2018, Marguerite DeVille Co. granted restricted stock units (RSUs) representing 300,000 of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $12 per share on the grant date. At the date of grant, DeVille anticipated that 6% of the recipients would leave the firm prior to vesting. In 2019, 2% of the options are forfeited due to executive turnover. DeVille chooses the option not to estimate forfeitures. What amount should DeVille record as compensation expense for the year ended December 31, 2019?

A) 72,000

B) 94,000

C) 1,152,000

D) 1,200,000

The following information pertains to Torque Corp.’s outstanding stock for 2018:

Common stock, $1 par value
Shares outstanding, 1/1/2018	60,000
2-for-1 stock split, 4/1/2018
Shares issued, 7/1/2018	30,000
Preferred stock, $10 par value, 6% cumulative
Shares outstanding, 1/1/2018	12,000

How many shares should Torque use to calculate 2018 basic earnings per share?

A) 120,000

B) 135,000

C) 150,000

D) 162,000

Answer 1

ans 1
Total compensation (300000*12) for 3 years	3600000
per year 3600000/3	1200000
1200000- (forefited (3600000-1200000)*2%)	1152000
Option C $1152000
ans 2
Shares should be used is Option B 135000 shares
60000*2*12/12	120000
30000*6/12 (7/1-12/31)	15000
	135000
If any doubt please comment