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29 May, 14:15

On January 1, 2018, VKI Corporation awarded restricted stock units (RSUs) representing 15 million of its $1 par common shares to key personnel, 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. On the grant date, the shares had a market price of $6.00 per share. 1. determine the total compensation cost pertaining to the rsus.

2. prepare the appropriate journal entries. (if no entry is required for a transaction/event, select "no journal entry required" in the first account field).

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  1. 29 May, 14:26
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    Total compensation cost = $90 million

    Journal entries are shown below.

    Explanation:

    (1). As per the given data in the question,

    Units = 15 million

    Market Price of per share = $6

    So, total compensation cost = 15 million * $6

    = $90 million

    (2). The journal entry are as follows:

    Total cost = $90 million

    Time period = 3 years

    so, Per year cost = $90 million : 3 = $30 million

    Jan. 1,2018 No journal entry required

    Dec. 31,2018 Compensation Expense A/c Dr. $30 million

    To Restricted Stock, Paid in capital A/c $30 million

    Dec. 31,2019 Compensation Expense A/c Dr. $30 million

    To Restricted Stock, Paid in capital A/c $30 million

    Dec. 31,2020 Compensation Expense A/c Dr. $30 million

    To Restricted Stock, Paid in capital A/c $30 million

    Dec. 31,2020 Restricted Stock, Paid in capital A/c $90 million

    To Common stock $15 million

    To Paid in capital excess of par Common stock $75 million ($90 - $15)
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