Opportunities, Inc. offers a restricted stock award plan to its vice presidents.

Question

Opportunities, Inc. offers a restricted stock award plan to its vice presidents. On January 1, 2013, the corporation granted 10 million of its $5 par common shares, subject to forfeiture if employment is terminated within two years. The common shares have a market value of $10 per share on the date the award is granted. 1. Assume that no shares are forfeited. Determine the total compensation cost pertaining to the restricted shares. 2. Prepare the appropriate journal entries related to the restricted stock through December 31, 2014

Explanation / Answer

1)      10,000,000 X10= 10O,000,000

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DEC 31 2013

RETAINED EARNING 50 ,000,000

PAID IN CAPITAL –RESTRICTED STOCK= 25,000, 000

COMMON STOCK= 25,000, 000

=================

DEC 31 2014

RETAINED EARNING 50 ,000,000

PAID IN CAPITAL –RESTRICTED STOCK= 25,000, 000

COMMON STOCK= 25,000, 000

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