A company issued its CEO 100,000 shares of restricted stock that are restricted

Question

A company issued its CEO 100,000 shares of restricted stock that are restricted for two years. The current share price is $10. Based on the information provided, which of the following statements is true?

A. An unearned compensation liability in the amount of $1 million is created at the grant date

B. An unearned compensation asset in the amount of $1 million is created at the grant date

C. Stockholders' equity increases by $1 million at the grant date

D. An unearned compensation contra equity account in the amount of $500,000 is recognized at the grant date

E. Stockholders' equity is unchanged at the grant date

Explanation / Answer

Solution:

The true statement is "Stockholders' equity increases by $1 million at the grant date"

Hence option C is correct.

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