On December 31, 2014, ABC Corporation issued 1,000 shares of restricted stock to

Question

On December 31, 2014, ABC Corporation issued 1,000 shares of restricted stock to its Chief Financial Officer. ABC stock had a fair value (closing market price) of '$10 per share on December 31, 2014. Additional information is as follows: a. The service period related to the restricted stock is 2 years.

b. Vesting occurs if the CFO stays with the company for a two-year    period.

c. The par value of the common stock is $3 per share.

Make the appropriate accounting entry as of the grant date, 12/31/14. Note: use the alternative method as described in your textbook for deferred compensation.

Explanation / Answer

JOURNAL ENTRY AS ON 31-12-2014

1- EMPLOYEE STOCK OPTION PLAN (ESOP) (1000 SHARES * 10) -DR 10,000

TO SHARE CAPITAL (1000 SHARES * 3 ) -CR 3000

TO SECURITY PREMIUM (1000 SHARES *7) -CR 7000

(BEING SHARES ISSUED UNDER STOCK OPTION PLAN)

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