Allied Paper Products, Inc. offers a restricted stock award plan to its vice pre

Question

Allied Paper Products, Inc. offers a restricted stock award plan to its vice presidents. On January 1, 2016, the company granted 35 million of its $1 par common shares, subject to forfeiture if employment is terminated within two years. The common shares have a market price of $8 per share on the grant date.

Determine the total compensation cost pertaining to the restricted shares. (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).)

       

Prepare the appropriate journal entries related to the restricted stock through December 31, 2017. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

     

Allied Paper Products, Inc. offers a restricted stock award plan to its vice presidents. On January 1, 2016, the company granted 35 million of its $1 par common shares, subject to forfeiture if employment is terminated within two years. The common shares have a market price of $8 per share on the grant date.

Explanation / Answer

1.

Total compensation cost=35 million ×$8 (fair value)

=$280 million

2.

Date Account titles Debit(million) Credit(million) Dec 31,2016 Compensation expense (280/2) $140 Paid in capital-restricted stock $140 Dec 31,2017 Compensation expense $140 Paid in capital-restricted stock $140 Paid in capital-restricted stock $280 Common stock (35million×$1par) $35 Paid in capital-excess of par(280-35) $245

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