The Peach Corporation provides restricted stock to certain executives. Under the

Question

The Peach Corporation provides restricted stock to certain executives. Under the plan, the company granted 30 million shares on January 1, 2016, which vest in four years. The fair value of the shares is $13.9. No forfeitures are anticipated. Ignore taxes.

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

                 

Prepare the appropriate journal entry (if any). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).)

Required:

Explanation / Answer

1. Computation of the total compensation cost pertaining to the restricted stock:

= 30 million shares x $13.9 = $417 million

2. "No journal entry required" to record the award of restricted stock on January 1, 2016.

3. Following journal entry is required at 31 december upto 31 December 2019 to record the compensation:

  

Account Title Debit Credit Compensation expense ($417 million / 4year) $104.25 Paid in capital - restricted stock $104.25

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