Chapter 19 - Share-Based Compensation and Earnings Per Share

Restricted Stock Units (RSU's)

a right to receive a specified number of shares of company stock (shares are NOT issued at the time of grant)

In a Restricted Stock Award...

-shares are awarded in the name of the employee -employee has all rights of a shareholder -shares are subject to forfeiture by the employee if employment is terminated within some specified number of years from the date of grant

Under its restricted stock award plan, Katrin Corp. grants 100,000 of its $1 par value common shares to certain executives on 01/02/2010. The awards are contingent on continued employment for 4 years. Shares have a current market value of $10 per share. On 01/02/2014, Katrin's journal entry should be

a credit to common stock for $1,000,000

If an employee is entitled to receive cash under a restricted stock units award plan, the sponsoring company should recognize:

a liability

When a company recognizes compensation expense related to restricted stock awards payable in cash, the company should also credit a

liability

Compensation: Restricted Stock

market price of an unrestricted share of the same stock

Frohe Inc. sponsors a restricted stock units award plan under which employees can choose to receive either company stock or cash. Frohe should recognize compensation expense:

over the service period

Nature of: Restricted Stock

shares typically are contingent on the continued employment of the awardee

Cater Company issues 100 shares of restricted stock to Berta Miller. What is an incentive that this stock provides for Berta?

to remain with Cater Company

Carter Company issues 100 shares of restricted stock to Berta Miller, who has worked for the company for 5 years. The stock grant requires that Berta remain with the company another 4 years. Compensation expense relating to the value of this restricted stock should be recognized

over a 4-year period.