EG Corporation granted restricted stock units (RSUS) representing 32 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within four years. After the recipients of the RSUS satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $6 per share on the grant date. Required: (1.) Ignoring taxes, determine the total compensation cost pertaining to the restricted stock units. (2.) What is the effect on earnings in the year after the shares are granted to executives?

EG Corporation granted restricted stock units (RSUS) representing 32 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within four years. After the recipients of the RSUS satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $6 per share on the grant date. Required: (1.) Ignoring taxes, determine the total compensation cost pertaining to the restricted stock units. (2.) What is the effect on earnings in the year after the shares are granted to executives?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

EG Corporation granted restricted stock units (RSUS) representing 32 million of its $1 par common shares to
executives, subject to forfeiture if employment is terminated within four years. After the recipients of the RSUS
satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of
$6 per share on the grant date.
Required:
(1.) Ignoring taxes, determine the total compensation cost pertaining to the restricted stock units.
(2.) What is the effect on earnings in the year after the shares are granted to executives?
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