Intermediate Accounting, 10 Ed
Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 19, Problem 19.1Q
To determine

Shares: The common stock is divided into smaller units of equal value called as Shares and issued to the public, to raise funds.

To Explain: TheRestricted Stock, difference between Restricted Stocks and RSU, and determination and recording of compensation expense for restricted stock award plan.

Expert Solution & Answer
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Explanation of Solution

Restricted Stock: Restricted stock is the portion of shares held up by the management, to be issued for the employees, which are subject to some conditions.

Restricted Stock: Restricted stock is the portion of shares held up by the management, to be issued for the employees, which are subject to some conditions.

Restricted Stock Units (RSU): RSUs are a type of restricted stock which is held up for some time, before being issued to the employees. Further they do not oblige the employees to stay in the company. Till they are issued to the employee, the employer possesses the right.

The compensation expense for the restricted stock award plan is the fair value of the stock equal to the market value at the grant date. The compensation expense is the accrued fair value over the service period till the vesting date. However, this could be made in the form of cash, shares or at times, both.

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