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.
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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Chapter 19 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
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- Describe how cumulative preferred stock differs from noncumulative preferred stock. How is a preferred stock dividend calculated?arrow_forwardWhich of the following is true about stock- based compensation? (check all that apply) Stock-based compensation expense is always reported as part of Selling, General, and Administrative (SG&A) expense The fair value of an option grant is always greater than the strike price of the option grant Stock-based compensation expense is adjusted based on movements in stock price after the exercise date Stock-based compensation expense must be added back in the Operating section of SCF under the indirect methodarrow_forward
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