Answered

Discover the answers you need at Westonci.ca, a dynamic Q&A platform where knowledge is shared freely by a community of experts. Discover comprehensive solutions to your questions from a wide network of experts on our user-friendly platform. Experience the ease of finding precise answers to your questions from a knowledgeable community of experts.

On January 1, 2021, Cori Ander Herbs granted restricted stock units (RSUs) representing 300,000 of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three 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 $12 per share on the grant date. At the date of grant, the company anticipated that 6% of the recipients would leave the firm prior to vesting. In 2022, 2% of the options are forfeited due to executive turnover. The company chooses the option not to estimate forfeitures. What amount should the company record as compensation expense for the year ended December 31, 2022

Sagot :

Parrain

Answer: $1,152,000

Explanation:

Compensation Expense = [(No. of RSUs * Market Value per share) * Years elapsed / Total period] - Compensation expense already recorded

Year 1 - 2021

= [ ( 300,000 * 12) * 1/3] - 0

= $1,200,000

Year 2 - 2020

2% of the options have been forfeited so the RSUs left are:

= 300,000 * ( 1 - 2%)

= 294,000 RSUs

Compensation expense = [ (294,000 * 12) * 2/3] - 1,200,000

= $1,152,000

We appreciate your time. Please come back anytime for the latest information and answers to your questions. Thank you for your visit. We're dedicated to helping you find the information you need, whenever you need it. Westonci.ca is here to provide the answers you seek. Return often for more expert solutions.