Question

# Facebook Inc. included the following disclosure note in an annual report: Share-Based Compensation (in part) ....

Facebook Inc. included the following disclosure note in an annual report:

Share-Based Compensation (in part)

. . . . compensation expense related to these grants is based on the grant date fair value of the RSUs and is recognized on a straight-line basis over the applicable service period.

The following table summarizes the activities for our unvested RSUs for the year ended December 31, 2015:

 Unvested RSUs Number of Shares (in thousands) Weighted Average Grant Date Fair Value Unvested at December 31, 2014 138,055 \$ 55.89 Granted 31,507 82.15 Vested (46,434 ) 49.19 Forfeited (6,719 ) 51.19 Unvested at December 31, 2015 116,409 \$ 65.95

Required:

1. Assuming a four-year vesting period, how much compensation expense did Facebook report in the year ended December 31, 2016, for the restricted stock units granted during the year ended December 31, 2015?
2. Based on the information provided in the disclosure note, prepare the journal entry that summarizes the vesting of RSUs during the year ended December 31, 2015. (Facebook’s common shares have a par amount per share of \$0.000006.)

compensation cost of RSU = FMV per share + No. of shares awarded

FMV (Fair Market Value) = \$82.15

No. of Shares Awarded = 31,507

Compensation Cost of RSUs = \$82.15 * 31,507 = \$2,588,300

Expense Allocation for each year = Total Compensation cost / Vesting Period

Vesting Period = 4yrs

Hence Expense Allocation for each year = \$2,588,300/4yrs = \$647,075

2. Journal Entry :

 Date Accounts and explanation Debit Credit 31-Dec-15 Paid-in-capital -(restricted stock)(46,434,000*49.19) 2279445060 Common stock(46434000*0.000006) 278.604 Paid-In-Capital (excess of par) 2279445339

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