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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