Question

FASB Codification about restricted stock.

The company granted restricted stock to its CEO on 1/1/20X1. Service period is 4 years. Its condition is the stock can only vest if company’s profit grow by 50% or more over 4-year period.

The likelohood that company will meet performance condition as follows:

Dec 31 20X1 = not probable

Dec 31 20X2 = probable

Journal entries in 20X1, 20X2? And which FASB Codification used to deal with this problem?

Answer 1

Answer for First Question :

20X1 Contra-equity - Unearned (deferred) Compensation 1

To Retained earnings - SBC expense

( If company not get Profit grow by 50% or more )

20X2 Retained earnings - SBC expense

To Contra-equity - Unearned (deferred) Compensation   

( If company get Profit grow by 50% or more )

Answer for Question 2

stock based compensation Under Restricted stock

Note:   Contra-equity - Unearned (deferred) Compensation 1..

To Common Stock & APIC – Common Stock2

( At the time of Initial Grant i.e at the Proposal )