ACC 306 Week 4 Exercise 19-2

E 192 - VKI Corporation - Restricted stock award plan ? LO1

On January 1, 2011, VKI Corporation awarded 12 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within three years. On the grant date, the shares have a market price of $2.50 per share.

Required:

1.Determine the total compensation cost pertaining to the restricted shares.

2.Prepare the appropriate journal entry to record the award of restricted shares on January 1, 2011.

3.Prepare the appropriate journal entry to record compensation expense on December 31, 2011.

4.Prepare the appropriate journal entry to record compensation expense on December 31, 2012.

5.Prepare the appropriate journal entry to record compensation expense on December 31, 2013.

1. Prepare the appropriate journal entry to record the lifting of restrictions on the shares at December 31, 2013.