Facebook Inc included the following disclosure note in an an

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.)

Solution

No. Of Shares in thousand Weighted Average Grant Date Fair Value Unvested at December 31, 2014 138055 $55.89 Granted 31507 $82.15 Vested -46434 $49.19 Forfeited -6719 $51.19 Unvested at December 2015 116409 $65.95 Part-1 Total Compensation Cost of RSU= Fair Market Value per Share X No. of Shares Awarded = (31507 X $82.15)X1000=$2588300000 Expenses allocated each Year= Total Compensation Cost of RSU/ Vesting Period =$2588300000/4= $647075000 Part-2 Date Account Tittle Debit Credit 31/12/2015 Paid in Capital- Restricted Stock (46434*$49.19*1000) $2,284,088,460.00 Common Stock (46434*$0.000006*1000) $278.60 Paid in Capital - Excess of Par $2,284,088,181.40