First Link Services granted 8 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $6 per share on the grant date of the restricted stock award. Ignoring taxes, what is the total compensation cost pertaining to the restricted shares? What is the effect on earnings in the year after the shares are granted to executives?

First Link Services granted 8 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $6 per share on the grant date of the restricted stock award. Ignoring taxes, what is the total compensation cost pertaining to the restricted shares? What is the effect on earnings in the year after the shares are granted to executives?

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter19: Deferred Compensation

Section: Chapter Questions

Problem 52P

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First Link Services granted 6 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $24 per share on the grant date of the restricted stock award. 1. Ignoring taxes, what is the total compensation cost pertaining to the restricted shares?2. Ignoring taxes, what is the effect on earnings in the year after the shares are granted to executives?
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