As Part of Its Stock-Based Compensation Package, on January 1

question 99

Essay

As part of its stock-based compensation package, on January 1, 2018, Weldon Well Supplies granted restricted stock units (RSUs) representing 100,000 $1 par common shares. At exercise, holders of the RSUs are entitled to receive cash or stock equal in value to the market price of those shares at exercise. The RSUs cannot be exercised until the end of 2021 (vesting date) and expire at the end of 2023. The $1 par common shares have a market price of $6 per share on the grant date. The fair value at December 31, 2018, 2019, 2020, 2021, and 2022, is $16, $12, $16, $10, and $12, respectively. All recipients are expected to remain employed through the vesting date.
Required:
(1.) Prepare the appropriate journal entry to record the award of RSUs on January 1, 2018.
(2.) Prepare the appropriate journal entries pertaining to the RSUs on December 31, 2018-December 31, 2021.
(3.) The RSUs remain unexercised on December 31, 2022. Prepare the appropriate journal entry on that date.
(4.) The RSUs are exercised on June 6, 2023, when the share price is $13, and executives choose to receive cash. Prepare the appropriate journal entry(s) on that date.

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Definitions:

Low-Cost Strategy

A business strategy aimed at becoming the lowest-cost producer in the industry or market, thereby allowing the company to offer its products or services at lower prices than competitors.

Focused Strategy

A strategy utilized by companies to focus on a particular market segment or demographic, offering customized products or services.

Organization Design

The creation of roles, processes, and formal reporting relationships in an organization to achieve its goals and objectives.

Differentiation

The process of distinguishing or creating differences between products, services, or concepts to make them more appealing to specific target markets.