Mansfield Corporation granted 4,200 of its $2 par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $10 per share on the grant date of the restricted stock award. Ignoring taxes, what is the compensation expense pertaining to the restricted shares in the first full year after the grant?

Question

Business

Giselle Knight

4 June, 12:46

Mansfield Corporation granted 4,200 of its $2 par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $10 per share on the grant date of the restricted stock award. Ignoring taxes, what is the compensation expense pertaining to the restricted shares in the first full year after the grant?

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Strickland · Answer 1

14,000

Explanation:

Given that,

Market value per share = 10

Shares granted = 4,200

Years of grant = 3

Total compensation expense = Market value per share * Shares granted

= 10 * 4,200

= 42,000

Compensation expense per year:

= Total compensation expense : Years of grant

= 42,000 : 3

= 14,000