Lopez Company issues 10,000 shares of restricted shares to its CFO, Juan Carlos, on January 1, 2010.

Question:

Lopez Company issues 10,000 shares of restricted shares to its CFO, Juan Carlos, on January 1, 2010. The shares have a fair value of €500,000 on this date. The service period related to the restricted shares is 5 years. Vesting occurs if Carlos stays with the company for 6 years. The par value of the shares is €10. At December 31, 2010, the fair value of the shares is €450,000.

Instructions

(a) Prepare the journal entries to record the restricted shares on January 1, 2010 (the date of grant), and December 31, 2011.

(b) On January 1, 2015, Carlos leaves the company. Prepare the journal entry (if any) to account for this forfeiture.

Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...