Question: Brief Exercise 1 9 - 2 ( Static ) Restricted stock units; financial statement effects [ LO 1 9 - 1 ] Second Link Services

Brief Exercise

19 - 2 (

Static

)

Restricted stock units; financial statement effects

[

19 - 1]

Second Link Services granted restricted stock units

(

RSUs

)

representing

16

million of its $

1

par common shares to executives, subject to forfeiture if employment is terminated within four years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $

10

per share on the grant date.

Ignoring taxes, what is the total compensation cost pertaining to the restricted stock units?

Ignoring taxes, what is the effect on earnings in the year after the RSUs are granted to executives?

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