Magnetic-Optical Corporation offers a variety of share-basedcompensation plans to employees. Under its restricted stock unitplan, the company on January 1, 2018, granted restricted stockunits (RSUs) representing 5 million of its $1 par common shares tovarious division managers. The shares are subject to forfeiture ifemployment is terminated within three years. The common shares havea market price of $30.00 per share on the grant date. Management’spolicy is to estimate forfeitures. Required: 1. Determine the totalcompensation cost pertaining to the RSUs. 2. & 3. Prepare theappropriate journal entries. 4. Suppose Magnetic-Optical expected a10% forfeiture rate on the RSUs prior to vesting. Determine thetotal compensation cost.
