Let's break down the solution into **3 steps**, as requested, with explanations after each step: --- ### **Step 1: Journal Entry for Award of RSUs on January 1, 2021** **Explanation:** On the grant date, no expense is recognized because the RSUs are subject to vesting, and service must be rendered over the vesting period. However, you do disclose the grant and start tracking compensation expense over the service period (2021-2024). **No journal entry is required on the grant date (January 1, 2021).** *Instead, the company will start recognizing compensation expense over the vesting period.* --- ### **Step 2: Journal Entries for Compensation Expense (2021-2024)** **Explanation:** The RSU compensation expense is recognized evenly over the vesting period (4 years: 2021–2024). The fair value used is the grant-date fair value, as per accounting standards (usually, unless service/market conditions require otherwise). Here, the fair value at grant date (January 1, 2021) is $6 per share. **Calculation:** - Number of shares: 100,000 - Grant date fair value per share: $6 - Total compensation: 100,000 × $6 = **$600,000** - Annual compensation expense (over 4 years): $600,000 ÷ 4 = **$150,000 per year** **Journal Entry for each year-end (2021-2024):** ``` Dr. Compensation Expense $150,000 Cr. Paid-in Capital – RSUs $150,000 ``` *This entry is made at the end of each year from 2021 to 2024.* --- ### **Step 3: Journal Entry if RSUs Remain Unexercised on December 31, 2025** **Explanation:** On December 31, 2025, the RSUs have vested (as of end of 2024) but have not yet been exercised. No additional compensation expense is recognized. The balance remains in Paid-in Capital – RSUs until exercise/settlement or expiration. **No journal entry is required on December 31, 2025** if the RSUs are just unexercised but not expired or forfeited. --- ## **Final Answers (Summary):** **1.** *No journal entry required on January 1, 2021 (grant date).* **2.** *Journal entry at each year-end (2021-2024):* ``` Dr. Compensation Expense $150,000 Cr. Paid-in Capital – RSUs $150,000 ``` **3.** *No entry on December 31, 2025 if RSUs remain unexercised but not expired.* --- **Let me know if you need the entry for when the RSUs are actually exercised or expire!**

Certainly! Here's a structured step-by-step solution for the questions, with explanations at each step and the final summarized answers: --- ### **Step 1: Recognize the Grant of RSUs on January 1, 2021** **Explanation:** On the grant date, the company awards RSUs to employees. According to accounting standards (such as IFRS 2 or ASC 718), no journal entry is typically made at the grant date because the award is contingent on future service. Instead, the company begins recognizing compensation expense over the vesting period. **Final answer for Step 1:** **No journal entry is required on January 1, 2021.** *The company will recognize compensation expense over the service period.* --- ### **Step 2: Record Compensation Expense Annually from 2021 to 2024** **Given Data:** - Number of RSUs granted: 100,000 shares - Grant date fair value per RSU: $6 - Vesting period: 4 years (2021–2024) - Total compensation cost: 100,000 × $6 = $600,000 **Calculation:** Annual expense = $600,000 ÷ 4 = **$150,000 per year** **Journal Entry at each year-end (2021-2024):** ``` Dr. Compensation Expense $150,000 Cr. Paid-in Capital – RSUs $150,000 ``` **Explanation:** This recognizes the expense associated with RSUs over the vesting period, matching expense with the period the employees provide service. --- ### **Step 3: Treatment if RSUs Remain Unexercised on December 31, 2025** **Explanation:** Since the RSUs have vested by the end of 2024, and assuming they are not exercised or forfeited, there is no additional compensation expense after vesting. The RSUs are now liabilities or equity (depending on accounting treatment), but no journal entry is needed solely because they are unexercised. **Final answer for Step 3:** **No journal entry is required on December 31, 2025, if the RSUs remain unexercised.** *The amount recognized as compensation expense has already been recorded over the vesting period.* --- ## **Summary of Final Answers:** 1. **On January 1, 2021 (grant date):** **No journal entry.** 2. **Annually from 2021 to 2024 (vesting period):** ``` Dr. Compensation Expense $150,000 Cr. Paid-in Capital – RSUs $150,000 ``` 3. **On December 31, 2025 (post-vesting, unexercised RSUs):** **No journal entry.** --- Let me know if you'd like entries related to the exercise or expiration of RSUs!