Restricted stock units (RSUs):
A) are reported as a liability if payable in shares rather than cash.
B) are reported as part of shareholders' equity if payable in shares rather than cash.
C) are reported as part of shareholders' equity if payable in cash rather than shares.
D) are reported as part of shareholders' equity if the recipient will receive cash or can elect to receive cash.

Question

Quizplus · Accepted Answer

Restricted stock units are typically granted as part of an equity compensation plan and represent a promise to issue shares of stock at a future date, subject to certain conditions. If the RSUs are payable in shares rather than cash, they are reported as a component of shareholders' equity since they represent a promise to issue additional shares to existing shareholders. If the RSUs are payable in cash rather than shares, they would be reported as a liability since they represent a promise to pay cash to the recipient. If the recipient has the option to receive either shares or cash, the RSUs would still be reported as a liability until the recipient makes their election.

Restricted Stock Units (RSUs)