The compensation associated with restricted stock under a stock award plan is:
A) The book value of an unrestricted share of the same stock times the number of shares.
B) The estimated fair value of a share of similar stock times the number of shares.
C) Allocated to expense over the service period which usually is the vesting period.
D) The book value of a share of similar stock times the number of shares.

Question

Quizplus · Accepted Answer

Restricted stock under a stock award plan is typically allocated to expense over the service period, which is usually the vesting period. The compensation expense is typically based on the fair value of the stock at the grant date. Therefore, option C is the correct answer. Options A, B, and D do not accurately reflect the compensation associated with restricted stock.

The Compensation Associated with Restricted Stock Under a Stock Award