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Accounting for restricted stock issued and forfeiture where the vesting requirements are not met, Restricted stock plans transfer shares of stock to employees with the agreement the shares cannot be sold, transferred or pledged until vesting occurs, the shares are subject to forfeiture if the conditions of vesting are not met, issuing restricted stock as common stock is based on the fair value of the stock at the time of issuing, the fair value of the stock is expensed as compensation expense over the service (vesting) period, the associated account is unearned compensation (deferred compensation expense) is a contra equity account, if the vesting requirements are not met the compensation expense to date has to be reversed & unearned compensation is reduced to zero, this is the case where Corp-A Restricted-Stock Plan, example On (1/1/X1) Corp-A issues 5,000 shares (C/S) as Restricted Stock to its Chief Excecutive Officer (CFO): 1-Stock's fair value $60/share, $5 par on issue date (1/1/X1), 2-Related service period 4-years for restricted stock, 3-Vesting occurs if CFO stays with the company 4-years, 4-On (3/1/X3) the CFO leaves the company, forefeits stock, Corp-A Restricted-Stock Plan, vesting never occurred because the CFO left the company before the service requirement was met (4-yr vesting required), detailed accounting by Allen Mursau
