Reference no: EM133070373

Question - As part of its stock-based compensation package, on January 1, 2021, International Electronics granted restricted stock units (RSUs) representing 200 million $1 par common shares. At exercise, holders of the RSUs are entitled to receive cash or stock equal in value to the market price of those shares at exercise. The RSUs cannot be exercised until the end of 2024 (vesting date) and expire at the end of 2026. The $1 par common shares have a market price of $6 per share on the grant date. The fair value at December 31, 2021, 2022, 2023, 2024, and 2025, is $8, $6, $8, $5, and $6, respectively. All recipients are expected to remain employed through the vesting date. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares.

Required - The RSUs are exercised on June 6, 2026, when the share price is $6.50, and executives choose to receive cash. Prepare the appropriate journal entry(s) on that date.