Baltic Limited is a listed company based in California. On January 1, 2019, the company granted 10,000 share units to its vice president. Each share unit has a contractual service period of five years and a vesting condition based on market performance.

Each share unit is convertible into ordinary shares of Baltic Limited as follows:

• If the companys share price increases by more than the Nasdaq Composite index over the five years, each share unit converts into 5 shares.
• If the companys share price increases by less than or equal to the Nasdaq Composite index over the five years, each share unit converts into 1 share.

On the grant date, the companys ordinary shares have a fair value of $10 per share.

Management believes the probability of the above scenarios occurring are 40% and 60%, and uses this information to calculate the fair value of the share unit award.

The companys accountant has asked for your help to calculate compensation costs for these share units so that the appropriate journal entry can be recorded in 2019.

Ignore the effects of taxes.

Provide the journal entries and calculations to answer this question.