A disclosure note from E Corp.'s 2009 annual report is shown below:
Employee Stock Purchase Plan. We have an employee stock purchase plan for all eligible employees. Compensation expense for the employee stock purchase plan is recognized in accordance with SFAS No.123(R). Shares of our common stock may be purchased by employees at three-month intervals at 85% of the fair market value on the last day of each three-month period. Employees may purchase shares having a value not exceeding 10% of their gross compensation during an offering period. Employees purchased the following shares:
At June30, 2009, 150million shares were reserved for future issuance.
Required:
Describe the way "Compensation expense for the employee stock purchase plan is recognized in accordance with SFAS No.123(R)" by E. Include in your explanation the journal entry that summarizes employee share purchases during 2009.
$\begin{array}{lrrrr}
\text { (Shares in millions) } & \mathbf{2 0 0 9} & \mathbf{2 0 0 8} & \mathbf{2 0 0 7} \
\text { Shares purchased } & \mathbf{1 5} & 14 & 12 \
\text { Average price paid per share } & \mathbf{\$ 2 5 . 2 5} & \$ 23.92 & \$ 23.83
\end{array}$

Question

A disclosure note from E Corp.'s 2009 annual report is shown below:
Employee Stock Purchase Plan. We have an employee stock purchase plan for all eligible employees. Compensation expense for the employee stock purchase plan is recognized in accordance with SFAS No.123(R). Shares of our common stock may be purchased by employees at three-month intervals at 85% of the fair market value on the last day of each three-month period. Employees may purchase shares having a value not exceeding 10% of their gross compensation during an offering period. Employees purchased the following shares:
At June30, 2009, 150million shares were reserved for future issuance.
Required:
Describe the way "Compensation expense for the employee stock purchase plan is recognized in accordance with SFAS No.123(R)" by E. Include in your explanation the journal entry that summarizes employee share purchases during 2009.
 $\begin{array}{lrrrr}
\text { (Shares in millions) } & \mathbf{2 0 0 9} & \mathbf{2 0 0 8} & \mathbf{2 0 0 7} \
\text { Shares purchased } & \mathbf{1 5} & 14 & 12 \
\text { Average price paid per share } & \mathbf{\$ 2 5 . 2 5} & \$ 23.92 & \$ 23.83
\end{array}$

Quizplus · Accepted Answer

The Answer of A disclosure note from E Corp.'s 2009 annual report is shown below:
Employee Stock Purchase Plan. We have an employee stock purchase plan for all eligible employees. Compensation expense for the employee stock purchase plan is recognized in accordance with SFAS No.123(R). Shares of our common stock may be purchased by employees at three-month intervals at 85% of the fair market value on the last day of each three-month period. Employees may purchase shares having a value not exceeding 10% of their gross compensation during an offering period. Employees purchased the following shares:
At June30, 2009, 150million shares were reserved for future issuance.
Required:
Describe the way "Compensation expense for the employee stock purchase plan is recognized in accordance with SFAS No.123(R)" by E. Include in your explanation the journal entry that summarizes employee share purchases during 2009.
 $\begin{array}{lrrrr}
\text { (Shares in millions) } & \mathbf{2 0 0 9} & \mathbf{2 0 0 8} & \mathbf{2 0 0 7} \
\text { Shares purchased } & \mathbf{1 5} & 14 & 12 \
\text { Average price paid per share } & \mathbf{\$ 2 5 . 2 5} & \$ 23.92 & \$ 23.83
\end{array}$

A Disclosure Note from E Corp