Anazazi Co. offers all its 10,000 employees the opportunity to participate in an employee share-purchase plan. Under the terms of the plan, the employees are entitled to purchase 100 ordinary shares (par value $1 per share) at a 20% discount. The purchase price must be paid immediately upon acceptance of the offer. In total, 8,500 employees accept the offer, and each employee purchases on average 80 shares at $22 per share (market price $27.50). Under IFRS, Anazazi Co. will record: a. no compensation since the plan is used to raise capital, not compensate employees. b. compensation expense of $5,500,000. c. compensation expense of $18,700,000. d. compensation expense of $3,740,000.
Anazazi Co. offers all its 10,000 employees the opportunity to participate in an employee share-purchase plan. Under the terms of the plan, the employees are entitled to purchase 100 ordinary shares (par value $1 per share) at a 20% discount. The purchase price must be paid immediately upon acceptance of the offer. In total, 8,500 employees accept the offer, and each employee purchases on average 80 shares at $22 per share (market price $27.50). Under IFRS, Anazazi Co. will record:
a. no compensation since the plan is used to raise capital, not compensate employees.
b. compensation expense of $5,500,000.
c. compensation expense of $18,700,000.
d. compensation expense of $3,740,000.
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