A Disclosure Note from E Corp

question 110

Essay

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.
$\begin{array}{lrrrr}\text { (Shares in millions) } & \mathbf{2 0 0 9} & \mathbf{2 0 0 8} & \mathbf{2 0 0 7} \\\text { Shares purchased } & \mathbf{1 5} & 14 & 12 \\\text { Average price paid per share } & \mathbf{\$ 2 5 . 2 5} & \$ 23.92 & \$ 23.83\end{array}$

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Definitions:

Confidence Level

The probability that a confidence interval will capture the true population parameter, expressed as a percentage, indicating the reliability of the estimate.

Population Mean

The average value of all the items in a population.

Malpractice Litigation

A legal process in which a patient sues a healthcare provider for receiving substandard care that resulted in harm or injury.

Medical Records

Documentation of a patient's medical history and care across time within one or more healthcare settings.