[shawnl112]

Wall Corp.’s employee stock purchase plan specifies the following:

For every $1 withheld from employees’s wages for the purchase of Wall’s common stock, Wall contributes $2.

The stock is purchased from Wall’s treasury stock at market price on the date of purchase.

The following information pertains to the plan’s current year transactions:

Employees withholdings for the year $350,000
Market value of 150,000 shares issued 1,050,000
Carrying amount of treasury stock issued (cost) 900,000

Before payroll taxes, what amount should Wall recognize as expense in the current year for the stock purchase plan?

A. 700,000
B. 900,000
C. 550,000
D. 1,050,000

[SchruteBeet]

The answer would be B. Regardless of at what price the treasury stock is purchased at, the only expense Wall incurs as part of the stock purchase plan is the amount it contributes for every dollar withheld from the employees' contribution. Since the amount withheld from the employees is $350K this year, Wall's expense = 350K *2 = 700K

[mskcle]

I agree with Scrute except I think he meant to put the answer is A..

[SchruteBeet]

Haha yes, thanks!

[Author]

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