Teague Corporation permits any of its employees to buy shares directly from the company through payroll deduction.There are no brokerage fees and shares can be purchased at a 10% discount.During July,employees purchased 15,000 shares at a time when the established market price was $25 per share.Teague will record compensation expense associated with July purchases of ________.

Question

Quizplus · Accepted Answer

The compensation expense is the discount given to employees, which is 10% of the market price. The market price is $25, so the discount is $2.50 per share. For 15,000 shares, the compensation expense is 15,000 x $2.50 = $37,500.

Teague Corporation Permits Any of Its Employees to Buy Shares