Which of the following provisions are part of the requirements that must be in place for an employee stock-purchase plan (covering rank-and-file employees) to avoid recording compensation expense related to the plan to avoid recording compensation expense?

Provisions

(1) Substantially all employees may participate.

(2) The discount from market is small (less than 5%).

(3) The plan offers no substantive option feature.

(4) There is no preferred stock outstanding.

Question

Business

Rosemary Joseph

17 March, 10:23

Which of the following provisions are part of the requirements that must be in place for an employee stock-purchase plan (covering rank-and-file employees) to avoid recording compensation expense related to the plan to avoid recording compensation expense?

Provisions

(1) Substantially all employees may participate.

(2) The discount from market is small (less than 5%).

(3) The plan offers no substantive option feature.

(4) There is no preferred stock outstanding.

+3

Answers (1)

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Alyvia Jefferson · Answer 1

Answer: Nos 1 - 3 are relevant

Explanation: To avoid recording compensation expense related to the plan the following provisions are relevant:

1. Substantially all employees may participate

2. The discount from market is small (less than 5%)

3. The plan offers no substantive option feature.

The above listed provisions are relevant to the plan while the 4th provision is irrelevant.