Employeee Share Purchase Plan

How does a company account( in the I/S, B/S and Cashflow statements) for share purchase plans whose discount is greater than 5 percent?

Increase in Compensation Expense in I/S Increase in Additional paid-in-Capital in B/S Increase in Financing cash flow in C/F

you need to expense this…on i/s then the rest of the rules apply… dta is created… when employees exercise… the dta is reversed…any excess is cff(apic). or when employees exercise and their is a shortfall…apic is reduced (up to a certain amount). then the actual shares reduce cff and when the co buys back in the open market it offests cff…however since we first took the benefit in the dta via cfo, we have a missmatch… thus we should reclassify the difference back to cfo