ESPP and performance based awards

I seriously don’t understand these two topics. Can someone strongon accounting please explain how they are booked? here is a problem SK introduced an employee stock purchase plan (ESPP) for all employees and a performance-based plan for senior executives. Lee believes that the ESPP will affect earnings over the vesting period of the plan, but that for the performance-based plan the full effect will be recognized in the current year when it was granted. Is Lee correct with respect to the employee stock purchase plans and performance-based awards introduced by Skylark? ESPP Performance-based awards A. Correct Correct B. Correct Incorrect C. Incorrect Correct D. Incorrect Incorrect

not sure about the ESPP, but im pretty sure his statement on performance-based plans is incorrect, since you may unwind the expense if the target is not met (like if its based on ROE and you dont meed the ROE target)

I would go with B) I think the first statement is correct. Mike, from what I can remember (eons ago when reading this), you’re correct.

zimzim78, you are right. you seem to know this well. so how is ESPP booked? As I recall, there is noncompensatory VS compensatory depending on the discount offered to employees. What’s the accounting difference b/w these two? curriculum isn’t very clear on this issue.

They would have to give you more info regarding ESPP’s. Isn’t the rule that if they have more than a 5% discount, its considered Compensitory??

that’s what I thought, then I chose D, incorrect, incorrent. it was wrong. I thought discount no less 5% would not be on income statement, right? no?

Is it only 5%? Why did I think 15% was the safe-harbor?

ZIM, It used to be 15% before the new rule i.e June 15 2005

Oiii, good catch. Now that you mention that, it does ring a bell. Seriously, there’s some ish in these books that I read soooo long ago and feel that I recognize, I just couldn’t tell you the first thing about it if I had to describe it. I’m losing it.

I know…same thing has been happening with me. The topic which I have studied last week is blank on my mind.