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vodomira [7]
3 years ago
9

To encourage employee ownership of the company's common shares, KL Corp. permits any of its employees to buy shares directly fro

m the company through payroll deduction. There are no brokerage fees and shares can be purchased at a 12% discount. During May, employees purchased 13,000 shares at a time when the market price of the shares on the New York Stock Exchange was $15 per share. KL will record compensation expense asscoiated with the May purchases of:
A.) $24,200
B.) $0
C.) $195,000
D.) $23,400
Business
1 answer:
JulijaS [17]3 years ago
4 0

Answer:

d. $23,400

Explanation:

The computation of compensation expense is shown below:-

Total number of shares purchased = 13,000

Market price of share = $15 per share

Compensation expenses per share = issue price at 12% discount

= $15 × 12%

= $1.8

Total compensation expenses = Compensation expenses per share × Total number of shares purchased

= $1.8 × 13,000

= $23,400

So, for computing the compensation expenses we applied the above formula.

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= $2,000/$300

= 6.67 or simply 7 units

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