On April 1, 2017, a company offered 100 shares to each of its 500 employees at $ 40 per share. The employees are given a month to decide whether or not to accept the offer. The shares issued under the plan shall be subject to lock-in on transfers for three years from grant date. The market price of shares of the company on the grant date is $ 50 per share. Due to post-vesting restrictions on transfer, the fair value of shares issued under the plan is estimated at $48 per share. On April 30, 2017, 400 employees accepted the offer and paid $40 per share purchased. Nominal value of each share is $10. Record the issue of shares in book of the company under the aforesaid plan. Solution Intrinsic value of ESPP per share = $48 $ 40 = $8 Number of share issued = 400 100 = 40,000 Fair value of ESPP = 40,000 $8 = $3,20,000 Vesting period = One month Expense recognised in 2017-18 = $3,20,000