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Under its employee stock purchase plan, Fortune Inc. encourages employee ownership by permitting all employees to buy shares directly from their company at 10% discount

Under its employee stock purchase plan, Fortune Inc. encourages employee ownership by permitting all employees to buy shares directly from their company at 10% discount and without brokerage fees. Fortune records the sale of new shares as employees buy them. Which of the following is an accurate statement regarding this policy?

a.

This approach is correct and consistent with the sale of shares to non-employees.

b.

The policy is correct because paid-in-capital should be reduced.

c.

The policy is inappropriate because substantially all employees can participate.

d.

The policy is inappropriate because the company should record only Common Stock (par value) when the shares are sold.

e.

The policy is inappropriate because the plan is compensatory.

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