MCQ Quiz

Question 1 of 21

Under US GAAP, past service costs related to a defined-benefit pension plan are first recognized in:

Cash flow from financing activities
Other comprehensive income and then amortized into pension expense
Profit or loss immediately

Question 2 of 21

Under US GAAP, the change in net pension asset or liability each period is viewed as having how many components?

Three
Five
Four

Question 3 of 21

Recognition of stock option expense over the vesting period most likely has what net impact on total equity?

Decreases total equity
Increases total equity
No net impact on total equity

Question 4 of 21

Share-based compensation is most likely intended to:

Align employees' interests with those of the shareholders
Reduce the company's tax liability
Increase the company's cash reserves

Question 5 of 21

Under a defined-contribution pension plan, the pension expense for the employer is most likely equal to:

The company's contribution to the plan
The present value of future retirement benefits
The expected return on plan assets

Question 6 of 21

The discount rate used to determine the present value of a defined-benefit pension obligation is most likely equal to the yield on:

Government treasury bonds
The company's own debt
High-quality corporate bonds

Question 7 of 21

For share-based compensation plans, compensation expense is generally measured at the fair value on the:

Vesting date
Exercise date
Grant date

Question 8 of 21

For an outright stock grant, compensation expense is most likely based on the fair value of the stock on the:

Grant date
Date the employee sells the stock
Reporting date

Question 9 of 21

Restricted stock grants require the employee to return shares to the company if:

Certain conditions such as remaining with the company or meeting performance goals are not met
The stock price declines below the grant date price
The company reports a net loss

Question 10 of 21

Under IFRS, remeasurements of a defined-benefit pension plan include actuarial gains and losses and:

Past service costs
The actual return on plan assets less the return included in net interest
Current service costs

Question 11 of 21

Under a defined-benefit pension plan, if the fair value of plan assets exceeds the present value of the pension obligation, the company most likely reports:

A net pension asset
No balance sheet impact
A net pension liability

Question 12 of 21

The vesting date for stock options is best described as the date when employees:

Sell the underlying shares
Receive the option grant
Can first exercise the stock options

Question 13 of 21

Financial reporting for deferred compensation plans is more complex than for immediately vesting compensation primarily because of:

Higher tax rates on deferred amounts
The requirement to use cash-basis accounting
Difficulty in measurement and potential lags between service and cash outflows

Question 14 of 21

A disadvantage of share-based compensation is that issuing shares to employees most likely:

Increases the company's debt
Reduces the company's credit rating
Dilutes existing shareholders

Question 15 of 21

Deferred compensation most likely vests:

Over time
Immediately upon hiring
Only at retirement

Question 16 of 21

Under IFRS, the change in the net pension asset or liability has how many general components?

Two
Three
Five

Question 17 of 21

Under IFRS, remeasurements of a defined-benefit pension plan are recognized in:

Other comprehensive income
Profit or loss
Cash flow from operations

Question 18 of 21

A company's defined-contribution plan contributions are most likely reported on the cash flow statement as:

An operating cash outflow
A financing cash outflow
An investing cash outflow

Question 19 of 21

Stock appreciation rights (SARs) are best described as a form of:

Defined-benefit pension compensation
Cash-settled share-based compensation
Equity-settled share-based compensation

Question 20 of 21

Under a defined-contribution plan, if the agreed-upon contribution has not been paid by fiscal year-end, the company most likely recognizes:

No balance sheet impact
A net pension asset
An accrued compensation liability on the balance sheet

Question 21 of 21

When a stock option is exercised, the amount of compensation expense recognized is based on:

The market price at the time of exercise
The difference between market price and exercise price
The fair value of the option at the grant date

Topics in Long Term Liabilities (Katas)

First Principles Thinking: US GAAP treatment of past service costs

First Principles Thinking: US GAAP pension components

First Principles Thinking: equity impact of option expense

First Principles Thinking: purpose of share-based compensation

First Principles Thinking: defined-contribution plan expense

First Principles Thinking: discount rate for pension obligation

First Principles Thinking: measurement date for share-based compensation

First Principles Thinking: stock grant expense measurement

First Principles Thinking: restricted stock grant conditions

First Principles Thinking: components of remeasurements under IFRS

First Principles Thinking: funded status of defined-benefit plans

First Principles Thinking: vesting date definition

First Principles Thinking: complexity of deferred compensation reporting

First Principles Thinking: disadvantage of share-based compensation

First Principles Thinking: nature of deferred compensation

First Principles Thinking: IFRS pension components

First Principles Thinking: IFRS treatment of remeasurements

First Principles Thinking: cash flow classification of pension contributions

First Principles Thinking: classification of SARs

First Principles Thinking: unpaid defined-contribution obligation

First Principles Thinking: option expense at exercise