Question 1

Compensation expense associated with stock options is ________.

Accepted Answer

A)  based upon the book value of the options 
B)  based upon the estimated fair value of the options 
C)  recorded on the date that the options are granted 
D)  allocated as expense over the time period until the options expire 
A)  based upon the book value of the options 
B)  based upon the estimated fair value of the options 
C)  recorded on the date that the options are granted 
D)  allocated as expense over the time period until the options expire

Question 2

Which of the following items is generally not specified by a compensation arrangement involving stock options?

Accepted Answer

A)  number of options granted 
B)  current market price 
C)  exercise price 
D)  vesting period 
A)  number of options granted 
B)  current market price 
C)  exercise price 
D)  vesting period

Question 3

What is the proper treatment of prior service costs?

Accepted Answer

A)  Prior service costs are included in other comprehensive income and amortized over future periods. 
B)  Prior service costs are included in other comprehensive income and amortized retroactively over the most recent three periods. 
C)  Prior service costs are included in net income and expensed in the current year. 
D)  Prior service costs are included in net income and amortized over future periods. 
A)  Prior service costs are included in other comprehensive income and amortized over future periods. 
B)  Prior service costs are included in other comprehensive income and amortized retroactively over the most recent three periods. 
C)  Prior service costs are included in net income and expensed in the current year. 
D)  Prior service costs are included in net income and amortized over future periods.

Question 4

In non-compensatory employee stock purchase plans, a company will record the amount of the discount below the regular market price as compensation expense.

Accepted Answer

A) True 
 B)False

Question 5

Among Fortune 500 companies, which of the following compensation plans is most common?

Accepted Answer

A)  stock options 
B)  profit-sharing 
C)  employee stock ownership 
D)  deferred compensation 
A)  stock options 
B)  profit-sharing 
C)  employee stock ownership 
D)  deferred compensation

Question 6

The vested benefit obligation uses future salary levels.

Accepted Answer

A) True 
 B)False

Question 7

Amortizing a net actuarial gain for pensions will ________.

Accepted Answer

A)  increase retained earnings and increase accumulated other comprehensive income 
B)  increase retained earnings and decrease accumulated other comprehensive income 
C)  decrease retained earnings and decrease accumulated other comprehensive income 
D)  decrease retained earnings and increase accumulated other comprehensive income 
A)  increase retained earnings and increase accumulated other comprehensive income 
B)  increase retained earnings and decrease accumulated other comprehensive income 
C)  decrease retained earnings and decrease accumulated other comprehensive income 
D)  decrease retained earnings and increase accumulated other comprehensive income

Question 8

Which of the following statements about pension plan disclosures is true?

Accepted Answer

A)  The difference between the projected benefit obligation and the plan assets at fair value represents the unfunded status of the plan reported on the balance sheet. 
B)  Public entities are not required to disclose the components of net pension benefit cost. 
C)  The footnote must disclose assumptions used for discount rates and expected return on assets on a weighted average basis. 
D)  Nonpublic entities must separately disclose the components of net pension benefit cost. 
A)  The difference between the projected benefit obligation and the plan assets at fair value represents the unfunded status of the plan reported on the balance sheet. 
B)  Public entities are not required to disclose the components of net pension benefit cost. 
C)  The footnote must disclose assumptions used for discount rates and expected return on assets on a weighted average basis. 
D)  Nonpublic entities must separately disclose the components of net pension benefit cost.

Question 9

Companies are required to disclose the intrinsic values of outstanding stock options granted.

Accepted Answer

A) True 
 B)False

Question 10

On January 1, 2017, Smart Corporation issues 10,000 shares of $5 par restricted stock to an executive. The market value of unrestricted shares of the same stock on the date of issue is $25 and there is a four-year vesting period. On January 1, 2018, the executive leaves and forfeits the restricted stock award. Record the journal entries for the issuance of the restricted shares, compensation expense for the first year, and forfeiture of the restricted stock.

Accepted Answer

January 1, 2017:
Deferred Compensation -

Question 11

Allied Electronics offered an incentive stock plan to its employees. On January 1, Year 1, 100,000 options were granted for 100,000 $10 par common shares. The exercise price equals the $25 market price of the common stock on the grant date. The vesting period is 3 years. The options cannot be exercised before January 1, Year 4, and expire on December 31, Year 5. Each option has a value of $15 based upon an option pricing model.
At the end of the first year, it is expected that 100% of employees will exercise the options. By the end of Year 2, it is expected that only 80% of the options will be exercised. Allied chooses to adjust the
fair value of options for the estimated forfeitures.
What are the journal entries to reflect the first year and second years' compensation expense? (Do not round intermediate calculations. Only round your final answer to the nearest dollar.)

Accepted Answer

End of 1st year:
Amortize 1/3 of compens

Question 12

To account for stock appreciation rights settled with cash, a company records compensation expense and a related liability.

Accepted Answer

A) True 
 B)False

Question 13

Explain the differences between accounting for defined benefit pension plans under IFRS and under GAAP.

Accepted Answer

Accounting for defined benefit pension p

Question 14

The portion of the obligation than plan participants are entitled to receive regardless of their continued employment is called the ________.

Accepted Answer

A)  retiree benefit obligation 
B)  projected benefit obligation 
C)  accumulated benefit obligation 
D)  vested benefit obligation 
A)  retiree benefit obligation 
B)  projected benefit obligation 
C)  accumulated benefit obligation 
D)  vested benefit obligation

Question 15

On January 1, 2017, Bubert Corporation issues 10,000 shares of $5 par restricted stock to its key executives. The market value of unrestricted shares of the same stock on the date of issue is $25 and there is a four-year vesting period. Record the journal entries for the issuance of the restricted shares, as well as compensation expense for the first year.

Accepted Answer

January 1, 2017
Deferred Compensation -

Question 16

If a pension plan is underfunded, it means that the ________.

Accepted Answer

A)  ABO exceeds plan assets 
B)  PBO is less than plan assets 
C)  ABO is less than plan assets 
D)  PBO exceeds plan assets 
A)  ABO exceeds plan assets 
B)  PBO is less than plan assets 
C)  ABO is less than plan assets 
D)  PBO exceeds plan assets

Question 17

An employee will not redeem a liability-classified award when the stock is out of the money.

Accepted Answer

A) True 
 B)False

Question 18

On January 1, 2017, Smart Corporation issues 12,500 shares of $2 par restricted stock to a key executive. The market value of unrestricted shares of the same stock on the date of issue is $18 and there is a four-year vesting period. On January 1, 2018, the executive leaves and forfeits the restricted stock award. The journal entry to record the forfeiture includes which of the following?

Accepted Answer

A)  credit Deferred Compensation $56,250 
B)  credit Common Stock $25,000 
C)  debit Deferred Compensation for $25,000 
D)  credit Compensation Expense for $56,250 
A)  credit Deferred Compensation $56,250 
B)  credit Common Stock $25,000 
C)  debit Deferred Compensation for $25,000 
D)  credit Compensation Expense for $56,250

Question 19

A company's defined-benefit pension plan had a projected benefit obligation (PBO) of $380,000 on January 1, Year 1. During Year 1, pension benefits paid were $70,000. The settlement rate for the plan for Year 1 was 12%. Service cost for the year was $109,000. Plan assets (fair value) increased during the year by $50,000. What was the PBO at December 31, Year 1?

Accepted Answer

A)  $310,000 
B)  $425,600 
C)  $489,000 
D)  $464,600 
A)  $310,000 
B)  $425,600 
C)  $489,000 
D)  $464,600

Question 20

Teague Corporation permits key employees to buy shares directly from the company through payroll deduction. There are no brokerage fees and shares can be purchased at a 10% discount. During July, employees purchased 20,000 $2 par shares of common stock at a time when the established market price was $30 per share. What is the journal entry to record issuance of these shares?

Accepted Answer

This is a compensatory plan, since it is

Compensation expense associated with stock options is ________.

Which of the following items is generally not specified by a compensation arrangement involving stock options?

What is the proper treatment of prior service costs?

In non-compensatory employee stock purchase plans, a company will record the amount of the discount below the regular market price as compensation expense.

Among Fortune 500 companies, which of the following compensation plans is most common?

The vested benefit obligation uses future salary levels.

Amortizing a net actuarial gain for pensions will ________.

Which of the following statements about pension plan disclosures is true?

Companies are required to disclose the intrinsic values of outstanding stock options granted.

To account for stock appreciation rights settled with cash, a company records compensation expense and a related liability.

Explain the differences between accounting for defined benefit pension plans under IFRS and under GAAP.

The portion of the obligation than plan participants are entitled to receive regardless of their continued employment is called the ________.

If a pension plan is underfunded, it means that the ________.

An employee will not redeem a liability-classified award when the stock is out of the money.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, Cost Allocation

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

Filters

Exam 19: Accounting for Employee Compensation and Benefits

Compensation expense associated with stock options is ________.

Which of the following items is generally not specified by a compensation arrangement involving stock options?

What is the proper treatment of prior service costs?

In non-compensatory employee stock purchase plans, a company will record the amount of the discount below the regular market price as compensation expense.

Among Fortune 500 companies, which of the following compensation plans is most common?

The vested benefit obligation uses future salary levels.

Amortizing a net actuarial gain for pensions will ________.

Which of the following statements about pension plan disclosures is true?

Companies are required to disclose the intrinsic values of outstanding stock options granted.

To account for stock appreciation rights settled with cash, a company records compensation expense and a related liability.

Explain the differences between accounting for defined benefit pension plans under IFRS and under GAAP.

The portion of the obligation than plan participants are entitled to receive regardless of their continued employment is called the ________.

If a pension plan is underfunded, it means that the ________.

An employee will not redeem a liability-classified award when the stock is out of the money.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, Cost Allocation

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

Filters