Question 1

Which of the following statements is true regarding share appreciation rights (SAR)payable in cash?

Accepted Answer

A) Changes in estimated total compensation are recorded as prior period adjustments. 
B) The amount of compensation under the SAR plan is unknown until the rights are actually exercised. 
C) At the time of exercise a participant may receive either cash or common stock. 
D) Deferred compensation expense is recorded at the time the share appreciation rights are granted. 
A) Changes in estimated total compensation are recorded as prior period adjustments. 
B) The amount of compensation under the SAR plan is unknown until the rights are actually exercised. 
C) At the time of exercise a participant may receive either cash or common stock. 
D) Deferred compensation expense is recorded at the time the share appreciation rights are granted.

Question 2

Which of the following is not a situation in which employee compensation is classified as a liability?

Accepted Answer

A) The option is granted for the acquisition of securities classified as equity securities. 
B) The option is granted for the acquisition of securities classified as liabilities,such as redeemable preferred stock 
C) The employee can sell back the acquired shares to the employer corporation at the exercise price within a reasonable period of time. 
D) The compensation is in the form of stock appreciation rights. 
A) The option is granted for the acquisition of securities classified as equity securities. 
B) The option is granted for the acquisition of securities classified as liabilities,such as redeemable preferred stock 
C) The employee can sell back the acquired shares to the employer corporation at the exercise price within a reasonable period of time. 
D) The compensation is in the form of stock appreciation rights.

Question 3

Under a defined contribution pension plan,the contribution is fixed but benefits can vary.

Accepted Answer

A) True 
 B)False

Question 4

In a contributory pension plan,employees must fund some or all of their pension costs.

Accepted Answer

A) True 
 B)False

Question 5

Equity classified awards should be reported as compensation expense ________.

Accepted Answer

A) using the book value method 
B) at the date of grant 
C) using the fair value method 
D) at the date of exercise 
A) using the book value method 
B) at the date of grant 
C) using the fair value method 
D) at the date of exercise

Question 6

Which of the following is not a key element of a defined benefit pension plan?

Accepted Answer

A) amortization of future benefit obligations 
B) service cost 
C) expected return on plan assets 
D) interest on projected benefit obligation 
A) amortization of future benefit obligations 
B) service cost 
C) expected return on plan assets 
D) interest on projected benefit obligation

Question 7

List and explain the three methods used to measure a company's pension obligation to its employees.

Accepted Answer

1.Vested benefit obligation (VBO)-This m

Question 8

Which of the following conditions is not required for an employee stock purchase plan to be non-compensatory?

Accepted Answer

A) The plan is made available to substantially all employees. 
B) After the plan is established,there is a maximum one month period to elect to participate in the plan. 
C) The discount is not larger than 5% of the open market price. 
D) Top-level employees may purchase no more than a set percentage of shares available. 
A) The plan is made available to substantially all employees. 
B) After the plan is established,there is a maximum one month period to elect to participate in the plan. 
C) The discount is not larger than 5% of the open market price. 
D) Top-level employees may purchase no more than a set percentage of shares available.

Question 9

Refer to Walker Corporation.On April 1,Year 7,when the market price of Walker's stock was $20 per share,15,000 of the options were exercised.Make the appropriate journal entry to record this transaction.

Accepted Answer

The answer of Refer to Walker Corporation.On April 1,Year 7,when...

Question 10

What is the entry to record the expiration of 15% of the options on December 31,Year 5?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 11

The compensation associated with equity classified awards is ________.

Accepted Answer

A) the estimated book value of the options 
B) the estimated fair value of the options 
C) allocated to compensation expense until the options expire 
D) recorded as compensation expense when the options are granted 
A) the estimated book value of the options 
B) the estimated fair value of the options 
C) allocated to compensation expense until the options expire 
D) recorded as compensation expense when the options are granted

Question 12

List the four key areas that minimum disclosures for stock-based compensation plans must address.

Accepted Answer

1.The nature and terms of the stock-base

Question 13

Under a defined benefit plan,the contribution is fixed but benefits can vary.

Accepted Answer

A) True 
 B)False

Question 14

At the beginning of the current year,Bridges Corporation has a net gain-Accumulated Other Comprehensive Net Income of $80,000,000.The Projected Benefit Obligation and the plan assets are $500,000,000 and $650,000,000 respectively.The average remaining service period for the employees to receive benefits is 15 years.What is the amount of amortization to pension expense for the year?

Accepted Answer

A) $1,000,000 
B) $1,500,000 
C) $2,000,000 
D) $8,000,000 
A) $1,000,000 
B) $1,500,000 
C) $2,000,000 
D) $8,000,000

Question 15

The initial journal entry to record an equity-classified award serves as a disclosure for a stock option plan.

Accepted Answer

A) True 
 B)False

Question 16

The value of forfeited stock options reduce compensation expense.

Accepted Answer

A) True 
 B)False

Question 17

What is the total compensation cost for this plan?

Accepted Answer

A) $80,000 
B) $160,000 
C) $240,000 
D) $480,000 
A) $80,000 
B) $160,000 
C) $240,000 
D) $480,000

Question 18

What is the primary difference in defined-benefit pension disclosures between U.S.GAAP and IFRS?

Accepted Answer

Under U.S.GAAP,all pension cost componen

Question 19

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 20

What is the journal entry to record compensation expense for Year 1?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Exam 20: Accounting for Employee Compensation and Benefits

Which of the following statements is true regarding share appreciation rights (SAR)payable in cash?

Which of the following is not a situation in which employee compensation is classified as a liability?

Under a defined contribution pension plan,the contribution is fixed but benefits can vary.

In a contributory pension plan,employees must fund some or all of their pension costs.

Equity classified awards should be reported as compensation expense ________.

Which of the following is not a key element of a defined benefit pension plan?

List and explain the three methods used to measure a company's pension obligation to its employees.

Which of the following conditions is not required for an employee stock purchase plan to be non-compensatory?

Refer to Walker Corporation.On April 1,Year 7,when the market price of Walker's stock was $20 per share,15,000 of the options were exercised.Make the appropriate journal entry to record this transaction.

What is the entry to record the expiration of 15% of the options on December 31,Year 5?

The compensation associated with equity classified awards is ________.

List the four key areas that minimum disclosures for stock-based compensation plans must address.

Under a defined benefit plan,the contribution is fixed but benefits can vary.

The initial journal entry to record an equity-classified award serves as a disclosure for a stock option plan.

The value of forfeited stock options reduce compensation expense.

What is the total compensation cost for this plan?

What is the primary difference in defined-benefit pension disclosures between U.S.GAAP and IFRS?

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

What is the journal entry to record compensation expense for Year 1?

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

OL: Revenue Recognition

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Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Earnings Per Share

Accounting Corrections and Error Analysis

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