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Exam 20: Accounting for Employee Compensation and Benefits

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Question 31

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Prior service cost is recognized as pension expense over a period of several years under IFRS.

A) True
B) False

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Question 32

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What is the most important accounting objective for equity classified awards?

A) Measuring their fair value for balance sheet purposes.
B) Determining the correct amount of compensation expense during the service period.
C) Disclosing increases and decreases in the value of the stock options held at the end of each accounting period.
D) Determining the change in the number of stock options that will eventually be exercised.

E) None of the above
F) B) and C)

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Question 33

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Refer to Walker Corporation.Assuming that all compensation expense has been recorded,record the journal entry to reflect the expiration of 3,000 options that were never exercised.

On January 1,Year 1,Gallagher Corporation issued stock options for 300,000 shares to a division manager.The options have an estimated fair value of $6 each.These options are not exercisable unless division revenue increases by 8% in four years.Gallagher estimates that it is probable that the goal will be achieved.What is pretax compensation expense for year 1?

Which of the following is a characteristic of the projected benefit obligation measurement?

Which of the following is not an element of pension cost that must be disclosed?

Which of the following areas is not an area that financial statements users seek to analyze in a company's defined benefit pension plan?

The accumulated benefit obligation reflects only current salary levels.

In what ways must an accountant exercise judgment in relation to stock-based compensation plans?

When pension plan assets exceed pension plan obligations,the pension plan is overfunded.

Which of the following is not a factor in calculating a defined benefit?

The fair value of stock options on the date of grant is usually readily determinable.

The vested benefit obligation uses future salary levels.

Under a defined benefit pension plan,employees are responsible for losses on plan assets.

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

Nonpublic entities are not required to separately disclose the components of net periodic benefit cost.

Which of the following items is not specified by a compensation arrangement?

Teague Corporation permits any of its 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 15,000 shares at a time when the established market price was $25 per share.Teague will record compensation expense associated with July purchases of ________.

When a pension plan is amended to recognize previous service of currently enrolled employees,what component of pension expense is created?

Pension data for John Ferguson Company include the following for the current calendar year: Discount rate: 7% Expected return on plan assets: 11% Actual return on plan assets: 10% Service cost: $250,000 January 1: December 31: Required: 1.Determine pension expense for the year. 2.Prepare the journal entries to record pension expense and funding and distributions to employees for the year.