INTERMEDIATE ACCOUNTING II – COMPREHENSIVE EXAMINATION c.

Deducted from equity

THEORY OF ACCOUNTS – SET B d. Deducted from equity, net of any related income tax benefit
1st SEMESTER SY 2022-2023 7. When collectability is reasonable assured, the excess of the subscription price over the
1. If shares are issued for noncash consideration, the shares issued shall be measured by stated value of the no-par subscribe share capital shall be recorded as
a. Fair value of the shares issued a. No par share capital
b. Par value of the shares issued b. Share premium when the subscription is recorded
c. Fair value of the noncash consideration received c. Share premium when the subscription is collected
a. Carrying amount of the noncash consideration received d. Share premium when the share capital is issued
8. When treasury shares are purchased for more than par value, what account or accounts
2. Which of the following statements is incorrect treasury shares? shall be debited?
a. Treasury shares shall be recorded at cost irrespective of whether acquire below or a. Treasury shares for the par value and share premium for the excess of purchase price
above par value. over the par value
b. The total cost of treasury shares shall be deducted from equity. b. Share premium for the purchase price
c. Treasury shares may be recognized as financial asset. c. Treasury shares for the purchase price
d. Gain or loss on sale of treasury shares shall not be included in profit or loss d. Treasury shares for the par value and retained earnings for excess of the purchase
price over the par value.
3. “Loss ” from sale of treasury shares shall be change to 9. When preference shares are purchased and retired by the issuing entity for less than original
a. Loss on sale of treasury shares to be reported as other expense issue price, proper accounting for the retirement
b. Retailed earnings and then share premium from treasury shares a. Increase the amount of dividends available to ordinary shareholders
c. Share premium from treasury shares and then retained earnings b. Increases the contributed capital of the ordinary shareholders
d. Share premium from original issuance, share premium from treasury shares and then c. Increases reported income for the period
retained earnings d. Increases the treasury shares
4. Subscriptions receivable from sale of shares which are not collectible currently shall be
presented as 10. Only a memorandum entry is made when
a. Deduction from the related subscribed share capital under shareholders’ equity a. Entities give share warrants to executives and employees as a form of compensation
b. Current asset b. Entities include share warrants to make a security more attractive
c. Long term investment c. Entities issue rights to existing shareholders.
d. Other asset d. All of the choices are correct
5. A redeemable preference share shall be classified in the statement of financial position as 11. Share warrants outstanding should be reported as
a. Current liability a. Liability c. Reduction of share premium
b. Noncurrent liability b. Share capital d. Share premium
c. Either current liability or noncurrent liability depending on redemption
d. Component of shareholders’ equity 12. When shareholders may select to receive cash lieu of stock dividend, the amount to be
charged to retained earnings is equal to
6. Transaction costs that are directly attribute to the issuance of new shares should be a. Optional cash dividend c. Fair value of the shares
a. Expensed immediately b. Par value of the shares d. Book value of the shares
b. Charged to retained earnings
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13. If the stock dividends less than 20%, what amount of the retained earnings should be 19. The primary purpose of a quasi –reorganization is to give the entity the opportunity to
capitalized? a. Obtained relief from creditors
a. Par value of the shares b. Revalue understated assets at fair value
b. Fair value of the shares on the date of declaration c. Eliminate a deficit
c. Fair value of the shares on the date of record d. Distribute the share of a newly-created subsidiary to the shareholders in exchange for
d. Fair value of the shares on the date of issuance part of their shares in the corporation
14. An entity shall review and adjust the carrying amount of the dividend payable at the end of 20. An entity with a substantial deficit undertakes a quasi –reorganization. Certain assets are
each reporting period and at the date of settlement with any changes in the carrying amount written down to fair value. Liabilities remain the same. How would the quasi –reorganization
of the dividend payable recognized affect share capital and retained earnings, respectively?
a. In equity as adjustment to the amount of distribution a. Increase and Decrease
b. In profit or loss b. Decrease and No effect
c. As adjustment of general reserve c. Decrease and Increase
d. As component of other comprehensive income d. No Effect and increase
21. An appropriation of retained earnings for the future plant expansion will result in
15. An entity declared a cash dividend on a certain date payable on another date. Retained a. The establishment of a fund to help finance future plant expansion.
earnings would b. The setting aside of cash to be used for future plant expansion.
a. Increase on the date of declaration c. Not be affected on the date of declaration c. A decrease in cash with an equal increase in the investment in fund.
b. Not be affected on the date of payment d. Decrease on the date of payment d. The disclosure that management does not intend to distribute in the form of dividends
assets equal to the amount of the appropriation
16. The issuer should charge retained earnings for the fair value of shares issued in a
a. 1 for 5 stock dividend c. 1 for 8 stock dividend 22. For equity share-based payment transactions, the entity shall measure the goods or services
b. 4 for 1 share split d. 2 for 1 share spit received and the corresponding increase in equity
17. Cash dividends are paid on the basis of the number of share a. Directly at the fair value of the goods or services
a. Authorized c. Issued b. Directly at the fair value of the equity instruments
b. Outstanding d. Outstanding less the number of treasury shares c. Indirectly at the fair value of the goods or services or directly at the fair value of equity
instruments
18. Which of the following statement is incorrect concerning the appropriation of retained d. Directly at the fair value of the goods or services or Indirectly at the fair value of equity
earnings? instruments
a. Appropriations of retained earnings do not change the total amount of shareholders’
equity. 23. For transaction with employees and others providing similar services, the value of the equity
b. Appropriations of retained earnings reflect funds set aside for a designated purpose, instrument granted is measured on
such as land expansion. a. Exercise date c. Grant date
c. Appropriations of retained earnings can be made as a result of contractual b. End of reporting period d. beginning of the year grant
requirements.
d. Appropriations of retained earnings can be made at the direction of the board of
directors.
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24. Compensation expense resulting from a share option plan is generally c. Leave working capital unaffected, decrease earnings per share and decrease book
a. Recognized in the period of exercise. value per share.
b. Recognized in the period of the grant. d. Leave working capital unaffected, decrease earnings per share and decrease the debt
c. Allocated to the periods benefited by the employee’s required service. to equity ratio.
d. Allocate over the periods of the employee’s service life to retirement. 30. Which of the following features of preference share would most likely be opposed by
ordinary shareholders?
25. The entity issued a range of share options to employees. What type of share-based payment a. Convertible c. Callable
transaction does this represent? b. Redeemable d. participating
a. Asset settle share-based payment transaction
b. Equity settle share-based payment transaction 31. When the right to receive dividend is forfeited in any one year in which dividend is not
c. Cash settle share-based payment transaction declared , the preference share is said to be
d. Liability settle share-based payment transaction a. Cumulative c. Noncumulative
b. Participating d. nonparticipating
26. For cash settled share-based payment transactions, until the liability is settled, the entity is
required to measure the fair value of the liability incurred at 32. An ordinary share
a. Fair value of the goods and services received a. Is an equity instrument that is subordinate to all other classes of equity instrument.
b. Fair value of the liability b. Is a final instrument or other contract that nay right to purchase ordinary shares
c. Either the fair value of the goods or services received or fair value of the liability c. Is a financial instrument that gives the holder the right to purchase ordinary shares
d. Neither the fair value of the goods or services received nor fair value of the liability d. Is any contract that gives rise to both a financial asset of one entity and entity and a
financial liability or equity instrument of another entity
27. If the share-based payment transaction provides that the employees have the right to choose 33. Liabilities are
the settlement whether in cash or shares, the entity is deemed to have issued a. Any accounts with credit balances
a. A compound financial instrument b. Deferred credits
b. An equity instrument c. Obligations to transfer ownership shares
c. A liability instrument d. Present obligations arising from past events and result in an outflow of resources
d. Either an entity instrument or a liability instrument but not both

28. For share appreciation rights, the measurement date for computing compensation is the 34. Which of the following represents a liability?
a. Date the rights mature c. Date the share reaches a predetermined amount a. The obligation to pay for goods that an entity expects to order from suppliers next
b. Date of grant d. Date of exercise year.
b. The obligation to provide goods that customers have ordered and paid for during the
29. The effect of recording a 100% stock dividend would be to current year.
a. Decrease the current ratio, decrease working capital and decrease book value per c. The obligation to pay interest on a five-year note payable that was issued the on last
share day of the current year.
b. Leave inventory turnover unaffected, increase earnings per share and increase book d. The obligation to distribute an entity’s own shares next year as a result of a stock
value per share dividend declared near the end of the current year.

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35. The fair value of a liability is defined as 40. The accrual approach in accounting for product warranty cost
a. The appraised value of a liability. a. Is required for income tax purposes.
b. The price that would be received to assume the liability b. Is frequently justified on the basis of expediency when warranty cost is immaterial.
c. The amount that would be paid when transferring a liability in an orderly transaction c. Finds the expense account being charged when the seller performs in compliance with
between market participants. the warranty.
d. The carrying amount of a liability on the date of transaction. d. Represents accepted practice and should be used whenever the warranty is an integral
36. Which of the following is false in relation to the fair value option of measuring a financial and inseparable part of the sale.
liability?
a. At initial recognition, an entity may irrevocably designate a financial liability at fair 41. When an entity received an advance payment for special order goods that are to be
value through profit or loss. manufactured and delivered within six months, the advance payment shall be reported as
b. The amortization is based on the effective interest method. a. Deferred charge c. Contra asset account
c. The financial liability is measured at fair value at every year-end and any change in fair b. Current liability d. Noncurrent Liability
value is generally recognized in profit or loss.
d. The interest expense on the financial liability is recognized using the nominal interest 42. How would the proceeds received from advance sale of non-refundable tickets for a
rate. theatrical performance be reported in the seller’s financial statements before the
performance?
37. At year-end, an entity classified a note payable as current liability. Under what conditions a. Unearned revenue for the entire proceeds.
could the entity reclassify the note payable from current to noncurrent? b. Revenue for the entire proceeds
a. If the entity has the intent and ability to reclassify the note before the end of reporting c. Unearned revenue to the extent of related costs expended
period. d. Revenue to the extent of related costs expended.
b. If the entity has executed an agreement to refinance the note before issuance of the 43. Which of the following is the correct definition of a provision?
financial statements. a. A possibly obligation arising from past event
c. If the entity has the intent and ability to reclassify the note before the issuance of the b. A liability of uncertain timing or amount
financial statements. c. A liability which cannot be easily measured
d. If the entity has executed an agreement to refinance the note before the end of d. An obligation to transfer funds to an entity
reporting period. 44. When the provision arises from a single obligation, the estimate of the amount
a. Reflects the weighting of all possible outcomes by their associated probabilities.
38. It is a marketing scheme whereby an entity grants award credits to customers and the entity b. Is determined as the individual most likely income
can redeem the award credits in exchange for free or discounted goods or services. c. Is the individual most likely outcome adjusted for the effect of other possible
a. Customer loyalty program c. Premium plan outcomes.
b. Marketing plan d. Loyalty award d. Midpoint of other possible outcomes.

39. Which of the following best describes the expense approach of accounting for warranty 45. When should a “provision” be recognized?
cost? a. When there is a legal obligation arising from a past obligating event, the probability of
a. Expensed based on estimate in year of sale c. Expensed when liability is accrued the outflow of resources is more than remote but less than probable and a reliable
b. Expensed when warranty claims are certain d. Expensed when incurred estimate can be made of the amount of the obligation.
SET B Page 4 of 9
 b. When there is a constructive obligation as a result of a past obligating event, the 50. A contingent liability shall be recognized when
outflow of resources is probable, and a reliable estimate can be made of the amount a. It is probable that a liability has been incurred even though the amount of the loss
of the obligation. cannot be reliably measured.
c. When there is a possible obligation arising from a past event, the outflow of resources b. The amount of the loss can be reliably measured and it is probable prior to issuance of
is probable, and an approximate amount can be set aside toward the obligation. financial statements that a liability has been incurred.
d. When management decides that it is essential that a provision be made for unforeseen c. Any lawsuit is actually filed against the entity.
circumstances and keeping in mind this year the profits were enough but next year d. It is certain that funds are available to pay the amount of the claim.
there may be losses. 51. Pending litigation would generally be considered
a. Nonmonetary liability c. Contingent liability
46. In calculating present value in a situation with a range of possible outcomes all discounted b. Estimated liability d. Current liability
using the same interest rate, the expected present value would be 52. Which of the following should be disclosed in the financial statements as a contingent
a. The most-likely outcome c. The maximum outcome liability?
b. The minimum outcome d. The sum of probability-weighted present values a. The entity is involved in a legal case which it may possibly lose.
b. The entity has not yet paid certain claims under product warranties.
47. Which statement is incorrect where the expenditure required to settle a provision is c. The entity has received a letter from a supplier complaining about an old unpaid invoice.
expected to be reimbursed by another party? d. The entity has accepted liability prior to the year-end for unfair dismissal of an employee
a. The reimbursement shall not be treated net of the reimbursement asset and therefore and is to pay damages.
“netted” against the estimated liability for the provision. 53. Which of the following is required to be disclosed regarding risk and uncertainties that exist?
b. The amount of reimbursement shall not exceed the amount of the provision. a. Factor causing an estimate to be sensitive.
c. The reimbursement shall be recognized only when it is virtually certain that the b. The potential impact of estimate when it is reasonably possible that the estimate will
reimbursement would be received if the entity settles the obligation. change in the future.
d. In the income statement, the expense relating to the provision may be presented net of c. The potential impact of estimate when it is remotely possible that the estimate will
the reimbursement. change in the future.
48. It is a contact in which the unavoidable costs of meeting the obligation under the contract d. A description of operations both within and outside of the home country.
exceed the economic benefits to be received under the contract. 54. Gain contingencies that are remote and can be reliably measured
a. Executory contract c. Executed Contract a. Must be disclosed in a note to the financial statements.
b. Onerous Contract d. Sale Contract b. May be disclosed in a note to the financial statements.
c. Must be reported in the body of the financial statements.
49. For which of the following should a provision be recognized d. Should not be reported or disclosed.
a. Future operating losses 55. Bonds payable not designated at fair value through profit loss shall be measured initially at
b. Obligations under insurance contracts a. Fair value c. Fair value plus bond issue costs
c. Obligation for plant decommissioning costs b. Fair value minus bond issue costs d. Face amount
d. Reduction in the fair value of financial instruments 56. Bonds issued with scheduled maturities at various dates are called
a. Convertible bonds c. Term bonds
b. Serial bonds d. Callable bonds

SET B Page 5 of 9
57. Unamortized debt discount should be reported as a. Fair value of the bonds c. Fair value of the bonds ex-warrant
a. Direct deduction from the face amount of the debt b. Share warrants outstanding d. Proceed received from the sale of the bonds.
b. Direct deduction from the present value of the debt
c. Deferred charge 64. The major difference between convertible bonds and bonds issued with share warrants is
d. Part of the issue costs that upon exercise of the warrants
58. An extinguishment of bonds payable originally issued at a premium is made by purchase of a. The shares are held by the issuer for a certain period before they are issued to the
the bonds between interest dates. Which of the following statements is false at the time of warrant holder.
extinguishment? b. The holder has to pay a certain amount to obtain the shares.
a. Any costs of issuing the bonds must be amortized up to the purchase date. c. The shares involved are restricted.
b. The difference between the carrying amount and the face amount at the time of d. No share premium can be a part of the transaction.
extinguishment can be either be a gain or loss.
c. The premium must be amortized up to the purchase date. 65. When convertible bond is not converted but paid at maturity
d. Interest must be accrued from the last interest date to the purchase date. a. A gain or loss is recorded for the difference between the carrying amount of the bond
and the present value of cash flows.
59. Bond issue costs b. The amount allocated is recorded as a gain.
a. Expense in the period incurred c. The amount allocated is recorded as a loss.
b. Recorded as a reduction in the carrying amount of bonds payable d. The carrying amount of the bond equal to face amount is derecognized.
c. Deferred and amortized over the life of the bonds 66. How are the proceeds from issuing a compound instrument allocated between the liability
d. Expense in the period when the bonds are retired. and equity components?
a. First the equity component is measured at fair value, and then the remainder of the
60. How should an entity calculate the net proceeds to be received from bond issuance? proceeds is allocated to the liability component.
a. Discount the bonds at the stated rate of interest b. First, the liability component is measured at fair value, and then the remainder of the
b. Discount the bonds at the market rate of interest proceeds is allocated to the equity component.
c. Discount the bonds at the stated rate of interest and deduct bonds issuance cost c. The equity component is measured at its intrinsic value. The liability component is
d. Discount the bonds at the market rate of interest and deduct bond issuance cost measured at the face amount less the intrinsic value of the equity component.
d. First the fair values of both the equity component and the liability component are
61. When interest expense for the current year is less than interest paid, bonds were issued at estimated. Then the proceeds are allocated to the liability and equity components
a. A discount c. A premium based on the relationship between the estimated fair value.
b. Face amount d. An indeterminable amount 67. After initial recognition, an entity shall measure a note payable at
a. Amotized cost
62. A discount on bond payable is charged to interest expense b. Fair value through profit or loss
a. Equally over the life of the bond c. Using the effective interest method c. Either amortized cost or fair value through profit or loss
b. Only in the year the bond is issued d. Only in the year the bond matures. d. Either amortized cost or fair value through other comprehensive income.
68. If the present value of a note issued in exchange for a property is less than face amount, the
63. An entity issued bonds payable with nondetachable share warrants. In computing interest difference should be
expense for the first year, the effective interest rate is multiplied by a. Included in the cost of the asset
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 b. Amortized as interest expense over the life of the note 74. A right of use asset is initially measured at
c. Amortized as interest expense over the life of the asset a. Cost c. Fair value
d. Included in interest expense in the year of issuance. b. Current cost d. Present value of expected cash inflows
69. Which of the following statements concerning discount on note payable is incorrect? 75. A lessee with a lease containing a purchase option that is reasonably certain to be exercised
a. Discount on note payable may be debited when an entity discounts its own note with should depreciate the right of use asset over
the bank. a. Useful life of the asset
b. The discount on note payable is a contra liability account which is shown as a b. Lease term
deduction from note payable. c. Useful life of the asset or the lease term, whichever is shorter
c. The discount on note payable represents interest charge applicable to future periods. d. Useful life of the asset or the lease term, whichever is longer
d. Amortizing the discount on note payable causes the carrying amount of the liability to 76. The lease payments include all of the following, except
gradually decrease over the life of the note. a. Fixed lease payments
b. Variable lease payments
70. For a debt restructuring involving substantial modification of terms, it is appropriate for a c. Exercise price of a purchase that is not reasonably certain to be exercised
debtor to recognize a gain when the carrying amount of the debt d. Residual value guarantee of the lessee
a. Exceed the total future cash payments specified by the new terms. 77. What is the treatment of initial direct cost incurred by the lessee in a finance lease?
b. Is less than the total future cash payments specified by the new terms. a. Added to the lease liability
c. Is less than the present value of the future cash payments specified by the new terms b. Added to the carrying amount of the right of use asset
d. Exceed the present value of the future cash payments specified by the new terms c. Expensed immediately
d. Added to the carrying amount of the right of use asset and lease liability
71. There is substantial modification of terms of an old financial liability if the gain or loss on 78. If the residual value of an underlying asset is greater than the amount guaranteed by the
extinguishment lessee
a. Less than the 10% of the new liability a. The lessor pays the lessee for the difference
b. At least 10% of the new liability b. The lessee recognizes a gain at the end of the lease term
c. Less than 10% of the carrying amount of the old liability c. The lessee has no obligation related to the residual value
d. At least 10% of the carrying amount of the old liability d. The lessee pays the lessor for the difference
72. An entity shall initially measure equity instruments issued to extinguish a financial liability at 79. A lessee had a ten-year finance lease requiring equal annual payments. The reduction of the
a. Fair value of the equity instruments issued lease liability in the second year should equal
b. Fair value of the liability extinguished a. The current liability shown for the lease at the end of first year
c. Par value of the equity instruments issued b. The current liability shown for the lease at the end of second year
d. Carrying amount of the liability extinguished c. The reduction of the lease liability in the first year
73. The gain or loss from extinguishment of a financial liability by issuing equity instruments is d. One-tenth of the original lease liability
presented as
a. Other income or other expense 80. When should a lessor recognize in income a nonrefundable lease bonus paid by a lessee on
b. Separate line item in the income statement a signing an operating lease?
c. Component of other comprehensive income a. When received c. At the inception of the lease
d. Component of finance cost b. At the lease expiration d. Over the lease term
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81. Which statement characteristics an operating lease? 87. Accounting profit is
a. The lessee records depreciation and interest a. The profit or loss for a period before deducting tax expense
b. The lessee records the lease obligation related to the underlying asset b. The profit or loss for a period determined in accordance with tax law
c. The lessor transfers title of the underlying asset to the lessee for the duration of the c. The profit or loss for a period after deducting tax expense
lease term d. The profit or loss after a current tax expense determined in accordance with tax law
d. The lessor records depreciation and lease revenue.
88. These are differences that result in future deductible amounts in determining taxable profit
82. All of the following situations would prima facie lead to a lease being classified as a finance in future periods when the carrying amount of the asset or liability is recovered or settled.
lease, except a. Taxable temporary differences
a. Transfer of ownership to the lessee at the end of the lease term. b. Deductible temporary differences
b. Option to purchase at a value below the fair value of the underlying asset. c. Taxable temporary and permanent differences
c. The lease term is for a major part of the asset’s life. d. Deductible temporary and permanent differences
d. The present value of the lease payments is 50% of the fair value of the asset. 89. The deferred tax expense is equal to
83. The accounting concept that is principally used to classify leases into operating & finance is a. Increase in deferred tax asset less the increase in deferred tax liability.
a. Substance over form c. Prudence b. Increase in deferred tax liability less the increase in deferred tax asset.
b. Neutrality d. Completeness c. Increase in deferred tax asset.
d. Increase in deferred tax liability.
84. Gross investment in the lease is equal to 90. Justification for the method of determining periodic deferred tax expense is based on the
a. Sum of the lease payments receivable by a lessor under a finance lease and any concept of
unguaranteed residual value accruing to the lessor. a. Matching of periodic expense to periodic revenue.
b. The lease payments under a finance lease of the lessor. b. Objectivity in the calculation of periodic expense.
c. Present value of lease payments under a finance lease of the lessor and any c. Recognition of asset and liability.
unguaranteed residual value. d. Consistency of tax expense measurement with actual tax planning strategies.
d. Present value of the lease payments under a finance lease of the lessor.
85. The lease receivable in a direct financing lease is 91. An entity reported deferred tax asset and deferred tax liability at the end of the prior year
a. The gross amount of lease payments and at the end of the current year. For the current year, the entity should report deferred
b. The difference between the gross rentals and the fair value of the leased asset. tax expense or benefit equal to the
c. The present value of lease payments a. Decrease in the deferred tax asset
d. The cost of the asset less any accumulated depreciation b. Increase in the deferred tax liability
86. Which statement characterizes a sales type lease? c. Amount in current liability plus the sum of the net changes in deferred tax asset and
a. The lessor recognizes only interest revenue over the useful life of the asset. deferred tax liability
b. The lessor recognizes only interest revenue over the lease term. d. Sum of the net changes in deferred tax asset and deferred tax liability
c. The lessor recognizes a dealer profit at lease inception and interest revenues over the
lease term. 92. Which statement is true about intraperiod tax allocation?
d. The lessor recognizes a dealer profit at lease inception and interest revenue over the a. It arises because certain revenue and expense items appear in the income statement
useful life of the asset. either before or after they are included in the tax return.
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 b. It is required for the cumulative effect of accounting changes but not for prior period 97. Under which category should lump sum benefit and actuarial gains be accounted for?
errors. a. Lump sum benefit and actuarial gains should be accounted for under defined benefit
c. The purpose is to allocate income tax expense evenly over a number of accounting
plan
periods.
b. Lump sum benefit should be accounted for under short term employee benefits and
d. The purpose is to relate the income tax expense to the items which affect the amount
actuarial gains should be accounted for under defined benefit plan
of tax.
93. Which statement characterizes defined contribution plans? c. Lump sum benefit should be accounted for under defined benefit plan and actuarial
a. Defined contribution plans are more complex gains should be accounted for under defined contribution plan
b. The employer’s obligation is satisfied by making the appropriate amount of periodic d. Lump sum benefit should be accounted for under short term employee benefits and
contribution actuarial gains should be accounted for under defined contribution plan
c. The investment risk is bone by the employer 98. Short-term employee benefits include all, except
d. Contributions are made in equal amounts by employer and employees a. Wages, salaries and social security contributions
b. Short-term compensated absences
94. In accounting for a defined benefit plan c. Profit-sharing and bonuses payable in more than twelve months after the end of the
a. An appropriate funding must be established to ensure that enough fund would be reporting period
available at retirement d. Nonmonetary benefits, such as medical care, housing, car and free and subsidized
b. The employer responsibility is simply to make a contribution each year goods
c. The expense recognized each period is equal to the cash contribution to the plan
d. The liability is determined based upon variables that reflect current salary levels. 99. Which of the following criteria is not required for the recognition of a liability for
compensated absences?
95. Plan assets held by a long-term benefit fund must satisfy all of the following conditions, a. The amount of the obligation must be estimable
except b. Payment of the obligation must be probable
a. The assets are held by an entity, the fund itself, that is legally separate from the c. Payment of the obligation will require the use of current assets
reporting entity d. The compensation either vests with the employee or can be carried forward to
b. The assets in the fund are available to pay only employee benefits subsequent years
c. The assets in the fund are not available to the reporting entity’s own creditors
d. The assets in the fund can be returned to the entity even if the remaining assets are 100. A profit-sharing plan requires an entity to pay a specified proportion of the cumulative
insufficient to meet all employee benefit obligations profit for a five-year period to employees who serve throughout the five-year period. What
is the profit-sharing plan?
96. A pension liability is reported when a. A short-term employee benefit
a. The defined benefit obligation exceeds the fair value of plan assets b. A postemployment benefit
b. The accumulated benefit obligation is less than the fair value of plan assets c. Other long-term employee benefit
c. The pension expense for the period is greater than the funding amount for the same d. A termination benefit
period
d. Cumulative other comprehensive income exceeds the fair value of plan assets
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