INTERMEDIATE ACCOUNTING II – COMPREHENSIVE

EXAMINATION 5. At year-end, an entity classified a note payable as current liability. Under

THEORY OF ACCOUNTS what conditions could the entity reclassify the note payable from current
1st SEMESTER SY 2021-2022 to noncurrent?
a. If the entity has the intent and ability to reclassify the note before
1. Liabilities are the end of reporting period.
a. Any accounts with credit balances b. If the entity has executed an agreement to refinance the note before
b. Deferred credits issuance of the financial statements.
c. Obligations to transfer ownership shares c. If the entity has the intent and ability to reclassify the note before
d. Present obligations arising from past events and result in an the issuance of the financial statements.
outflow of resources d. If the entity has executed an agreement to refinance the
note before the end of reporting period.
2. Which of the following represents a liability?
a. The obligation to pay for goods that an entity expects to order from
suppliers next year. 6. It is a marketing scheme whereby an entity grants award credits to
b. The obligation to provide goods that customers have ordered customers and the entity can redeem the award credits in exchange for
and paid for during the current year. free or discounted goods or services.
c. The obligation to pay interest on a five-year note payable that was a. Customer loyalty program c. Premium plan
issued the on last day of the current year. b. Marketing plan d. Loyalty award
d. The obligation to distribute an entity’s own shares next year as a
result of a stock dividend declared near the end of the current year. 7. Which of the following best describes the expense approach of
accounting for warranty cost?
3. The fair value of a liability is defined as a. Expensed based on estimate in year of sale c. Expensed
a. The appraised value of a liability. when liability is accrued
b. The price that would be received to assume the liability b. Expensed when warranty claims are certain d. Expensed when
c. The amount that would be paid when transferring a liability incurred
in an orderly transaction between market participants.
d. The carrying amount of a liability on the date of transaction.
8. The accrual approach in accounting for product warranty cost
4. Which of the following is false in relation to the fair value option of a. Is required for income tax purposes.
measuring a financial liability? b. Is frequently justified on the basis of expediency when warranty cost
a. At initial recognition, an entity may irrevocably designate a financial is immaterial.
liability at fair value through profit or loss. c. Finds the expense account being charged when the seller performs in
b. The amortization is based on the effective interest method. compliance with the warranty.
c. The financial liability is measured at fair value at every year-end and d. Represents accepted practice and should be used whenever
any change in fair value is generally recognized in profit or loss. the warranty is an integral and inseparable part of the sale.
d. The interest expense on the financial liability is recognized using the
nominal interest rate.
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9. When an entity received an advance payment for special order goods c. When there is a possible obligation arising from a past event, the
that are to be manufactured and delivered within six months, the outflow of resources is probable, and an approximate amount can be
advance payment shall be reported as set aside toward the obligation.
a. Deferred charge c. Contra asset account d. When management decides that it is essential that a provision be
b. Current liability d. Noncurrent Liability made for unforeseen circumstances and keeping in mind this year
the profits were enough but next year there may be losses.
10.How would the proceeds received from advance sale of non-refundable
tickets for a theatrical performance be reported in the seller’s financial
14.In calculating present value in a situation with a range of possible
statements before the performance?
outcomes all discounted using the same interest rate, the expected
a. Unearned revenue for the entire proceeds.
present value would be
b. Revenue for the entire proceeds
a. The most-likely outcome c. The maximum outcome
c. Unearned revenue to the extent of related costs expended
b. The minimum outcome d. The sum of probability-
d. Revenue to the extent of related costs expended.
weighted present values
11.Which of the following is the correct definition of a provision?
a. A possibly obligation arising from past event 15.Which statement is incorrect where the expenditure required to settle a
b. A liability of uncertain timing or amount provision is expected to be reimbursed by another party?
c. A liability which cannot be easily measured a. The reimbursement shall not be treated net of the
d. An obligation to transfer funds to an entity reimbursement asset and therefore “netted” against the
estimated liability for the provision.
12.When the provision arises from a single obligation, the estimate of the b. The amount of reimbursement shall not exceed the amount of the
amount provision.
a. Reflects the weighting of all possible outcomes by their associated c. The reimbursement shall be recognized only when it is virtually
probabilities. certain that the reimbursement would be received if the entity
b. Is determined as the individual most likely income settles the obligation.
c. Is the individual most likely outcome adjusted for the effect d. In the income statement, the expense relating to the provision may
of other possible outcomes. be presented net of the reimbursement.
d. Midpoint of other possible outcomes.
16.It is a contact in which the unavoidable costs of meeting the obligation
under the contract exceed the economic benefits to be received under
13.When should a “provision” be recognized? the contract.
a. When there is a legal obligation arising from a past obligating event, a. Executory contract c. Executed Contract
the probability of the outflow of resources is more than remote but b. Onerous Contract d. Sale Contract
less than probable and a reliable estimate can be made of the 17.For which of the following should a provision be recognized
amount of the obligation. a. Future operating losses
b. When there is a constructive obligation as a result of a past b. Obligations under insurance contracts
obligating event, the outflow of resources is probable, and a reliable c. Obligation for plant decommissioning costs
estimate can be made of the amount of the obligation. d. Reduction in the fair value of financial instruments

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18.A contingent liability shall be recognized when b. Fair value minus bond issue costs d. Face amount
a. It is probable that a liability has been incurred even though the
amount of the loss cannot be reliably measured. 24.Bonds issued with scheduled maturities at various dates are called
b. The amount of the loss can be reliably measured and it is a. Convertible bonds c. Term bonds
probable prior to issuance of financial statements that a b. Serial bonds d. Callable bonds
liability has been incurred. 25.Unamortized debt discount should be reported as
c. Any lawsuit is actually filed against the entity. a. Direct deduction from the face amount of the debt
d. It is certain that funds are available to pay the amount of the claim. b. Direct deduction from the present value of the debt
19.Pending litigation would generally be considered c. Deferred charge
a. Nonmonetary liability c. Contingent liability d. Part of the issue costs
b. Estimated liability d. Current liability 26.An extinguishment of bonds payable originally issued at a premium is
20.Which of the following should be disclosed in the financial statements as made by purchase of the bonds between interest dates. Which of the
a contingent liability? following statements is false at the time of extinguishment?
a. The entity is involved in a legal case which it may possibly lose. a. Any costs of issuing the bonds must be amortized up to the purchase
b. The entity has not yet paid certain claims under product warranties. date.
c. The entity has received a letter from a supplier complaining about an b. The difference between the carrying amount and the face
old unpaid invoice. amount at the time of extinguishment can be either be a gain
d. The entity has accepted liability prior to the year-end for unfair or loss.
dismissal of an employee and is to pay damages. c. The premium must be amortized up to the purchase date.
21.Which of the following is required to be disclosed regarding risk and d. Interest must be accrued from the last interest date to the purchase
uncertainties that exist? date.
a. Factor causing an estimate to be sensitive.
b. The potential impact of estimate when it is reasonably possible that
27.Bond issue costs
the estimate will change in the future.
a. Expense in the period incurred
c. The potential impact of estimate when it is remotely possible that
b. Recorded as a reduction in the carrying amount of bonds payable
the estimate will change in the future.
c. Deferred and amortized over the life of the bonds
d. A description of operations both within and outside of the home
d. Expense in the period when the bonds are retired.
country.
28.How should an entity calculate the net proceeds to be received from
22.Gain contingencies that are remote and can be reliably measured
bond issuance?
a. Must be disclosed in a note to the financial statements.
a. Discount the bonds at the stated rate of interest
b. May be disclosed in a note to the financial statements.
b. Discount the bonds at the market rate of interest
c. Must be reported in the body of the financial statements.
c. Discount the bonds at the stated rate of interest and deduct bonds
d. Should not be reported or disclosed.
issuance cost
23.Bonds payable not designated at fair value through profit loss shall be d. Discount the bonds at the market rate of interest and deduct
measured initially at bond issuance cost
a. Fair value c. Fair value plus bond issue costs

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29.When interest expense for the current year is less than interest paid, a. First the equity component is measured at fair value, and then the
bonds were issued at remainder of the proceeds is allocated to the liability component.
a. A discount c. A premium b. First, the liability component is measured at fair value, and
b. Face amount d. An indeterminable amount then the remainder of the proceeds is allocated to the equity
component.
c. The equity component is measured at its intrinsic value. The liability
30.A discount on bond payable is charged to interest expense
component is measured at the face amount less the intrinsic value of
a. Equally over the life of the bond c. Using the effective
the equity component.
interest method
d. First the fair values of both the equity component and the liability
b. Only in the year the bond is issued d. Only in the year the bond
component are estimated. Then the proceeds are allocated to the
matures.
liability and equity components based on the relationship between
the estimated fair value.
31.An entity issued bonds payable with nondetachable share warrants. In
35.After initial recognition, an entity shall measure a note payable at
computing interest expense for the first year, the effective interest rate
a. Amortized cost
is multiplied by
b. Fair value through profit or loss
a. Fair value of the bonds c. Fair value of the bonds ex-
c. Either amortized cost or fair value through profit or loss
warrant
d. Either amortized cost or fair value through other comprehensive
b. Share warrants outstanding d. Proceed received from the
income.
sale of the bonds.
36.If the present value of a note issued in exchange for a property is less
than face amount, the difference should be
32.The major difference between convertible bonds and bonds issued with
a. Included in the cost of the asset
share warrants is that upon exercise of the warrants
b. Amortized as interest expense over the life of the note
a. The shares are held by the issuer for a certain period before they are
c. Amortized as interest expense over the life of the asset
issued to the warrant holder.
d. Included in interest expense in the year of issuance.
b. The holder has to pay a certain amount to obtain the shares.
c. The shares involved are restricted. 37.Which of the following statements concerning discount on note payable
d. No share premium can be a part of the transaction. is incorrect?
a. Discount on note payable may be debited when an entity discounts
33.When convertible bond is not converted but paid at maturity its own note with the bank.
a. A gain or loss is recorded for the difference between the carrying b. The discount on note payable is a contra liability account which is
amount of the bond and the present value of cash flows. shown as a deduction from note payable.
b. The amount allocated is recorded as a gain. c. The discount on note payable represents interest charge applicable
c. The amount allocated is recorded as a loss. to future periods.
d. The carrying amount of the bond equal to face amount is d. Amortizing the discount on note payable causes the carrying
derecognized. amount of the liability to gradually decrease over the life of
34.How are the proceeds from issuing a compound instrument allocated the note.
between the liability and equity components?

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38.For a debt restructuring involving substantial modification of terms, it is c. Useful life of the asset or the lease term, whichever is shorter
appropriate for a debtor to recognize a gain when the carrying amount d. Useful life of the asset or the lease term, whichever is longer
of the debt
44.The lease payments include all of the following, except
a. Exceed the total future cash payments specified by the new terms.
a. Fixed lease payments
b. Is less than the total future cash payments specified by the new
b. Variable lease payments
terms.
c. Exercise price of a purchase that is not reasonably certain to be
c. Is less than the present value of the future cash payments specified
exercised
by the new terms
d. Residual value guarantee of the lessee
d. Exceed the present value of the future cash payments
specified by the new terms
39.There is substantial modification of terms of an old financial liability if 45.What is the treatment of initial direct cost incurred by the lessee in a
the gain or loss on extinguishment finance lease?
a. Less than the 10% of the new liability a. Added to the lease liability
b. At least 10% of the new liability b. Added to the carrying amount of the right of use asset
c. Less than 10% of the carrying amount of the old liability c. Expensed immediately
d. At least 10% of the carrying amount of the old liability d. Added to the carrying amount of the right of use asset and lease
40.An entity shall initially measure equity instruments issued to extinguish liability
a financial liability at
a. Fair value of the equity instruments issued
b. Fair value of the liability extinguished 46.If the residual value of an underlying asset is greater than the amount
c. Par value of the equity instruments issued guaranteed by the lessee
d. Carrying amount of the liability extinguished a. The lessor pays the lessee for the difference
b. The lessee recognizes a gain at the end of the lease term
41.The gain or loss from extinguishment of a financial liability by issuing c. The lessee has no obligation related to the residual value
equity instruments is presented as d. The lessee pays the lessor for the difference
a. Other income or other expense
b. Separate line item in the income statement 47.A lessee had a ten-year finance lease requiring equal annual payments.
c. Component of other comprehensive income The reduction of the lease liability in the second year should equal
d. Component of finance cost a. The current liability shown for the lease at the end of first
year
b. The current liability shown for the lease at the end of second year
42.A right of use asset is initially measured at c. The reduction of the lease liability in the first year
a. Cost c. Fair value d. One-tenth of the original lease liability
b. Current cost d. Present value of expected cash inflows
43.A lessee with a lease containing a purchase option that is reasonably 48.When should a lessor recognize in income a nonrefundable lease bonus
certain to be exercised should depreciate the right of use asset over paid by a lessee on a signing an operating lease?
a. Useful life of the asset a. When received c. At the inception of the
b. Lease term lease
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 b. At the lease expiration d. Over the lease term d. The cost of the asset less any accumulated depreciation
49.Which statement characteristics an operating lease? 54.Which statement characterizes a sales type lease?
a. The lessee records depreciation and interest a. The lessor recognizes only interest revenue over the useful life of the
b. The lessee records the lease obligation related to the underlying asset.
asset b. The lessor recognizes only interest revenue over the lease term.
c. The lessor transfers title of the underlying asset to the lessee for the c. The lessor recognizes a dealer profit at lease inception and
duration of the lease term interest revenues over the lease term.
d. The lessor records depreciation and lease revenue. d. The lessor recognizes a dealer profit at lease inception and interest
revenue over the useful life of the asset.
50.All of the following situations would prima facie lead to a lease being 55.Accounting profit is
classified as a finance lease, except a. The profit or loss for a period before deducting tax expense
a. Transfer of ownership to the lessee at the end of the lease term. b. The profit or loss for a period determined in accordance with tax law
b. Option to purchase at a value below the fair value of the underlying c. The profit or loss for a period after deducting tax expense
asset. d. The profit or loss after a current tax expense determined in
c. The lease term is for a major part of the asset’s life. accordance with tax law
d. The present value of the lease payments is 50% of the fair
value of the asset.
56.These are differences that result in future deductible amounts in
51.The accounting concept that is principally used to classify leases into determining taxable profit in future periods when the carrying amount of
operating & finance is the asset or liability is recovered or settled.
a. Substance over form c. Prudence a. Taxable temporary differences
b. Neutrality d. Completeness b. Deductible temporary differences
52.Gross investment in the lease is equal to c. Taxable temporary and permanent differences
a. Sum of the lease payments receivable by a lessor under a d. Deductible temporary and permanent differences
finance lease and any unguaranteed residual value accruing 57.The deferred tax expense is equal to
to the lessor. a. Increase in deferred tax asset less the increase in deferred tax
b. The lease payments under a finance lease of the lessor. liability.
c. Present value of lease payments under a finance lease of the lessor b. Increase in deferred tax liability less the increase in deferred tax
and any unguaranteed residual value. asset.
d. Present value of the lease payments under a finance lease of the c. Increase in deferred tax asset.
lessor. d. Increase in deferred tax liability.
53.The lease receivable in a direct financing lease is 58.Justification for the method of determining periodic deferred tax
a. The gross amount of lease payments expense is based on the concept of
b. The difference between the gross rentals and the fair value of the a. Matching of periodic expense to periodic revenue.
leased asset. b. Objectivity in the calculation of periodic expense.
c. The present value of lease payments
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 c. Recognition of asset and liability. a. An appropriate funding must be established to ensure that
d. Consistency of tax expense measurement with actual tax planning enough fund would be available at retirement
strategies.
b. The employer responsibility is simply to make a contribution each
59.An entity reported deferred tax asset and deferred tax liability at the year
end of the prior year and at the end of the current year. For the current
year, the entity should report deferred tax expense or benefit equal to c. The expense recognized each period is equal to the cash contribution
the to the plan
a. Decrease in the deferred tax asset
b. Increase in the deferred tax liability d. The liability is determined based upon variables that reflect current
c. Amount in current liability plus the sum of the net changes in salary levels.
deferred tax asset and deferred tax liability
d. Sum of the net changes in deferred tax asset and deferred
tax liability 63.Plan assets held by a long-term benefit fund must satisfy all of the
following conditions, except
a. The assets are held by an entity, the fund itself, that is legally
60.Which statement is true about intraperiod tax allocation? separate from the reporting entity
a. It arises because certain revenue and expense items appear in the
income statement either before or after they are included in the tax b. The assets in the fund are available to pay only employee benefits
return.
b. It is required for the cumulative effect of accounting changes but not c. The assets in the fund are not available to the reporting entity’s own
for prior period errors. creditors
c. The purpose is to allocate income tax expense evenly over a number
of accounting periods. d. The assets in the fund can be returned to the entity even if
d. The purpose is to relate the income tax expense to the items the remaining assets are insufficient to meet all employee
which affect the amount of tax. benefit obligations

61.Which statement characterizes defined contribution plans?

a. Defined contribution plans are more complex 64.A pension liability is reported when
a. The defined benefit obligation exceeds the fair value of plan
b. The employer’s obligation is satisfied by making the assets
appropriate amount of periodic contribution
b. The accumulated benefit obligation is less than the fair value of plan
c. The investment risk is bone by the employer assets
d. Contributions are made in equal amounts by employer and c. The pension expense for the period is greater than the funding
employees amount for the same period

62.In accounting for a defined benefit plan

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 d. Cumulative other comprehensive income exceeds the fair value of d. The compensation either vests with the employee or can be carried
plan assets forward to subsequent years

65.Under which category should lump sum benefit and actuarial gains be
accounted for? 68.A profit-sharing plan requires an entity to pay a specified proportion of
a. Lump sum benefit and actuarial gains should be accounted for under the cumulative profit for a five-year period to employees who serve
throughout the five-year period. What is the profit-sharing plan?
defined benefit plan
a. A short-term employee benefit
b. Lump sum benefit should be accounted for under short term
b. A postemployment benefit
employee benefits and actuarial gains should be accounted for under
defined benefit plan c. Other long-term employee benefit
c. Lump sum benefit should be accounted for under defined benefit d. A termination benefit
plan and actuarial gains should be accounted for under defined
contribution plan
69.If shares are issued for a noncash consideration , the shares issued
d. Lump sum benefit should be accounted for under short term shall be measured by
employee benefits and actuarial gains should be accounted for a. Fair value of the shares issued
under defined contribution plan b. Par value of the shares issued
c. Fair value of the noncash consideration received
66.Short-term employee benefits include all, except a. Carrying amount of the noncash consideration received
a. Wages, salaries and social security contributions

b. Short-term compensated absences 70.Which of the following statements is incorrect treasury shares?
a. Treasury shares shall be recorded at cost irrespective of whether
c. Profit-sharing and bonuses payable in more than twelve acquire below or above par value.
months after the end of the reporting period b. The total cost of treasury shares shall be deducted from equity.
c. Treasury shares may be recognized as financial asset.
d. Nonmonetary benefits, such as medical care, housing, car and free d. Gain or loss on sale of treasury shares shall not be included in profit
and subsidized goods or loss

67.Which of the following criteria is not required for the recognition of a 71.“Loss ” from sale of treasury shares shall be change to
liability for compensated absences? a. Loss on sale of treasury shares to be reported as other expense
a. The amount of the obligation must be estimable b. Retailed earnings and then share premium from treasury shares
c. Share premium from treasury shares and then retained earnings
b. Payment of the obligation must be probable d. Share premium from original issuance, share premium from
treasury shares and then retained earnings
c. Payment of the obligation will require the use of current
assets
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72.Subscriptions receivable from sale of shares which are not collectible 77.When preference shares are purchased and retired by the issuing entity
currently shall be presented as for less than original issue price, proper accounting for the retirement
a. Deduction from the related subscribed share capital under a. Increase the amount of dividends available to ordinary shareholders
shareholders’ equity b. Increases the contributed capital of the ordinary
b. Current asset shareholders
c. Long term investment c. Increases reported income for the period
d. Other asset d. Increases the treasury shares
73.A redeemable preference share shall be classified in the statement of 78.Only a memorandum entry is made when
financial position as a. Entities give share warrants to executives and employees as a form
a. Current liability of compensation
b. Noncurrent liability b. Entities include share warrants to make a security more attractive
c. Either current liability or noncurrent liability depending on c. Entities issue rights to existing shareholders.
redemption d. All of the choices are correct
d. Component of shareholders’ equity
79.Share warrants outstanding should be reported as
74.Transaction costs that are directly attribute to the issuance of new a. Liability c. Reduction of share premium
shares should be b. Share capital d. Share premium
a. Expensed immediately
b. Charged to retained earnings 80.When shareholders may select to receive cash lieu of stock dividend,
c. Deducted from equity the amount to be charged to retained earnings is equal to
d. Deducted from equity, net of any related income tax benefit a. Optional cash dividend c. Fair value of the shares
b. Par value of the shares d. Book value of the shares
75.When collectability is reasonable assured, the excess of the subscription
price over the stated value of the no-par subscribe share capital shall be 81.If the stock dividends less than 20%, what amount of the retained
recorded as earnings should be capitalized?
a. No par share capital a. Par value of the shares
b. Share premium when the subscription is recorded b. Fair value of the shares on the date of declaration
c. Share premium when the subscription is collected c. Fair value of the shares on the date of record
d. Share premium when the share capital is issued d. Fair value of the shares on the date of issuance
76.When treasury shares are purchased for more than par value, what
account or accounts shall be debited? 82.An entity shall review and adjust the carrying amount of the dividend
a. Treasury shares for the par value and share premium for the excess payable at the end of each reporting period and at the date of
of purchase price over the par value settlement with any changes in the carrying amount of the dividend
b. Share premium for the purchase price payable recognized
c. Treasury shares for the purchase price a. In equity as adjustment to the amount of distribution ‘’
d. Treasury shares for the par value and retained earnings for excess of b. In profit or loss
the purchase price over the par value. c. As adjustment of general reserve
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 d. As component of other comprehensive income d. Distribute the share of a newly-created subsidiary to the
shareholders in exchange for part of their shares in the corporation
83.An entity declared a cash dividend on a certain date payable on another
date. Retained earnings would 88.An entity with a substantial deficit undertakes a quasi –reorganization.
a. Increase on the date of declaration c. Not be affected on the date Certain assets are written down to fair value. Liabilities remain the
of declaration same. How would the quasi –reorganization affect share capital and
b. Not be affected on the date of payment d. Decrease on the retained earnings, respectively?
date of payment a. Increase and Decrease
b. Decrease and No effect
c. Decrease and Increase
84.The issuer should charge retained earnings for the fair value of shares
d. No Effect and increase
issued in a
a. 1 for 5 stock dividend c. 1 for 8 stock dividend
b. 4 for 1 share split d. 2 for 1 share spit 89.An appropriation of retained earnings for the future plant expansion will
result in
85.Cash dividends are paid on the basis of the number of share
a. The establishment of a fund to help finance future plant expansion.
a. Authorized c. Issued
b. The setting aside of cash to be used for future plant expansion.
b. Outstanding d. Outstanding less the number of
c. A decrease in cash with an equal increase in the investment in fund.
treasury shares
d. The disclosure that management does not intend to
distribute in the form of dividends assets equal to the
86.Which of the following statement is incorrect concerning the amount of the appropriation
appropriation of retained earnings?
90.For equity share-based payment transactions, the entity shall measure
a. Appropriations of retained earnings do not change the total amount
the goods or services received and the corresponding increase in equity
of shareholders’ equity.
a. Directly at the fair value of the goods or services
b. Appropriations of retained earnings reflect funds set aside for a
b. Directly at the fair value of the equity instruments
designated purpose, such as land expansion.
c. Indirectly at the fair value of the goods or services or directly at the
c. Appropriations of retained earnings can be made as a result of
fair value of equity instruments
contractual requirements.
d. Directly at the fair value of the goods or services or Indirectly at the
d. Appropriations of retained earnings can be made at the direction of
fair value of equity instruments
the board of directors.

91.For transaction with employees and others providing similar services,

87.The primary purpose of a quasi –reorganization is to give the entity the
the value of the equity instrument granted is measured on
opportunity to
a. Exercise date c. Grant date
a. Obtained relief from creditors
b. End of reporting period d. beginning of the year grant
b. Revalue understated assets at fair value
c. Eliminate a deficit
92.Compensation expense resulting from a share option plan is generally
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 a. Recognized in the period of exercise. a. Date the rights mature c. Date the share reaches a
b. Recognized in the period of the grant. predetermined amount
c. Allocated to the periods benefited by the employee’s b. Date of grant d. Date of exercise
required service.
d. Allocate over the periods of the employee’s service life to retirement.
97.The effect of recording a 100% stock dividend would be to
a. Decrease the current ratio, decrease working capital and decrease
93.The entity issued a range of share options to employees. What type of book value per share
share-based payment transaction does this represent? b. Leave inventory turnover unaffected, increase earnings per share
a. Asset settle share-based payment transaction and increase book value per share
b. Equity settle share-based payment transaction c. Leave working capital unaffected, decrease earnings per share and
c. Cash settle share-based payment transaction decrease book value per share.
d. Liability settle share-based payment transaction d. Leave working capital unaffected, decrease earnings per share and
decrease the debt to equity ratio.
94.For cash settled share-based payment transactions, until the liability is 98.Which of the following features of preference share would most likely be
settled, the entity is required to measure the fair value of the liability opposed by ordinary shareholders?
incurred at a. Convertible c. Callable
a. Fair value of the goods and services received b. Redeemable d. participating
b. Fair value of the liability
c. Either the fair value of the goods or services received or fair value of
the liability 99.When the right to receive dividend is forfeited in any one year in which
d. Neither the fair value of the goods or services received nor fair value dividend is not declare , the preference share is said to be
of the liability a. Cumulative c. Noncumulative
b. Participating d. nonparticipating

95.If the share-based payment transaction provides that the employees 100. An ordinary share
have the right to choose the settlement whether in cash or shares, the a. Is an equity instrument that is subordinate to all other classes of
entity is deemed to have issued equity instrument
a. A compound financial instrument b. Is a final instrument or other contract that nay right to purchase
b. An equity instrument ordinary shares
c. A liability instrument c. Is a financial instrument that gives the holder the right to purchase
d. Either an entity instrument or a liability instrument but not both ordinary shares
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
96.For share appreciation rights, the measurement date for computing
entity
compensation is the

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