Question 1

In a share-based payment transaction like an option,vesting date is:

Accepted Answer

A)  date of grant. 
B)  expiry date of option. 
C)  date when all vesting conditions are satisfied. 
D)  balance date. 
E)  None of the given answers. 
A)  date of grant. 
B)  expiry date of option. 
C)  date when all vesting conditions are satisfied. 
D)  balance date. 
E)  None of the given answers. C

Question 2

Where equity instruments are issued with a vesting period,the transactions must be recognised over the vesting period.

Accepted Answer

A) True 
 B)False  False

Question 3

Issue of shares in exchange for shares of another entity in a purchase transaction of the net assets of an entity in a business combination is within the scope of AASB 2.

Accepted Answer

A) True 
 B)False  False

Question 4

Which of the following statements is incorrect of equity-settled share-based payment transactions?

Accepted Answer

A)  These are transactions in which the entity receives goods and services as consideration for shares or share options issued by the entity. 
B)  There is a presumption that the fair value of the transactions with other parties (other than employees) can be measured reliably. 
C)  The fair value of equity-settled instruments is required to be re-estimated at balance date. 
D)  The entity shall recognise a corresponding increase in equity if the goods or services were received in an equity-settled share-based payment transaction. 
E)  Goods or services received or acquired in an equity settled share-based payment transaction shall be recognised as expenses when it does not qualify for recognition as assets. 
A)  These are transactions in which the entity receives goods and services as consideration for shares or share options issued by the entity. 
B)  There is a presumption that the fair value of the transactions with other parties (other than employees) can be measured reliably. 
C)  The fair value of equity-settled instruments is required to be re-estimated at balance date. 
D)  The entity shall recognise a corresponding increase in equity if the goods or services were received in an equity-settled share-based payment transaction. 
E)  Goods or services received or acquired in an equity settled share-based payment transaction shall be recognised as expenses when it does not qualify for recognition as assets.

Question 5

AASB 2 also applies to transactions where an entity issues equity instruments to purchase the net assets of another entity in a business combination.

Accepted Answer

A) True 
 B)False

Question 6

In accordance with AASB 2,how much remuneration expense related to the share option issue should Blackburn Ltd recognise for the year ended 30 June 2010,30 June 2011 and 30 June 2012,respectively?

Accepted Answer

A)  $19,500; $33,800, $39,800. 
B)  $23,400; $25,800; $30,600. 
C)  $23,400; $29,900; $39,800. 
D)  $23,833; $35,534; $33,733. 
E)  $28,600; $26,200; $25,000. 
A)  $19,500; $33,800, $39,800. 
B)  $23,400; $25,800; $30,600. 
C)  $23,400; $29,900; $39,800. 
D)  $23,833; $35,534; $33,733. 
E)  $28,600; $26,200; $25,000.

Question 7

If a grant of equity instruments is conditional upon satisfying specified vesting conditions,the vesting conditions shall be taken into account in estimating the fair value of the instruments at measurement date.

Accepted Answer

A) True 
 B)False

Question 8

In accordance with AASB 2,how much Employee benefits expense related to the share option issue should Wigan Ltd recognise for the year ended 30 June 2012?

Accepted Answer

A)  $36,667 
B)  $44,667 
C)  $46,667 
D)  $48,000 
E)  $144,000 
A)  $36,667 
B)  $44,667 
C)  $46,667 
D)  $48,000 
E)  $144,000

Question 9

What is the Employee benefits expense of Liverpool Ltd related to this share option for the year ended 30 June 2012?

Accepted Answer

A)  $19,500 
B)  $22,750 
C)  $26,500 
D)  $70,200 
E)  None of the given answers 
A)  $19,500 
B)  $22,750 
C)  $26,500 
D)  $70,200 
E)  None of the given answers

Question 10

On 1 July 2009 Lancashire Ltd grants 100 share options to each of its 50 employees conditional upon the employee working for the entity for the next three years.On the same date,the entity estimates the fair value of each share option at $15.Based on probability estimates,15 employees are expected to leave the entity in one year and another 5 employees in two years.Actual resignation for the year ending 2010 was 12 employees and the fair value of the option is $12 on 30 June 2011. In accordance with AASB 2,what is the cumulative remuneration expense (related to the share option issue)as at 30 June 2011?

Accepted Answer

A)  $24,000 
B)  $26,400 
C)  $33,000 
D)  $45,000 
E)  $75,000 
A)  $24,000 
B)  $26,400 
C)  $33,000 
D)  $45,000 
E)  $75,000

Question 11

Which of the following share-based payment transactions are considered equity-settled transactions within the scope of AASB 2?

Accepted Answer

A)  Company A grants 5 000 options each to its directors in return for services to be received over two years. 
B)  Company B purchases machinery in exchange for shares. 
C)  Company C incurs a liability based on the price of the entity's share options to pay for the services of its sales executives. 
D)  All of the given answers. 
E)  Company A grants 5 000 options each to its directors in return for services to be received over two years; Company B purchases machinery in exchange for shares. 
A)  Company A grants 5 000 options each to its directors in return for services to be received over two years. 
B)  Company B purchases machinery in exchange for shares. 
C)  Company C incurs a liability based on the price of the entity's share options to pay for the services of its sales executives. 
D)  All of the given answers. 
E)  Company A grants 5 000 options each to its directors in return for services to be received over two years; Company B purchases machinery in exchange for shares.

Question 12

What would be the appropriate journal entry to account for the share-based payment transaction for the year ending 30 June 2010?

Accepted Answer

A)    
B)    
C)    
D)    
E)  None of the given answers. 
A)    
B)    
C)    
D)    
E)  None of the given answers.

Question 13

AASB 2 requires all share-based payment transactions to be recognised at:

Accepted Answer

A)  grant date. 
B)  balance date. 
C)  exercise date. 
D)  settlement date. 
E)  None of the given answers. 
A)  grant date. 
B)  balance date. 
C)  exercise date. 
D)  settlement date. 
E)  None of the given answers.

Question 14

If share appreciation rights vest immediately,the entity shall presume that the services rendered by the employees in exchange for the share appreciation rights have been received.

Accepted Answer

A) True 
 B)False

Question 15

If the arrangement in a share-based transaction provides either the entity or the counter party with the choice of cash settlement or issuance of the equity instruments,what is the accounting treatment required in AASB 2?

Accepted Answer

A)  Similar treatment with cash-settled transactions if the entity has incurred a liability to settle in cash or other assets. 
B)  Similar treatment with equity-settled transactions if the entity has not incurred a liability. 
C)  Where the other party has the right to choose the settlement basis then it should be accounted for simular to a compound financial instrument. 
D)  All of the given answers. 
E)  Similar treatment with cash-settled transactions if the entity has incurred a liability to settle in cash or other assets and similar treatment with equity-settled transactions if the entity has not incurred a liability. 
A)  Similar treatment with cash-settled transactions if the entity has incurred a liability to settle in cash or other assets. 
B)  Similar treatment with equity-settled transactions if the entity has not incurred a liability. 
C)  Where the other party has the right to choose the settlement basis then it should be accounted for simular to a compound financial instrument. 
D)  All of the given answers. 
E)  Similar treatment with cash-settled transactions if the entity has incurred a liability to settle in cash or other assets and similar treatment with equity-settled transactions if the entity has not incurred a liability.

Question 16

Longreach Ltd grants 100 options to each of its 50 employees on 1 July 2009.Each grant is conditional on the employee working for the company for 3 years.The fair value of each option at grant date is $15. The following information is available:
  What is the employee benefits expense of Longreach Ltd related to this share option for the year ended 30 June 2010?

Accepted Answer

A)  $18 667; 
B)  20 000; 
C)  $26 667; 
D)  $56 000; 
E)  $60 000 
A)  $18 667; 
B)  20 000; 
C)  $26 667; 
D)  $56 000; 
E)  $60 000

Question 17

On 1 July 2009 Chester Ltd granted an executive director a choice between receiving a cash payment equivalent to 5,000 shares or receiving 6,000 shares.The grant is conditional upon the director being under the employ of the entity for three years.What is the accounting treatment for this share-based payment arrangement that is consistent with AASB 2?

Accepted Answer

A)  Similar treatment with cash-settled transactions. 
B)  Similar treatment with equity-settled transactions. 
C)  It should be accounted for similar to a compound financial instrument. 
D)  Recognise salaries benefit expense at vesting date. 
E)  None of the given answers. 
A)  Similar treatment with cash-settled transactions. 
B)  Similar treatment with equity-settled transactions. 
C)  It should be accounted for similar to a compound financial instrument. 
D)  Recognise salaries benefit expense at vesting date. 
E)  None of the given answers.

Question 18

On 30 June 2011,based on probability estimates how many employees are expected to be employed by Windermere Ltd when the share vests?

Accepted Answer

A)  72 
B)  75 
C)  78 
D)  82 
E)  None of the given answers 
A)  72 
B)  75 
C)  78 
D)  82 
E)  None of the given answers

Question 19

In accordance with AASB 2,how much Employee benefits expense related to the share option issue should Southport Ltd recognise for the year ended 30 June 2010?

Accepted Answer

A)  $9,840 
B)  $12,000 
C)  $29,520 
D)  $36,000 
E)  None of the given answers 
A)  $9,840 
B)  $12,000 
C)  $29,520 
D)  $36,000 
E)  None of the given answers

Question 20

AASB 2 requires all share-based payment transactions to be expensed on grant date and the credit is equity.

Accepted Answer

A) True 
 B)False

Exam 18: Accounting for Share-Based Payments

In a share-based payment transaction like an option,vesting date is:

Where equity instruments are issued with a vesting period,the transactions must be recognised over the vesting period.

Issue of shares in exchange for shares of another entity in a purchase transaction of the net assets of an entity in a business combination is within the scope of AASB 2.

Which of the following statements is incorrect of equity-settled share-based payment transactions?

AASB 2 also applies to transactions where an entity issues equity instruments to purchase the net assets of another entity in a business combination.

In accordance with AASB 2,how much remuneration expense related to the share option issue should Blackburn Ltd recognise for the year ended 30 June 2010,30 June 2011 and 30 June 2012,respectively?

If a grant of equity instruments is conditional upon satisfying specified vesting conditions,the vesting conditions shall be taken into account in estimating the fair value of the instruments at measurement date.

In accordance with AASB 2,how much Employee benefits expense related to the share option issue should Wigan Ltd recognise for the year ended 30 June 2012?

What is the Employee benefits expense of Liverpool Ltd related to this share option for the year ended 30 June 2012?

Which of the following share-based payment transactions are considered equity-settled transactions within the scope of AASB 2?

What would be the appropriate journal entry to account for the share-based payment transaction for the year ending 30 June 2010?

AASB 2 requires all share-based payment transactions to be recognised at:

If share appreciation rights vest immediately,the entity shall presume that the services rendered by the employees in exchange for the share appreciation rights have been received.

If the arrangement in a share-based transaction provides either the entity or the counter party with the choice of cash settlement or issuance of the equity instruments,what is the accounting treatment required in AASB 2?

On 30 June 2011,based on probability estimates how many employees are expected to be employed by Windermere Ltd when the share vests?

In accordance with AASB 2,how much Employee benefits expense related to the share option issue should Southport Ltd recognise for the year ended 30 June 2010?

AASB 2 requires all share-based payment transactions to be expensed on grant date and the credit is equity.

An Overview of the Australian External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financ

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, plant and Equipment

Revaluation and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

Accounting for Heritage Assets and Biological Assets

An Overview of Accounting for Liabilities

Accounting for Lease

Set-Off and Extinguishment of Debt

Accounting for Employee Benefits

Share Capital and Reserves

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in E

Accounting for Income Taxes

Cash-Flow Statements

Accounting for the Extractive Industries

Accounting for General Insurance Contracts

Accounting for Superannuation Plans

Events Occurring After Balance Sheet Date

Segment Reporting

Related-Party Disclosures

Earnings Per Share

Accounting for Group Structures

Further Consolidation Issues I: Accounting for Intragroup Transact

Further Consolidation Issues II: Accounting for Minority Interests

Further Consolidation Issues III: Accounting for Indirect Ownershi

Further Consolidation Issues Iv: Accounting for Changes in the Deg

Accounting for Equity Investments

Accounting for Equity Investments

Accounting for Foreign Currency Transactions

Translation of the Accounts of Foreign Operations

Accounting for Corporate Social Responsibility

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