Question 1

The timing of the recognition of an expense and liability is based on the date:

Accepted Answer

A)   when the entity can no longer withdraw for the offer of those benefits
B)   when the entity recognises costs for a restructuring that is within the scope of AASB 137
C)   of the most recent financial statements
D)   the earlier of A or B

Question 2

The method of accounting for superannuation costs based on the assumption that the trust that manages the superannuation plan is a separate legal entity to the employer and is responsible for the fund's obligations is:

Accepted Answer

A)   the form method
B)   the legal entity method
C)   the net-worth method
D)   none of the above

Question 3

Which of the following is not a period of employment for long-service leave purposes?

Accepted Answer

A)   Apprenticeship
B)   Preconditional
C)   Conditional
D)   Unconditional

Question 4

The journal entry to record the payment of long service leave to an employee is:

Accepted Answer

A)   Dr. Liability for long service leave	Cr Bank
B)   Dr Bank Cr Liability for long service leave
C)   Dr Long service leave expense Cr Bank
D)   None of the above A

Question 5

Discuss the three types of share-based payment transactions as outlined by AASB 2 'Share-based Payment'.

Accepted Answer

Equity-settled share-based payment trans...

Question 6

Gassy Pty Ltd pays Andy $80 000 per annum in cash,plus a car that cost $50 000 a year.The company income tax rate is 30% and the average personal income tax rate is 45%.There are no other taxes (ignore Fringe Benefits Tax for the purposes of this calculation) .Personal income tax is not paid on non-cash benefits.The after-tax cost of employing Andy for the year and the after-tax benefits received by Andy are,respectively:

Accepted Answer

A)   $80 000; $71 500
B)   $28 000; $71 500
C)   $80 000; $94 000
D)   None of the above

Question 7

The superannuation trust fund is a separate entity which manages the fund's assets and is responsible for the fund's obligations.The employer's only assets and liabilities are related to the accrual or deferral of the payments due to the superannuation plan.Discuss whether you agree or disagree with the above approach to accounting for superannuation costs by employers.

Accepted Answer

AASB 119 classifies post-employment benefit arrangements as either def ned contribution plans or defined benefit plans,each of which has different accounting and reporting requirements.Defined contribution plans are: post-employment benefit plans under which an entity pays fixed contributions into a separate entity (a fund)and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.

Question 8

Which of the following is not considered a post-employment benefit by AASB 119?

Accepted Answer

A)   Superannuation
B)   Termination benefits
C)   Administrative support
D)   Free travel

Question 9

There are two types of risk associated with post-employment benefits,investment risk and actuarial risk.Explain these terms and describe the situations when these risks are borne by the employee and when they are borne by the employer (in accordance with AASB 119).

Accepted Answer

Post-employment benefits fall within the...

Question 10

According to AASB 2,how is the reporting entity to measure the good or services acquired for cash-settled share-based payment transactions?

Accepted Answer

A)   Fair value of the asset
B)   Book value of the asset
C)   Fair value of the liability
D)   Book value of the liability

Question 11

In terms of post-employment benefits,at what point does past-service costs arise?

Accepted Answer

A)   an employee is terminated and the employer must provide compensation for the past service of the employee
B)   a defined benefits post-employment plan is established or when the plan's benefits are increased
C)   a defined contributions post-employment plan is established or when the plan's benefits are increased
D)   a new employee commences employment

Question 12

Sick leave entitlements should be reflected as a liability in accordance with AASB 119 when:

Accepted Answer

A)   it is non-accumulating sick leave
B)   it is accumulating sick leave which is vesting
C)   it is accumulating sick leave which is non-vesting
D)   never

Question 13

What are employee profit-sharing and bonus plans commonly based on?

Accepted Answer

A)   Equity
B)   Cash
C)   Employee longevity
D)   All of the above answers are correct

Question 14

How should a reporting entity account for the fair value of a compound instrument?
Debt Component Equity Component

Accepted Answer

A)   Cash-settled Cash-settled
B)   Equity-settled Cash-settled
C)   Equity-settled Equity-settled
D)   Cash-settled Equity-settled D

Question 15

Wendell is employed at a salary of $150 000 per annum,paid in cash,the company income tax rate is 30%,and the average personal income tax rate is 42%.There are no other taxes.The after-tax cost of employing Wendell for the year and the after-tax benefit received by Andy are,respectively:

Accepted Answer

A)   $105 000; $63 000
B)   $105 000; $87 000
C)   $87 000; $63 000
D)   None of the above

Question 16

The discount rate to be used when estimating future cash outflows relating to an employee benefit that is expected to be paid out in 20 years by a Sydney company should be restricted to:

Accepted Answer

A)   the current yield on 20 year Australian Government Bonds
B)   the current yield on high quality bonds
C)   no estimation of future cash outflows is required
D)   none of the above

Question 17

Which of the following methods for the recognition of actuarial gains and losses are acceptable under AASB 119?
I.Immediate recognition of all actuarial gains or losses through profit or loss
ii)  Recognition of all actuarialgains or losses outside profitor loss
iii)  The corridorapproach

Accepted Answer

A)   i
B)   i and ii
C)   ii and iii
D)   i, ii and iii

Question 18

Which of the following is not an objective related to disclosures of share-based payment transactions?

Accepted Answer

A)   Disclosure of percentage of equity and cash payouts to employees
B)   Highlights the effects of share-based payment transactions on a company's profit or loss
C)   Allows users to understand how the fair value of equity instruments has been determined
D)   Allows users to understand the nature and extend of share-based arrangements

Question 19

Under AASB 119,the recognition criteria for liabilities for profit sharing and bonus plans is:

Accepted Answer

A)   It is probable the liability will be settled and the amount of the liability can be measured consistently
B)   It is reasonably certain the liability will be settled
C)   It is probable the liability will be settled
D)   The entity has a present legal or constructive obligation to settle the liability, and the amount of the liability is capable of being measured reliably

Question 20

What are the two approaches to accounting for post-employment benefit costs by employers?

Accepted Answer

A)   the current and deferred methods
B)   the deferred debit and the deferred credit methods
C)   the defined benefit method and the defined contribution methods
D)   the form method and the net-worth methods

Exam 12: Accounting for Employee Benefits

The timing of the recognition of an expense and liability is based on the date:

Correct Answer
verified

The method of accounting for superannuation costs based on the assumption that the trust that manages the superannuation plan is a separate legal entity to the employer and is responsible for the fund's obligations is:

Correct Answer
verified

Which of the following is not a period of employment for long-service leave purposes?

Correct Answer
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The journal entry to record the payment of long service leave to an employee is:

Correct Answer
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A

Discuss the three types of share-based payment transactions as outlined by AASB 2 'Share-based Payment'.

Correct Answer
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Equity-settled share-based payment trans...
View Answer

Correct Answer
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Which of the following is not considered a post-employment benefit by AASB 119?

Correct Answer
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There are two types of risk associated with post-employment benefits,investment risk and actuarial risk.Explain these terms and describe the situations when these risks are borne by the employee and when they are borne by the employer (in accordance with AASB 119).

Correct Answer
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Post-employment benefits fall within the...
View Answer

According to AASB 2,how is the reporting entity to measure the good or services acquired for cash-settled share-based payment transactions?

Correct Answer
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In terms of post-employment benefits,at what point does past-service costs arise?

Correct Answer
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Sick leave entitlements should be reflected as a liability in accordance with AASB 119 when:

Correct Answer
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What are employee profit-sharing and bonus plans commonly based on?

Correct Answer
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How should a reporting entity account for the fair value of a compound instrument? Debt Component Equity Component

Correct Answer
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D

Wendell is employed at a salary of $150 000 per annum,paid in cash,the company income tax rate is 30%,and the average personal income tax rate is 42%.There are no other taxes.The after-tax cost of employing Wendell for the year and the after-tax benefit received by Andy are,respectively:

Correct Answer
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The discount rate to be used when estimating future cash outflows relating to an employee benefit that is expected to be paid out in 20 years by a Sydney company should be restricted to:

Correct Answer
verified

Which of the following methods for the recognition of actuarial gains and losses are acceptable under AASB 119? I.Immediate recognition of all actuarial gains or losses through profit or loss ii) Recognition of all actuarialgains or losses outside profitor loss iii) The corridorapproach

Correct Answer
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Which of the following is not an objective related to disclosures of share-based payment transactions?

Correct Answer
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Under AASB 119,the recognition criteria for liabilities for profit sharing and bonus plans is:

Correct Answer
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What are the two approaches to accounting for post-employment benefit costs by employers?

Correct Answer
verified

Exam 12: Accounting for Employee Benefits

The timing of the recognition of an expense and liability is based on the date:

Correct AnswerverifiedShow Answer

The method of accounting for superannuation costs based on the assumption that the trust that manages the superannuation plan is a separate legal entity to the employer and is responsible for the fund's obligations is:

Correct AnswerverifiedShow Answer

Which of the following is not a period of employment for long-service leave purposes?

Correct AnswerverifiedShow Answer

The journal entry to record the payment of long service leave to an employee is:

Correct AnswerverifiedA

Discuss the three types of share-based payment transactions as outlined by AASB 2 'Share-based Payment'.

Correct AnswerverifiedEquity-settled share-based payment trans...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not considered a post-employment benefit by AASB 119?

Correct AnswerverifiedShow Answer

There are two types of risk associated with post-employment benefits,investment risk and actuarial risk.Explain these terms and describe the situations when these risks are borne by the employee and when they are borne by the employer (in accordance with AASB 119).

Correct AnswerverifiedPost-employment benefits fall within the...View AnswerShow Answer

According to AASB 2,how is the reporting entity to measure the good or services acquired for cash-settled share-based payment transactions?

Correct AnswerverifiedShow Answer

In terms of post-employment benefits,at what point does past-service costs arise?

Correct AnswerverifiedShow Answer

Sick leave entitlements should be reflected as a liability in accordance with AASB 119 when:

Correct AnswerverifiedShow Answer

What are employee profit-sharing and bonus plans commonly based on?

Correct AnswerverifiedShow Answer

How should a reporting entity account for the fair value of a compound instrument? Debt Component Equity Component

Correct AnswerverifiedD

Wendell is employed at a salary of $150 000 per annum,paid in cash,the company income tax rate is 30%,and the average personal income tax rate is 42%.There are no other taxes.The after-tax cost of employing Wendell for the year and the after-tax benefit received by Andy are,respectively:

Correct AnswerverifiedShow Answer

The discount rate to be used when estimating future cash outflows relating to an employee benefit that is expected to be paid out in 20 years by a Sydney company should be restricted to:

Correct AnswerverifiedShow Answer

Which of the following methods for the recognition of actuarial gains and losses are acceptable under AASB 119? I.Immediate recognition of all actuarial gains or losses through profit or loss ii) Recognition of all actuarialgains or losses outside profitor loss iii) The corridorapproach

Correct AnswerverifiedShow Answer

Which of the following is not an objective related to disclosures of share-based payment transactions?

Correct AnswerverifiedShow Answer

Under AASB 119,the recognition criteria for liabilities for profit sharing and bonus plans is:

Correct AnswerverifiedShow Answer

What are the two approaches to accounting for post-employment benefit costs by employers?

Correct AnswerverifiedShow Answer

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A

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Equity-settled share-based payment trans...
View Answer

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Post-employment benefits fall within the...
View Answer

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D

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