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CFA Level 2 - FRA
Study Session 6: Reading 20 - Employee Compensation: Post-Employment and Share Based
Quiz #1 by mikesswimn
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What gives an employee the right to compensation based on the increase of a firm's stock over time?
Stock Appreciation Rights
Stock Grants
Phantom Stock
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What is an appropriate tool to use in determining the fair value of a highly customized stock option, granted to an employee?
Price of an option traded on the market.
Black-Scholes Option Pricing Model
ARCH model
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If a firm decides to net their pension assets and liabilities, which ratios are likely to decrease as a result?
Gross Profit Margin
Interest Coverage Ratio
Return on Assets
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When making adjustments for analytical purposes to overcome differences in income statement classifications, which is appropriate to do?
Adjust income by subtracting the pension expense and adding the service cost to determine operating income, with interest cost added to interest expense.
Adjust income by adding the pension expense and subtracting the service cost to determine operating income, with interest cost subtracted from the interest expense.
Adjust income by adding the pension expense and subtracting the service cost to determine operating income, with interest cost added to the interest expense.
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Which pension assumption change will not result in a change to the balance sheet liability
Increase of the expected rate of return
Decrease of the discount rate.
Increase of the discount rate
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Which of the following is found only on the income statement?
GAAP: Actuarial Gains/Losses, IFRS: Interest Cost
GAAP: Past Service Cost, IFRS: Actuarial Gains/Losses
GAAP: Expected Return, IFRS: Past Service Cost
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How are past/prior service costs dealt with under IFRS and US GAAP?
IFRS: Expensed immediately, GAAP: Amortized over the average service life of employees
IFRS: Amortized over 20 years, GAAP: Expensed Immediately
IFRS: Expensed immediately, GAAP: Expensed Immediately
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Under US GAAP, which components of a firm's pension costs are found in Other Comprehensive Income (OCI)?
Past service costs, amortized portion of actuarial gains/losses
Past service costs, unamortized portion of actuarial gains/losses
Amortized portion of actuarial gains/losses, current service cost.
