SBR Employee benefits and share-based payment

ACCA · Strategic Professional · 8 questions

Name: ____________________ Date: ____________

In a defined benefit plan, remeasurements of the net defined benefit liability are recognised in:
- A Profit or loss
- B Cost of sales
- C Equity directly as a transfer
- D Other comprehensive income
The net interest cost on a defined benefit liability of $500,000 with a discount rate of 5 percent is:
- A $5,000
- B $50,000
- C $25,000
- D $250,000
Past service cost is recognised:
- A In OCI
- B Over the remaining service of employees
- C In profit or loss at the earlier of the plan amendment and related restructuring costs
- D In equity
In a defined contribution plan, the employer's expense for the period is:
- A The net interest cost
- B The contributions payable for that period
- C The actuarial estimate of future benefits
- D The change in the fair value of plan assets
100 employees each receive 1,000 share options with a grant date fair value of $3. Vesting is after three years and 90 employees are expected to remain. The year 1 expense under IFRS 2 is:
- A $90,000
- B $300,000
- C $270,000
- D $100,000
For an equity-settled share-based payment to employees, the fair value used is measured at:
- A Each reporting date
- B The exercise date
- C The vesting date only
- D The grant date and not remeasured
A cash-settled share-based payment liability is remeasured:
- A Only when the options vest
- B In OCI
- C At each reporting date until settlement, with changes in profit or loss
- D At grant date only
An entity offers termination benefits. When is the liability recognised?
- A At the year end only
- B When employees leave
- C When it can no longer withdraw the offer or when it recognises related restructuring costs, whichever is earlier
- D When the offer is accepted by all

Answer key

1. D, 2. C, 3. C, 4. B, 5. A, 6. D, 7. C, 8. C

Remeasurements, such as actuarial gains and losses, are in OCI and are not reclassified to profit.
Net interest is the net liability multiplied by the discount rate: 500,000 x 5% = 25,000.
Under current IAS 19, past service cost is recognised immediately.
The employer's obligation is limited to the contributions it has agreed to pay.
90 x 1,000 x $3 x 1/3 = $90,000, with a credit to equity.
Equity-settled schemes use grant date fair value. Cash-settled schemes are remeasured to each reporting date.
The liability is at fair value, and changes go to profit or loss.
IAS 19 sets this timing rule for termination benefits.