How are share$-$based payment awards that are indexed to a factor in addition to the

entity's share price that is not a market, performance, or service condition $($i$.$e$.$ it is

considered an "other" condition$)$ treated? $($Select the best answer.$)$

a$.$

The awards are treated as liability$-$classified awards and remeasured using a fair$-$

value$-$based measure as of each reporting$-$period end.

b$.$ The awards can either be liabilty$-$ or equity$-$classified, on the basis of whether the

award can be cash$-$settled. The award may not be classified as a liability unless it is

cash$-$settled. If the "other" condition meets the definition of a "nonvesting"

condition, it should be reflected in the fair$-$value$-$based measurement of the award.

c$.$ The awards are always treated as an equity$-$classified award regardless of the

factors to which they are indexed.

d$.$ The awards are treated as a liability$-$classified award and measured at a grant$-$date

fair$-$value$-$based measurement of the award.Company G purchases annuities with plan assets for $8\%$ of the Plan's benefits in a

way that eliminates future risk to the company. The cost of the settlement is less than

service cost plus interest cost. Does this transaction result in settlement accounting

for the plan? $($Select the best answer.$)$

a$.$ The purchase of annuities may not trigger settlement accounting depending on the

company's elected accounting policy, because the cost of the settlement does not

exceed service cost plus interest cost for the year.

b$.$ The purchase of annuities would trigger settlement accounting because a lump

sum cash payment, under the terms of the plan, to plan participants in exchange

for their rights to receive specified post$-$employment benefits is considered a

settlement.

c$.$ The purchase of annuities would trigger settlement accounting because the

purchase price does not exceed the service cost plus interest cost for the year.

d$.$ The purchase of annuities would trigger settlement accounting and reduce the

defined benefit obligation and the plan's assets. The difference between the change

in the defined benefit obligation and the change in the plan assets would be a

settlement gain$/$loss which would be recognized in profit or loss.A company updates its discount rate from $6\mathrm{.}5\%$ to $5\mathrm{.}75\%.$ How would the increase in

the defined benefit obligation be accounted for? What components of retirement

benefit cost would be affected? $($Select the best answer.$)$

a$.$ The actuarial loss resulting from the increase in the benefit obligation would be

recognized through net income. The following period's service cost and interest

cost would not be affected.

b$.$ The increase in the defined benefit obligation would be immediately recognized on

the balance sheet, and the related actuarial loss would be included in other

comprehensive income $($OCI$)($unless the entity had elected an accounting policy to

immediately recognize actuarial gains and losses in net income$).$ The following

period's service cost, interest cost, as well as amortization of the actuarial gain$/$loss

in accumulated OCI would likely be affected.

c$.$ The increase in the defined benefit obligation would be immediately recognized in

the balance sheet, and the related actuarial loss would be recognized in other

comprehensive income. The following period's service cost and net interest cost

would also likely be affected.

d$.$ The increase in the defined benefit obligation would not be immediately recognized

in the balance sheet or in net income, but instead would be amortized over multip

periods. The following period's service cost would not be affected.Polar Bear Limited operates their main office in Norway. The company has $5$

subsidiaries around the world. The company offers a defined benefit retirement plan

for all employees across their subsidiaries. How is this defined benefit retirement plan

treated in the separate financial statements of the subsidiaries? $($Select the best

answer.$)$

a$.$ O The accounting treatment in the separate financial statement of a subsidiary

depends on whether a contractual agreement or stated policy for allocating the

costs among the parent and subsidiaries exists.

b$.$

The accounting treatment in the separate subsidiary financial statements would not

matter because the subsidiary does not record the defined benefit obligation

retirement plan.

c$.$

The usual accounting treatment in the separate subsidiary financial statements

would be to treat the plan as a multiemployer plan.

d$.$

The accounting treatment in the separate subsidiary financial statements would not

be contingent on whether a contractual agreement or stated policy exists because

there are multiple subsidiaries.

IMPORTANT: Printing exam questions is prohibited and any attempt to print questions from the exam will be considered an ethical viofation.Calculate the expected return on plan assets for the year using the following facts:

Market$-$related value of plan as