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$1.$ How are share$-$based payment awards that are indexes 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 liability $$ or equity $$ 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.

$2.$ 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 recognize 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 like 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 multiple periods. The following period$$s service cost would not be affected.

$3.$ 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.

$4.$ Calculate the expected return on plan assets for the year using the following facts: Market$-$related value of plan assets $($based on a calculated value$)$ at beginning of the year: $ $7,500$

Net adjustments $($contributions and benefit payments during the year$)$: $$-500$

Expected average market$-$related value of plan assets during the year: $$7,000$

Fair value of plan assets at beginning of the year: $$7,000$

Net Adjustments $($contributions and benefit payments during the year$)$: $$-500$

Expected average fair value of plan assets during the year: $$6,500$

Expected long$-$term rate of return: $8\%$

Discount rate: $6\%$

Defined benefit obligation beginning of the year: $10,000$

$($Select the best answer$)$

a$)$ The expected return on plan assets for the year is $ $7,000$ x $\mathrm{.}08=$ $$560$

b$)$ The expected return on plan assets for the year is $ $6,500$ x $\mathrm{.}06=$ $$390$

c$)$ There is no expected return on plan assets. The net interest cost is $10,0007,000500=$ $ $2,500$ x $6\%=$ $$150$

d$)$ There is no expected return on plan assets. The net interest cost is $ $10,000-$ $ $7,000-$ $ $500=$ $ $2,500$ x $8\%=$ $ $200.$

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