Week 1 to 3 (ULO 8 to 10)

Activity 1 (Adapted). At this point, let us to determine the extent of your

understanding on the share-based payment transactions of the entity. Encircle the
letter that corresponds to your answer.

1.) These are transactions in which the entity receives goods or services as consideration
for equity instruments of the entity, including shares and share options.
a. Equity settled share-based payment transactions
b. Cash settled share-based payment transactions
c. Equity payment transactions
d. Cash payment transactions

2.) It is a contract that gives the holder the right, but not the obligation, to subscribe to the
entity’s shares at a fixed or determinable price for a specified period of time.
a. Share option
b. Share warrant
c. Share appreciation right
d. Share split

3.) What is the date on which the fair value of the equity instrument granted is measured?
a. Measurement date
b. Grant date
c. Exercise date
d. End of the reporting period

4.) It is the difference between the fair value of the shares to which the counterparty has
the right to subscribe and the price the counterparty is required to pay for those shares.
a. Fair value
b. Intrinsic value
c. Market value
d. Book value

5.) For equity settled share-based payment transactions, the entity shall measure the goods
or services received and the corresponding increase in equity
I Directly, at the fair value of the goods or services received.
II Indirectly, by reference to the fair value of the equity instruments granted, if the
fair value of the goods or services received cannot be estimated reliably.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
6.) These are transactions in which the entity acquires goods or services by incurring
liabilities to the supplier of those goods or services fro amounts that are based on the
price of the entity’s shares and other equity instruments.
a. Equity transactions
b. Cash payment transactions
c. Purchase transactions
d. Cash settled share-based payment transactions

7.) For cash settled share-based payment transactions, an entity shall measure the goods
or services received and the liability incurred at
a. Fair value of the goods and services received
b. Fair value of the liability
c. Either the fair value of the goods and services received or the fair value of the
liability
d. Neither the fair value of the goods and services received nor the fair value of the
liability

8.) For transactions with employees and others providing similar services, the fair value of
the equity instrument granted is measured on
a. Exercise date
b. Grant date
c. End of reporting period
d. Beginning of the year of grant

9.) Compensation cost for a share-based payment to employee that is classified as a

liability is measured at
a. The change in fair value of the instrument for each reporting period.
b. The total fair value at grant date
c. The present value of cash payments due over the life of the grant
d. The actual cash outlay for the period

10.) If the share options do not vest until the employee completes a specified service
period, the compensation is
a. Not recognized as expense
b. Recognized as expense immediately
c. Recognized as expense over the service or vesting period
d. Recognized as expense over a reasonable period not exceeding 10 years

11.) How should an entity recognize the change in the fair value of the liability in
respect of a cash settled share-based payment transaction?
a. Should not recognize in the financial statements but disclose in the notes
b. Should recognize in the statement of changes in equity
c. Should recognize in other comprehensive income
 d. Should recognize in profit or loss

12.) In what circumstances is compensation expense immediately recognized under a

share option plan?
a. In all circumstances
b. In circumstances when the options are exercisable within two years for services
rendered over the next two years
c. In circumstances when the options are granted for prior service and the
options are immediately exercisable
d. In no circumstances is compensation expense immediately recognized

13.) For cash settled share based payment transactions, until the liability is settled,
the entity is required to re measure the fair value of the liability at each reporting date
and at the date of settlement and any changes in fair value are
a. Included in profit or loss
b. Included in retained earnings
c. Treated as component of other comprehensive income
d. Not recognized

14.) Which of the following statements in relation to a cash settled share-based

payment transaction is true?
I The fair value of the liability shall be remeasured at the end of each reporting
period.
II The fair value of the liability shall be remeasured at the date of settlement.
a. I only
b. II only
c. Both I and II
d. Neither I nor II

15.) Which of the following statements in relation to share options granted to

employees in exchange for their services is true?
I The services received shall be measured at the fair value of the employees’
services.
II Fair value shall be measured at the date the options vest.
a. I only
b. II only
c. Both I and II
d. Neither I nor II