IFRS 2 MIX SBP

Question 1

What does IFRS 2 stand for?

Answer 1

International Financial Reporting Standard 2

Question 1

True or False: IFRS 2 applies only to share-based payment transactions.

Answer 1

True

Question 1

Fill in the blank: IFRS 2 requires entities to recognize the cost of share-based payments as __________.

Answer 1

an expense

Question 2

What types of share-based payments does IFRS 2 cover?

Answer 2

Equity-settled and cash-settled share-based payments

Question 3

Short answer: What is the main objective of IFRS 2?

Answer 3

To specify the financial reporting requirements for share-based payment transactions.

Question 4

Multiple choice: Which of the following is NOT a type of share-based payment under IFRS 2? A) Equity-settled B) Cash-settled C) Debt-settled

Answer 4

C) Debt-settled

Question 5

What is a key requirement for equity-settled share-based payments under IFRS 2?

Answer 5

The fair value of the equity instruments granted must be measured at the grant date.

Question 6

True or False: IFRS 2 requires the recognition of a liability for cash-settled share-based payments.

Answer 6

True

Question 7

What is the measurement basis for cash-settled share-based payments?

Answer 7

The fair value of the liability is remeasured at each reporting date.

Question 8

Multiple choice: Which of the following is a key disclosure requirement of IFRS 2? A) Nature of share-based payments B) Fair value of equity instruments granted C) Both A and B

Answer 8

C) Both A and B

Question 9

Short answer: How does IFRS 2 define ‘grant date’?

Answer 9

The date at which the entity and the counterparty agree to the terms of the share-based payment.

Question 10

What is the treatment of share-based payments with performance conditions under IFRS 2?

Answer 10

The expense is recognized over the vesting period based on the probability of meeting the performance conditions.

Question 11

True or False: IFRS 2 allows for the reversal of share-based payment expenses if performance conditions are not met.

Answer 11

True

Question 12

Fill in the blank: The __________ of share-based payments is typically determined using an option pricing model.

Answer 12

fair value

Question 13

What is the impact of share-based payments on the financial statements?

Answer 13

They increase expenses and reduce profit in the income statement.

Question 14

Multiple choice: Which of the following is a common method for measuring the fair value of share options? A) Cost approach B) Market approach C) Black-Scholes model

Answer 14

C) Black-Scholes model

Question 15

Short answer: What must entities disclose about share-based payment transactions?

Answer 15

They must disclose the nature and extent of share-based payment arrangements and the effect on the financial statements.

Question 16

What is the treatment for share-based payments settled in cash?

Answer 16

They are recognized as a liability and measured at fair value.

Question 17

True or False: IFRS 2 applies to transactions with employees only.

Answer 17

False

Question 18

Fill in the blank: IFRS 2 requires that the fair value of equity instruments is based on the __________ market price.

Answer 18

active

Question 19

Short answer: What is the significance of the vesting period in IFRS 2?

Answer 19

It is the period during which the employee must fulfill conditions to earn the share-based payment.

Question 20

Multiple choice: Which of the following is an example of a share-based payment? A) Cash bonuses B) Stock options C) Fixed salaries

Answer 20

B) Stock options

Question 21

What disclosures are required for share-based payments that contain market conditions?

Answer 21

Entities must disclose the effect of the market conditions on the fair value of the award.

Question 22

True or False: IFRS 2 allows for the simplification of fair value measurement for small entities.

Answer 22

False

Question 23

What does IFRS 2 stand for?

Answer 23

International Financial Reporting Standard 2

Question 24

What is the primary focus of IFRS 2?

Answer 24

Share-based payment transactions

Question 25

True or False: IFRS 2 applies only to equity-settled share-based payments.

Answer 25

False

Question 26

Fill in the blank: IFRS 2 requires entities to recognize share-based payment transactions in their financial statements at ______.

Answer 26

fair value

Question 27

What are the two types of share-based payment transactions defined in IFRS 2?

Answer 27

Equity-settled and cash-settled

Question 28

True or False: Equity-settled share-based payments are settled in cash.

Answer 28

False

Question 29

What is the measurement basis for equity-settled share-based payments under IFRS 2?

Answer 29

Fair value at the grant date

Question 30

How is the fair value of cash-settled share-based payments measured?

Answer 30

At the end of each reporting period until settled

Question 31

What does 'vesting period' refer to in IFRS 2?

Answer 31

The period during which the employee must complete service to earn the share-based payment

Question 32

True or False: IFRS 2 requires recognition of expenses related to share-based payments over the vesting period.

Answer 32

True

Question 33

What is the impact of share-based payments on the income statement?

Answer 33

They create an expense that reduces profit.

Question 34

What is a 'grant date' in the context of IFRS 2?

Answer 34

The date at which the entity and the employee agree to the share-based payment arrangement.

Question 35

Fill in the blank: Under IFRS 2, the fair value of equity instruments is determined using ______.

Answer 35

valuation techniques

Question 36

What are 'market conditions' in the context of share-based payment?

Answer 36

Conditions that relate to the market price of the entity's equity instruments.

Question 37

True or False: Performance conditions must be met for a share-based payment to vest.

Answer 37

True

Question 38

What is the role of a 'service condition' in share-based payments?

Answer 38

It requires the employee to provide service for a specified period.

Question 39

What happens if a share-based payment is not vested?

Answer 39

The expense recognized for the unvested payment is reversed.

Question 40

True or False: IFRS 2 requires disclosures about share-based payments in the financial statements.

Answer 40

True

Question 41

What is the purpose of the disclosures required by IFRS 2?

Answer 41

To provide information that helps users understand the nature and extent of share-based payment arrangements.

Question 42

Fill in the blank: The fair value of share-based payments is usually calculated using the ______ model.

Answer 42

Black-Scholes

Question 43

What is the significance of the 'exercise price' in share-based payments?

Answer 43

It is the price at which the employee can purchase the shares.

Question 44

True or False: The fair value of share-based payments is not affected by the entity's share price volatility.

Answer 44

False

Question 45

What is 'forfeiture' in the context of share-based payments?

Answer 45

It occurs when the employee fails to meet the vesting conditions.

Question 46

What is the accounting treatment for cash-settled share-based payments?

Answer 46

They are measured at fair value at each reporting date.

Question 47

True or False: IFRS 2 applies to share-based payment transactions with both employees and non-employees.

Answer 47

True

Question 48

What is the effect of share-based payments on equity?

Answer 48

They increase equity when settled in shares.

Question 49

Fill in the blank: If a share-based payment is settled in cash, it is considered ______.

Answer 49

cash-settled

Question 50

What are 'non-market vesting conditions'?

Answer 50

Conditions that are not related to the market price of the entity's equity instruments.

Question 51

True or False: IFRS 2 allows for the revaluation of equity instruments after the grant date.

Answer 51

False

Question 52

What is the 'intrinsic value' method?

Answer 52

A method that measures the value based on the difference between the share price and the exercise price.

Question 53

What is a 'share option'?

Answer 53

A right given to an employee to purchase shares at a predetermined price.

Question 54

Fill in the blank: An entity must account for share-based payments regardless of whether the payment is ______.

Answer 54

material

Question 55

What is the 'expected term' in share-based payments?

Answer 55

The period the share options are expected to remain outstanding.

Question 56

True or False: The expected term is a key input in the fair value calculation for options.

Answer 56

True

Question 57

What is the 'volatility' factor in share-based payment valuation?

Answer 57

It measures the expected fluctuations in the share price.

Question 58

What is the treatment of share-based payment awards that expire unexercised?

Answer 58

No expense is recognized if the award expires without being exercised.

Question 59

Fill in the blank: The fair value of share options is generally estimated using ______ techniques.

Answer 59

option pricing

Question 60

True or False: Entities must disclose the terms and conditions of share-based payments.

Answer 60

True

Question 61

What is the 'grant date fair value'?

Answer 61

The fair value of the equity instruments at the grant date.

Question 62

What does 'performance condition' mean?

Answer 62

A condition that is related to the performance of the entity or the employee.

Question 63

Fill in the blank: Under IFRS 2, the entity must measure share-based payments at ______.

Answer 63

fair value

Question 64

What is the treatment for modifications of share-based payment arrangements?

Answer 64

The entity must account for any incremental fair value increase.

Question 65

True or False: IFRS 2 allows for the reversal of expenses if the share-based payment is modified.

Answer 65

False

Question 66

What is the 'expected volatility' in share-based payment valuation?

Answer 66

The estimate of the future volatility of the underlying share price.

Question 67

Fill in the blank: The ______ method is commonly used to estimate the fair value of share options.

Answer 67

Black-Scholes

Question 68

What is a 'vesting condition'?

Answer 68

A condition that must be satisfied for the employee to earn the share-based payment.

Question 69

True or False: IFRS 2 requires entities to disclose the number of share options granted.

Answer 69

True

Question 70

What is the purpose of the 'valuation date'?

Answer 70

To determine the fair value of share-based payments at the specific date.

Question 71

Fill in the blank: Share-based payment transactions are recognized as ______ in the income statement.

Answer 71

expenses

Question 72

What is the accounting treatment for share-based payments granted to non-employees?

Answer 72

They are also measured at fair value.

Question 73

True or False: IFRS 2 allows for different measurement bases for different types of share-based payments.

Answer 73

True

Question 74

What happens if an employee leaves before the vesting period ends?

Answer 74

The share-based payment may be forfeited.

Question 75

Fill in the blank: IFRS 2 applies to share-based payment transactions that are settled in ______.

Answer 75

equity or cash

Question 76

What is the significance of the 'exercise price' in share options?

Answer 76

It determines the cost to the employee to exercise the option.

Question 77

True or False: The fair value of cash-settled share-based payments is fixed at the grant date.

Answer 77

False

Question 78

What is a 'share-based payment transaction'?

Answer 78

An arrangement where an entity receives goods or services in exchange for equity instruments.

Question 79

Fill in the blank: The ______ model is often used by entities to estimate the fair value of share options.

Answer 79

Black-Scholes

Question 80

What are 'market conditions' in share-based payments?

Answer 80

Conditions that affect the market price of the entity's equity instruments.

Question 81

True or False: IFRS 2 requires that the fair value of the goods or services received be measured at the time of receipt.

Answer 81

False

Question 82

What is the effect of forfeiture on share-based payment expense?

Answer 82

The expense recognized is reversed.

Question 83

Fill in the blank: IFRS 2 requires entities to measure share-based payments at ______ at the grant date.

Answer 83

fair value

Question 84

What is the significance of 'non-market vesting conditions'?

Answer 84

They affect the vesting of the equity instruments but are not related to share price.

Question 85

True or False: Share-based payments can be settled in shares or cash.

Answer 85

True

Question 86

What is the 'intrinsic value' of a share option?

Answer 86

The difference between the market price of the share and the exercise price.

Question 87

Fill in the blank: The fair value of a share option is ______ at the grant date.

Answer 87

fixed

Question 88

What is a key factor in determining the fair value of share-based payments?

Answer 88

The expected volatility of the entity's share price.

Question 89

True or False: Entities must disclose the terms of share-based payment arrangements in their annual reports.

Answer 89

True

Question 90

What is the primary purpose of IFRS 2?

Answer 90

To ensure consistent accounting for share-based payment transactions.

Question 91

Fill in the blank: IFRS 2 is applicable to ______ transactions.

Answer 91

all share-based payment

Question 92

What is the treatment for share-based payments that are modified after grant date?

Answer 92

Incremental fair value is recognized.

Question 93

True or False: The fair value of cash-settled payments is remeasured until settlement.

Answer 93

True

Question 94

What is the 'grant date' fair value used for?

Answer 94

To measure the expense recognized in the income statement.

Question 95

Fill in the blank: The ______ condition relates to the employee's performance.

Answer 95

performance

Question 96

What is the accounting treatment for share options granted to non-employees?

Answer 96

They are measured at fair value at the grant date.

Question 97

What is the significance of the 'vesting period'?

Answer 97

It determines the timeframe for the employee to earn the share-based payment.

Question 98

Fill in the blank: The fair value of share-based payments must be estimated using ______ techniques.

Answer 98

appropriate valuation

Question 99

What is the impact of share-based payments on the statement of financial position?

Answer 99

They increase the equity section when settled in shares.

Question 100

True or False: Performance conditions must be met for the share-based payment to vest.

Answer 100

True

Question 101

What is the primary benefit of IFRS 2 for entities?

Answer 101

Enhances transparency and comparability in financial reporting.