Question

1.

A liability for compensated absences is

recognized in the year in which it is earned by employees whenever a reasonable estimate can be made of amounts expected to be paid out in the future.

accrued only if specific conditions are met.

disclosed in a note only.

never accrued but may be disclosed if desired.

2.

Under the revenue approach to accounting for product guarantees, the liability is

recognized at the value of the service to be provided.

recognized at the estimated present cost of the service to be provided.

recognized at the estimated future cost of the service to be provided.

not recognized.

3.

Under ASPE, a contingent liability is recognized in income and as a liability when

the liability can be reasonably estimated.

the liability is likely to be paid.

the liability is both likely to be paid and can be reasonably measured.

contingent liabilities are never recorded.

4.

The selling price of a bond is the sum of the present values of the principal and the periodic interest payments. The present values are determined by using the

coupon rate.

stated rate.

nominal rate.

market rate.

Answer 1

1) A liability for compensated absences is recognised in the year in which it is earned by employees whenever a reasonable estimate can be made of amounts expected to be paid out in the future.

2) Under the revenue approach to accounting for product guarantees the liability is recognise the value of service to be provided.

3) under the ASPE a contingent liability is recognised in income and as a liability when the liability is both likely to be paid and can be reasonably measured.

4) coupon rate.