Under U

1. Under U.S. GAAP, which of the following items would require a lessee to classify a lease of equipment as a capital lease?

The lease term is 90% of the estimated economic life of the lease property.

2. Which of the following is not one of the three criteria for recognition of a liability?

The firm is required to make a cash payment for the goods or services.

3. Which of the following is FALSE?

Employee stock options are now accounted for using the intrinsic value method, whereby the difference between the market price of the stock and the strike price of the option at the date of grant are recorded as a current period expense.

4. Which kind of dividends have an interest-bearing promise to pay dividends?

scrip dividend

5. Under the fair value method of accounting for stock options, firms must value stock options on the

grant date.

6. Financial reporting requires that firms recognize product financing arrangements as liabilities if which of the following conditions is met?

d) Both A and C are correct.

7. Which is the date when a firm gives a stock option to employees?

grant date

8. GAAP requires that companies disclose debt principal repayment requirements for the next ____ years plus all other debt principal repayments thereafter.

5

9. Which of the following is the date on which the dividend distribution occurs?

date of payment

10. All of the following are the general principles underlying the valuation of liabilities except:

The fair value of a liability cannot differ from the amount appearing on the balance sheet, particularly for long-term debt.