26 Questions
Which one of the following is a requirement for recognizing a provision?
The provision must reflect future events that may affect the amount required to settle an obligation
What is the basis for determining the amount recognized in a provision?
The expectation of technically qualified, objective observers
What is an example of a cost reduction that can be included in a provision?
Expected cost reductions associated with increased experience in applying existing technology
Which actuarial technique is used to determine the deficit or surplus of a defined benefit plan?
Projected unit credit method
What is the purpose of discounting the benefit in a defined benefit plan?
To determine the present value of the defined benefit obligation
Which of the following is an example of a long-term employee benefit?
Sabbatical leave
When should an entity recognize a liability and expense for termination benefits?
When the entity can no longer withdraw the offer of benefits
Which type of post-employment benefit plan is determined by the amount of contributions paid by an entity to a post-employment benefit plan or to an insurance company?
Defined contribution plan
When an employee has rendered service to an entity during a period, the entity shall recognize the contribution payable to a defined contribution plan in exchange for that service.
True
Under which type of post-employment benefit plan does the entity's obligation include providing agreed benefits to current and former employees?
Defined benefit plan
What type of risk falls on the entity under defined benefit plans?
Both actuarial and investment risks
According to IAS 37, when should a provision be reversed?
When it is no longer probable that an outflow of resources will be required
When should a provision be used?
For expenditures for which the provision was originally recognised
When is a contract considered onerous?
When the unavoidable costs of meeting the obligations exceed the economic benefits expected
What should be recognized before establishing a separate provision for an onerous contract?
Impairment loss on assets dedicated to that contract
According to Italian GAAP, when should a provision be accrued?
All of the above
What is the value of the provision according to Italian law?
The accounting value of the provision
Why is there a difference in the accounting treatment of provisions between Italian GAAP and other legislations?
All of the above
Which of the following is an example of a provision being recognized for the best estimate of the costs of clean-up?
An entity in the oil industry causing contamination and cleaning up when required by law
When is a provision recognized for a present obligation as a result of a past obligating event?
When there is a present obligation based on evidence available
In which situation is a provision not recognized and the matter disclosed as a contingent liability?
When there is no obligation as a result of past events
What is the expected value of the cost of repairs for warranty obligations?
Euro 400,000
According to IAS 19, what are short-term employee benefits?
Employee benefits that are expected to be settled wholly before twelve months after the end of the annual reporting period.
According to OIC 31, how is the occurrence of a probable event defined?
The occurrence of an event is based on reliable and serious reasons, even if not certain.
Which type of employee benefits are payable after the completion of employment?
Post-employment benefits
What is the main difference between IAS 37 and OIC 31 regarding the actualization of the amount when a provision is relevant?
IAS 37 requires it, while OIC 31 does not require it.
This quiz tests your knowledge of accounting for defined benefit plans. Learn about the complexities involved in measuring obligations and expenses, as well as the potential impact of actuarial gains and losses. Explore techniques used to determine deficits or surpluses in this challenging area of accounting.
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