Prior Service Cost Is Included Among OCI Items in the Statement

question 12

Multiple Choice

Prior service cost is included among OCI items in the statement of comprehensive income and thus subsequently becomes part of AOCI where it is amortized over the average remaining service period using

• A) U.S. GAAP.
• B) IFRS.
• C) Both U.S. GAAP and IFRS.
• D) Neither U.S. GAAP nor IFRS.

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Definitions:

Common Stock Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell shares of a company's common stock at a set price before the option expires.

Corporate Capital Structure

The mix of debt, equity, and other securities that a company uses to finance its activities.

Diluted Earnings Per Share

A metric that calculates a company's earnings per share (EPS) if all convertible securities were converted into common stock, potentially lowering the EPS.

Convertible Debt

A type of bond or loan that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.