In a Share Based Payment Transaction Where the Entity Has

question 2

Multiple Choice

In a share based payment transaction where the entity has settlement choice:

• A) where a present obligation does not exist the entity has a choice of classification as an equity or cash settled share based payment transaction.
• B) the entity has a present obligation to settle in cash where it has a past practice or stated policy of settling in cash
• C) the entity must settle in equity unless there is no commercial substance to the transaction.
• D) if an entity elects to settle in cash the settlement is accounted for as an expense.

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Definitions:

Price Skimming

A pricing strategy where a firm charges the highest initial price that customers will pay for a new product or service, then gradually lowers the price to attract more price-sensitive consumers.

Penetration Pricing

A marketing strategy where the initial price of a product is set lower than the eventual market price to attract new customers and gain market share.