7q.

An argument raised by opponents to the FASBs proposal that employee stock options should be recognized as an expense was that it could:

Multiple Choice

• violate materiality concepts.

• jeopardize compliance with contract terms and conditions.

• violate the historical cost principle.

• violate the cost-benefit rule.

13.q.

Which of the following statements does not properly reflect the accounting rules for accounting for minority equity investment securities, if fair value is not readily determinable?

Multiple Choice

• If reported at cost, the reported value is updated when circumstances indicate the assets value is impaired.

• If there are changes in carrying value, they are not to be reported in net income.

• Firms may opt to report at fair value or report at cost.

• If reported at cost, the reported value is to be updated when there is an observable transaction.