INTERNATIONAL FINANCE REPORTING
STANDARDS FOR COMPENSATION
PROFESSIONALS EXAM 2026 WITH ACTUAL
CORRECT QUESTIONS AND VERIFIED
DETAILED ANSWERS |CURRENTLY TESTING
QUESTIONS AND SOLUTIONS|ALREADY
GRADED A+|BRAND NEW VERSION
!!|GUARANTEED PASS
1. Which of the following transactions is within the scope of IFRS 2?
A. Cash bonuses unrelated to share price
B. Equity awards granted to employees
C. Employer pension contributions
D. Profit-sharing plans not linked to equity
Correct Answer: B
Explanation: IFRS 2 applies to transactions where employees receive equity instruments or
cash amounts tied to share price. Pension contributions and plain cash bonuses fall under IAS
19, not IFRS 2.
2. Equity-settled awards are measured at fair value at which date?
A. Grant date
B. Vesting date
C. Exercise date
D. Reporting date
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,Correct Answer: A
Explanation: For equity-settled awards, fair value is locked in at grant date and never
remeasured.
3. Which of the following is treated as a market condition under IFRS 2?
A. Two years of service
B. Sales target of $10 million
C. EBITDA margin target
D. Share price reaching $50
Correct Answer: D
Explanation: Market conditions relate to the entity’s share price or market-based
performance metrics.
4. Market conditions affect:
A. Grant date fair value only
B. Expected vesting
C. Both A and B
D. Neither A nor B
Correct Answer: A
Explanation: Market conditions are incorporated into grant date fair value, but do NOT change
the expected vesting estimate.
5. For cash-settled awards (SARs), the liability must be:
A. Measured once at grant date
B. Remeasured at each reporting date
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,C. Recognized only at settlement
D. Expensed only when exercised
Correct Answer: B
Explanation: IFRS 2 requires cash-settled liabilities to be remeasured to fair value every period
until settlement.
6. A service condition fails (employee leaves). What happens to previously recognized
expense?
A. It stays unchanged
B. It is reversed
C. It is added to the next year’s expense
D. It is transferred to equity
Correct Answer: B
Explanation: For service conditions, if employees do not meet the condition, all previous
expense must be reversed.
7. A company grants 1,500 options with a grant date FV of $8, vesting over 3 years. What is
annual expense?
A. $4,000
B. $8,000
C. $12,000
D. $4,500
Correct Answer: B
Explanation:
Total FV = 1,500 × $8 = $12,000
Annual = $12,000 ÷ 3 = $4,000
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, 8. Which valuation technique is acceptable for valuing share options under IFRS 2?
A. Straight-line method
B. Black-Scholes model
C. Historical cost method
D. Par value model
Correct Answer: B
Explanation: IFRS 2 requires option-pricing models such as Black-Scholes or Monte Carlo.
9. A plan allows employees to choose cash or shares. Classification depends on:
A. Employee preference
B. Management policy
C. Whether the employer has an obligation to deliver cash
D. Grant date FV
Correct Answer: C
Explanation: IFRS 2 classification depends on the entity’s obligation, not the employee’s
choice.
10. Non-vesting conditions (e.g., holding shares after exercise):
A. Affect expected vesting
B. Are ignored
C. Must be built into grant date FV
D. Reverse expense if unmet
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STANDARDS FOR COMPENSATION
PROFESSIONALS EXAM 2026 WITH ACTUAL
CORRECT QUESTIONS AND VERIFIED
DETAILED ANSWERS |CURRENTLY TESTING
QUESTIONS AND SOLUTIONS|ALREADY
GRADED A+|BRAND NEW VERSION
!!|GUARANTEED PASS
1. Which of the following transactions is within the scope of IFRS 2?
A. Cash bonuses unrelated to share price
B. Equity awards granted to employees
C. Employer pension contributions
D. Profit-sharing plans not linked to equity
Correct Answer: B
Explanation: IFRS 2 applies to transactions where employees receive equity instruments or
cash amounts tied to share price. Pension contributions and plain cash bonuses fall under IAS
19, not IFRS 2.
2. Equity-settled awards are measured at fair value at which date?
A. Grant date
B. Vesting date
C. Exercise date
D. Reporting date
1|Page
,Correct Answer: A
Explanation: For equity-settled awards, fair value is locked in at grant date and never
remeasured.
3. Which of the following is treated as a market condition under IFRS 2?
A. Two years of service
B. Sales target of $10 million
C. EBITDA margin target
D. Share price reaching $50
Correct Answer: D
Explanation: Market conditions relate to the entity’s share price or market-based
performance metrics.
4. Market conditions affect:
A. Grant date fair value only
B. Expected vesting
C. Both A and B
D. Neither A nor B
Correct Answer: A
Explanation: Market conditions are incorporated into grant date fair value, but do NOT change
the expected vesting estimate.
5. For cash-settled awards (SARs), the liability must be:
A. Measured once at grant date
B. Remeasured at each reporting date
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,C. Recognized only at settlement
D. Expensed only when exercised
Correct Answer: B
Explanation: IFRS 2 requires cash-settled liabilities to be remeasured to fair value every period
until settlement.
6. A service condition fails (employee leaves). What happens to previously recognized
expense?
A. It stays unchanged
B. It is reversed
C. It is added to the next year’s expense
D. It is transferred to equity
Correct Answer: B
Explanation: For service conditions, if employees do not meet the condition, all previous
expense must be reversed.
7. A company grants 1,500 options with a grant date FV of $8, vesting over 3 years. What is
annual expense?
A. $4,000
B. $8,000
C. $12,000
D. $4,500
Correct Answer: B
Explanation:
Total FV = 1,500 × $8 = $12,000
Annual = $12,000 ÷ 3 = $4,000
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, 8. Which valuation technique is acceptable for valuing share options under IFRS 2?
A. Straight-line method
B. Black-Scholes model
C. Historical cost method
D. Par value model
Correct Answer: B
Explanation: IFRS 2 requires option-pricing models such as Black-Scholes or Monte Carlo.
9. A plan allows employees to choose cash or shares. Classification depends on:
A. Employee preference
B. Management policy
C. Whether the employer has an obligation to deliver cash
D. Grant date FV
Correct Answer: C
Explanation: IFRS 2 classification depends on the entity’s obligation, not the employee’s
choice.
10. Non-vesting conditions (e.g., holding shares after exercise):
A. Affect expected vesting
B. Are ignored
C. Must be built into grant date FV
D. Reverse expense if unmet
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