IFRS: Income taxes related to share-based payment transactions

FratBro23
Category:
Accounting
Price: $5 USD

Question description

In accordance with IFRS 2 Share-based Payment, an entity has recognized an expense for the consumption of employee services received as consideration for 50,000 share options granted. A tax deduction will not arise until the options are exercised, and the deduction is based on the options’ intrinsic value at exercise date.

The entity’s tax rate is 40 per cent. The options were granted at the start of year 1, vested at the end of year 3 and were exercised at the end of year 5. Details of the expense recognized for employee services received and consumed in each accounting period, the number of options outstanding at each year-end, and the intrinsic value of the options at each year-end, are as follows:

Employee services expense

Number of options at year-end

Intrinsic value per option

Year 1

188,000

50,000

5

Year 2

185,000

45,000

8

Year 3

190,000

40,000

13

Year 4

0

40,000

17

Year 5

0

40,000

20

Questions

Under IFRS, what are current and deferred income tax expense (income) and related current and deferred tax balances related to this share-based payment transaction in years 1–5 under IFRS?  Under U.S. GAAP?


Tutor Answer

(Top Tutor) Daniel C.
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School: UCLA
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