Question #2
Reading: Reading 9 Employee Compensation - Post-Employment and Share-Based
PDF File: Reading 9 Employee Compensation - Post-Employment and Share-Based.pdf
Page: 1
Status: Correct
Correct Answer: B
Question
A company is reporting a tax windfall arising from a share-based compensation plan. Which of the following is least accurate?
Answer Choices:
A. The company would report a higher net income under U.S. GAAP
B. The company would take the gain directly to equity under IFRS
C. The company would report a lower tax expense in the income statement under IFRS
Explanation
Tax windfalls (shortfalls) are reported directly to equity under IFRS. Under U.S. GAAP, tax
windfalls (shortfalls) reduce (increase) tax expense in the income statement.