CERTYNEX IFRS ACADEMY

Falquenne estimates the future tax deduction of its share option plan from the grant-date fair value of the options (6 per option), whereas the tax law in the case will deduct intrinsic value on exercise and the intrinsic value at the reporting date is 15 per option. Where is the error?

The basis of the estimate: intrinsic value at the reporting date (15) should have been used, not grant-date fair value.

Falquenne should have recognised no deferred tax before the options are exercised.

The number of options: only options already exercisable count for estimating the deduction.

The rate: the deduction must be estimated at the tax rate in force at grant date.