CERTYNEX IFRS ACADEMY

At the end of 20X5, Gernasse carried a deferred tax asset of 50,000 on its share option plan (deduction equal to intrinsic value on exercise, under the tax law in the case). At 31 December 20X6, the share price has fallen below the exercise price: the intrinsic value is nil and no recovery can be anticipated from the information available. Which treatment applies at the 20X6 reporting date?

Keep the asset at 50,000, computed on grant-date fair value, which does not change.

Reduce the asset to nil, the deduction estimated at the reporting date being nil.

Set the asset at the tax effect of the cumulative expense, the floor of the estimate.

Keep the asset until the plan expires, a recovery in the share price remaining possible.