M Company prepares its financial statements using IFRS. M will record a deferred tax asset for stock options a. for the cumulative amount of the fair value of the options M has recorded for compensation expense. b. for the portion of the options’ intrinsic value earned to date times the tax rate. c. for the tax rate times the amount of compensation. d. unless the award is “in the money;” that is, it has intrinsic value.

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.