Equity-based Compensation with Case
From the e-Activity, discuss the impact of adopting IFRS reporting on equity-based accounting for financial reporting and tax payments.
The method of equity accounting is utilized in case the parent company controls the investee. The Equity accounting refers to the accounting method by which equity investment is recorded at cost. The subsequent under this accounting is usually adjusted so that it focuses on the shares of the assets of the investee. The AIS28 dictates that there is a significant influence when a company holds 20% of the company’s voting power. The recording of the initial investment is done at cost while investor’s percentage shares are recorded at either net profit or loss (Chan, 2010). There is a difference between the ways tax benefits are recorded under IFRS compared to the GAAP. The tax benefit under IFRS relies upon the approximated future deduction on the date of reporting. Under IFRS, the deferred tax assets are not recognized especially during the granting period.
Disclosures in financial reporting
The firms that adopt accounting equity under IFRS have to categories the associates as non-current assets. The share of investors’ profits or losses is disclosed separately in the financial statements. There is also associate’s summary of information regarding the finances based on assets, revenues, liabilities as well as profits and losses. There are also uniform p…
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