IFRS and GAAP are similar in regard to computing earnings per share components. However, the calculation of the impact from the exercise of options differs.
Required:
a. Describe the difference in treatment of unrecognized compensation cost relating to options in the calculation of EPS.
a. When applying the treasury stock method, GAAP adjusts for unrecognized compensation cost by adding it to the assumed exercise price when the options are not yet fully vested the required service period is not completed). This is a hypothetical number that serves as a surrogate for the potential premium that an employee might have to pay over the exercise price to be given the right to
b. Explain why the IFRS approach will systematically result in lower reported diluted EPS.

Question

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The Answer of IFRS and GAAP are similar in regard to computing earnings per share components. However, the calculation of the impact from the exercise of options differs.
Required:
a. Describe the difference in treatment of unrecognized compensation cost relating to options in the calculation of EPS.
a. When applying the treasury stock method, GAAP adjusts for unrecognized compensation cost by adding it to the assumed exercise price when the options are not yet fully vested the required service period is not completed). This is a hypothetical number that serves as a surrogate for the potential premium that an employee might have to pay over the exercise price to be given the right to
b. Explain why the IFRS approach will systematically result in lower reported diluted EPS.

IFRS and GAAP Are Similar in Regard to Computing Earnings