Galaxy has a tax benefit and cash retained of 20 000 as a result of share based payments to employee...........

Accountancy (Phase -I & II) Employee Stock Option and Buy back of Securities

Galaxy has a tax benefit and cash retained of $20,000 as a result of share-based payments to employees. How is this tax benefit disclosed in the financial statements?

As a component of other comprehensive income.

As a prior period adjustment.

As a current liability on the balance sheet.

As a cash inflow from financing activities on the statement of cash flows.

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Explanation:

(d) Cash retained as a result of excess tax benefits in connection with share-based payments to employees should be recognized as a cash inflow from financing activities in the statement of cash flows.