B. Balance sheet is the correct answer because the balance sheet approach is specifically designed to protect an expatriate ' s purchasing power and maintain a reasonably comparable standard of living during an international assignment. The approach generally begins with home-country compensation and adjusts for significant differences between home and host locations.

This question falls within Total Rewards . HRCI requires SPHR candidates to understand compensation strategies and philosophy, job pricing and pay structures, external labor markets and economic factors, and methods for designing compensation programs that attract, reward, and retain talent. International assignments require these concepts to be applied across different tax systems, housing markets, living costs, exchange rates, and employment environments.

The traditional balance sheet philosophy is often summarized as ensuring that the expatriate is financially “no gain, no loss” because of the assignment. Mercer describes the home-based balance sheet methodology as an approach intended to preserve home-country purchasing power at the host location. Typical calculations consider housing, taxes, goods and services, and other spending or reserve components.

A. Home-base comparison is not the recognized comprehensive compensation methodology described in the question. Home-country compensation may serve as the starting point for a balance sheet approach, but comparing home pay alone does not equalize the relevant cost differences.

C. Tax equalization is important but narrower. It generally seeks to ensure that the employee ' s tax burden is approximately what it would have been had the employee remained in the home country. Tax equalization may be incorporated into a balance sheet package, but it addresses taxation rather than the expatriate ' s entire standard of living.

D. Host-country stipend may offset a particular expense or provide an allowance but does not systematically reconcile major home-versus-host cost differences.

The key exam phrase is “maintains an equitable standard of living.” That is the defining purpose of the balance sheet approach , making B the clear answer.