Lessons
- Introduction to Income Tax
- Deferred Tax Liabilities and Assets
- Tax Base of Assets and Liabilities
- Example of a Deferred Tax Liability
- Permanent and Temporary Differences Between Taxable Income and Accounting Profits
- Valuation Allowance for Deferred Tax Assets
- Disclosures for Deferred Tax Items
- IT Accounting under IFRS and US GAAP
IT Accounting under IFRS and US GAAP
Even though IFRS and US GAAP have similar treatment of income tax issues, there are some differences. These differences are summarized below:
| US GAAP | IFRS | |
| Recognition of deferred tax assets | Recognized in full (except for certain outside basis differences), but valuation allowance reduces asset to the amount that is more likely than not to be realized. | Amounts are recognized only to the extent it is probable (similar to ―more likely than not under US GAAP) that they will be realized. |
| Calculation of deferredtax asset or liability | Enacted tax rates must be used. | Enacted or ―substantively enacted tax rates as of the balance sheet date must be used. |
| Classification of deferredtax assets and liabilitiesin balance sheet | Current or non-current classification, based on the nature of the related asset or liability, is required. | All amounts classified as non-current in the balance sheet. |
| Recognition of deferredtax liabilities frominvestments insubsidiaries or jointventures (JVs) (oftenreferred to as outsidebasis differences) | Recognition not required for investment in a foreign subsidiary or corporate JV that is essentially permanent in duration, unless it becomes apparent that the difference will reverse in the foreseeable future. | Recognition required unless the reporting entity has control over the timing of the reversal of the temporary difference and it is probable (―more likely than not) that the difference will not reverse in the foreseeable future. |
| Revaluation of fixed assetsand intangible assets | Not applicable, no revaluation allowed. | Deferred taxes are recognized in equity. |
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