115 CFA
File: Financial Analysis - Reading 27 - 7. Comparison of IFRS and U.S. GAAP

7. Comparison of IFRS and U.S. GAAP

j. identify the key provisions of and differences between income tax accounting under International Financial Reporting Standards (IFRS) and US generally accepted accounting principles (GAAP).

What is the difference between IFRS and GAAP when it comes to determining tax basis.
- US GAAP: Tax basis is a question of fact under the law
- IFRS: Tax basis is generally the amount deductible or taxable for tax purposes.

What is the difference between GAAP and IFRS when it comes to recognition of tax deferred assets?
- U.S. GAAP: Tax deferred assets are recognized in full, but valuation allowance reduces assets to the amount that is more likely than not to be realized.
- IFRS: Amounts are recognized only to the extent it is probable (similar to "more likely than not" under U.S. GAAP) that they will be realized.

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