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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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If a company believes that it is more likely than not to have future taxable income against which it can use its deferred tax asset, how might the accounting treatment of this deferred tax asset differ under U.S. GAAP and IFRS?

To determine

Explain the way for the accounting treatment of deferred tax asset varies under U.S. GAAP and IFRS.

Explanation

Deferred tax asset: When Income Tax Expense account is more than the Income Tax Payable account, this difference is known as Deferred Tax Asset.

International Financial Reporting Standards (IFRS): IFRS are a set of international accounting standards which are framed, approved, and published by IASB for the preparation and disclosure of international financial reports.

GAAP: GAAP stands for “Generally Accepted Accounting Principles”. It provides the accounting rules and standards those are followed across the globe for reporting practice.

Under IFRS, a corporation may recognize a deferred tax asset when the corporation expects that there is a possibility of deferred tax asset that will have future taxable income against which the corporation could utilize deferred tax asset...

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