Income Tax Under Gaap and Ifer
Accounting for Income Tax Under IFRS, Income Tax is taxes based on taxable profits, and taxes that are payable by a subsidiary, associate or joint venture on distribution to investors.
U.S GAAP defines income tax as all domestic federal, state and local taxes based on income, including foreign income taxes from an entity's operations that are consolidated, combined or accounted for under the equity method, both foreign and domestic. In IFRS, the guidance about accounting for income taxes is in International Accounting Standard (IAS) 12. The guidance about accounting for income taxes in U.S GAAP is in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 740. Now, I will talk about some differences in specific parts about income tax between IFRS and GAAP.
First of all, it's the tax basis.
Background:
The tax basis of an asset or liability is one of the key elements in determining deferred tax assets (DTAs) and deferred tax liabilities (DTLs). A company determines DTAs and DTLs by comparing the book carrying amount an asset or liability to the tax basis of that asset or liability, and then applying the applicable tax rate to the resulting difference. Under IAS 12, the tax basis of an asset is defined as the amount that will be deductible for tax purposes against any taxable economic benefits that will flow to an entity when it recovers the carrying amount of the asset. Moreover, it also defines the tax basis of a liability as its carrying amount, subtracting any amount that will be deductible for tax purposes relate to that liability in future periods. In the case of revenue that is received in advance, the tax basis of the resulting liability is its carrying amount, deducting any amount of the revenue that won't be taxable in the future periods. Under ASC 740, the tax basis of an asset or liability is the amount used for tax purposes. For example, in the case of a depreciable asset, tax basis is not
U.S GAAP defines income tax as all domestic federal, state and local taxes based on income, including foreign income taxes from an entity's operations that are consolidated, combined or accounted for under the equity method, both foreign and domestic. In IFRS, the guidance about accounting for income taxes is in International Accounting Standard (IAS) 12. The guidance about accounting for income taxes in U.S GAAP is in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 740. Now, I will talk about some differences in specific parts about income tax between IFRS and GAAP.
First of all, it's the tax basis.
Background:
The tax basis of an asset or liability is one of the key elements in determining deferred tax assets (DTAs) and deferred tax liabilities (DTLs). A company determines DTAs and DTLs by comparing the book carrying amount an asset or liability to the tax basis of that asset or liability, and then applying the applicable tax rate to the resulting difference. Under IAS 12, the tax basis of an asset is defined as the amount that will be deductible for tax purposes against any taxable economic benefits that will flow to an entity when it recovers the carrying amount of the asset. Moreover, it also defines the tax basis of a liability as its carrying amount, subtracting any amount that will be deductible for tax purposes relate to that liability in future periods. In the case of revenue that is received in advance, the tax basis of the resulting liability is its carrying amount, deducting any amount of the revenue that won't be taxable in the future periods. Under ASC 740, the tax basis of an asset or liability is the amount used for tax purposes. For example, in the case of a depreciable asset, tax basis is not