- CFA Exams
- CFA Exam: Level I 2021
- Study Session 8. Financial Reporting and Analysis (3)
- Reading 27. Income Taxes
- Subject 7. Comparison of IFRS and U.S. GAAP
CFA Practice Question
The valuation allowance approach is used by ______.
B. IFRS
C. both U.S. GAAP and IFRS
A. U.S. GAAP
B. IFRS
C. both U.S. GAAP and IFRS
Correct Answer: A
Under IFRS, a deferred tax asset is recognized if it is probable (more likely than not) that sufficient taxable profit will be available against which the temporary difference can be utilized. No valuation allowance is used.
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