Question

Under U.S. GAAP, gross deferred tax assets may be larger and offset with valuation allowances as compared to how the same company would appear under IFRS. True or False?

Answer 1

Under U.S. GAAP, gross deferred tax assets may be larger and offset with valuation allowances compared to IFRS.

Step-by-step explanation:

True. Under U.S. GAAP (Generally Accepted Accounting Principles), companies are more likely to recognize gross deferred tax assets. These assets represent potential future tax deductions and are recorded when a company has temporary differences between the book and tax basis of certain assets and liabilities. However, under IFRS (International Financial Reporting Standards), companies are more conservative and may require the establishment of a valuation allowance to offset a portion of the deferred tax assets that may not be realized.