Firms recognize deferred tax assets only to the extent that they expect to generate sufficient taxable income to realize the assets in the form of tax savings in the future.IFRS requires that firms recognize the _____of deferred tax assets, with explanatory disclosures.

Question

Quizplus · Accepted Answer

IFRS requires firms to recognize the expected realizable amount of deferred tax assets, which represents the amount of tax savings that the firm expects to realize in the future. The firm must provide explanatory disclosures to explain the significant assumptions used in determining the expected realizable amount, as well as any uncertainties that might affect the realization of the assets. The present value or future value of the amount are not relevant to the recognition of deferred tax assets under IFRS, and there is no such thing as a negotiated or liquidation value for these assets.

Firms Recognize Deferred Tax Assets Only to the Extent That