ASC 740 is the primary source of guidance on the accounting for income taxes under U.S. GAAP, and IAS 12 is the primary source of such guidance under IFRS® Accounting Standards.1
The IASB issued the IFRS for SMEs® Standard (the “SMEs Standard”) in July 2009. The SMEs Standard is a stand-alone standard and does not require preparers of private-entity financial statements to explicitly refer to full IFRS Accounting Standards. Section 29 of the SMEs Standard is the primary source of guidance on accounting for income taxes for entities applying the SMEs Standard. This appendix does not address the differences between Section 29 and IAS 12 and, therefore, the differences in the accounting for income taxes that might exist between U.S. GAAP and the SMEs Standard.
Differences are based on comparison of authoritative literature under U.S. GAAP and IFRS Accounting Standards and do not necessarily include interpretations of such literature.
While IAS 12 is silent with regard to the meaning of “probable” in the context of paragraph 24 of IAS 12, IAS 37 defines the term as “more likely than not.” The footnote to paragraph 23 of IAS 37 acknowledges that this definition is not necessarily applicable to other IFRS Accounting Standards. However, in the absence of any other guidance, the term probable should be considered to mean more likely than not. In March 2009, the IASB issued an exposure draft containing proposals for an IFRS Standard that would replace IAS 12. Although a replacement standard was not finalized, the exposure draft provided useful guidance on the meaning of “probable” because it used the term “more likely than not” and noted in the Basis for Conclusions that it was consistent with the term “probable” as used in IAS 37 and IFRS 3.