Income Taxes — ASC 740 vs IAS 12

Both ASC 740 (US GAAP) and IAS 12 (IFRS) use the balance-sheet temporary-difference approach to deferred tax, and both classify all deferred tax as non-current. The differences sit in recognition mechanics — which matter for a multinational reconciling its parallel ledgers.

• Deferred tax arises on temporary differences between the carrying amount and the tax base of assets and liabilities, measured at enacted (US) / enacted or substantively enacted (IFRS) rates.
• Current tax is the amount payable/recoverable for the period.

Area	US GAAP (ASC 740)	IFRS (IAS 12)
Uncertain tax positions	Two-step: recognize if more-likely-than-not, then measure	IFRIC 23 — expected value or most-likely amount
DTA recognition	Recognize in full, then a valuation allowance	Recognize only to the extent probable
Backwards-tracing	Prohibited	Required (trace tax effects to where the item was recognized)
Initial-recognition exemption	None	Yes

• Realizability of DTAs — the valuation allowance / “probable” assessment.
• Uncertain tax positions — recognition and measurement.
• Rate and law changes — timing of remeasurement.

• SAP implementation: deferred tax in SAP Group Reporting / tax configuration — write-up forthcoming under SAP & Enterprise Systems. Parallel ledgers feed the differing temporary differences.

An educational reference and original synthesis — not investment advice, and not a substitute for the standard or for professional accounting guidance. For authoritative measurement detail, consult ASC 740 / IAS 12 directly.