Clarification regarding Valuation Allowance Under US GAAP and IFRS

CFA Level I FRA
#1

Hi Everyone,

Just need some clarification, under US GAAP, Valuation Allowance is a contra account that is used for previous tax losses or credits that a firm will NOT be able to utilize, however if they are able to utilize it, it is still a deferred tax asset, correct?

Also, since IFRS does not have Valuation Allowances, if Deffered Tax Assets in IFRS will not be recognized, which account does a company recognize the loss in?

Any help is appreciated

Thanks

#2

You’re correct about US GAAP.

I believe that under IFRS you simply credit the DTA.

Under each, the debit will be to income tax expense.