Tax rate under GAAP and IFRS

CFA Level I
#1

A tax rate that has been substantively enacted is used to determine the balance sheet values of deferred tax assets and deferred tax liabilities under: A. GAAP only

B IFRS only

C. both

The answer is B. Does anyone know what is “substantive enacted tax rate”?

#2

http://www.pwc.com/us/en/tax-accounting/assets/income_tax_this_that.pdf

Check the term in page 2, right column

#3

Hello Tung Nguyen. This question puzzled me too until I took the effort and looked up the word ‘stubstantively’ in the dictionary.

In very plain language (so neither legal nor accounting terms) it means it is "almost’ or “practically” enacted. Everyone assumes it will be enacted. And since the IFRS is rather a principle based and not rule based system, they already apply the rule before being officially enacted.

Gosh the native English speakers have no idea how lucky they are. :-))

#4

Thank you guys. Your answers really complement each other :smiley: