Final answer:
The variations in reported amounts for deferred taxes between U.S. GAAP and IFRS are most commonly caused by differences in accounting for temporary differences. These differences arise due to the different ways the two standards recognize and measure these temporary differences, which do not affect permanent differences or the treatment of net operating losses.
So the correct option is c. differences between the two methods in accounting for temporary differences.
Step-by-step explanation:
The most common cause for variation in reported amounts for deferred taxes between U.S. GAAP and IFRS is due to differences between the two methods in accounting for temporary differences. Permanent differences do not create deferred taxes, while net operating losses are treated similarly under both sets of standards. The key lies in the recognition and measurement of temporary differences, which can lead to deferred tax assets or liabilities.
Temporary differences occur when there is a discrepancy between the tax base of an asset or liability and its reported amount in the financial statements. These differences will eventually reverse as the asset is used or the liability is settled. The way these temporary differences are recognized and measured can lead to variations in the reported amounts for deferred taxes under U.S. GAAP and IFRS.
It is essential to note that while net operating losses can affect deferred tax calculations, the differences in how they are accounted for between the two standards are not the most common cause for variation. Similarly, non-tax differences between IFRS and U.S. GAAP are broad and not specific to deferred taxes.