Hi, Quick question- is the (say +60) lifo reserse adjustment for modified total assets split between (+14) on deferred tax liability and +36 on the equity (retained earnings) (if there’s a 40% tax rate)? I don’t get this equity part in a Qbank question: Bingaman’s modified balance sheet will show the following net adjustments to equity: adding the entire LIFO reserve (due to the assumption of rising prices), less the value of the goodwill from previous acquisitions, less the expected litigation exposure, plus the offset to equity for the decrease in the value of the long term debt due to rising interest rates: ($60,000,000 − $20,000,000 − $12,000,000 + $15,000,000) = $43,000,000. Thanks, Andrew
according to Schweser, the Entire LIFO reserve is added to Retained Earnings under stockholders’ equity.