Difference in constructing FIFO balance sheet from LIFO BS

CFA Level II
#1

Hi team,

I seen 2 methods of getting the FIFO BS from the LIFO BS. Both starts with adding LIFO reserve to Inventory (sure!) and adding (LIFO reserve*(1-tax)) to Equity. One method (Schweser note) however subtract LIFO reserve * tax from cash and the other (everywhere else on the Internet) increasing deferred tax liab by LIFO reserve * tax. The first method (Schweser’s) does not sound right to me, because it “adjusts” cash, one of the most tangible item in the BS. However, I don’t get the meaning behind the second method either.

What should be right?

Thanks a lot.

#2

The CFA Institute curriculum suggests subtracting it from cash.