What happens if income tax increase or decrease to NET DTL account? What Happends if Income tax increase or decrease to NET DTA account?
As far as I remember, any tax increase will increase DTL and DTA… Sorry, should clarify: any increase in the tax rate will increase both DTL and DTA
so tax rate increse DTL & DTA increase - whats the chain effect on other accounting items?
I guess it depends on whether you expect it to reverse : if you don’t expect it to reverse and it’s classed as a ‘permanent’ difference, then it’s treated as equity. So any change in DTL/DTA will affect equity in these circumstances. But I have to admit i’m not too hot on this area!
Assuming they reverse A tax increase/decrease directly affects the deferred tax liability or asset. So, in the case of a Net DTL, you can simplify the Tax Expense = Tax Payable + Change in DTL - Change in DTA to: Tax Expense = Tax Payable + Change in Net DTL DTL goes UP, income tax expense goes up, net income and equity go down. Same sort of logic applies to the other cases.
Cubemonkey Wrote: ------------------------------------------------------- > Assuming they reverse > > A tax increase/decrease directly affects the > deferred tax liability or asset. > > So, in the case of a Net DTL, you can simplify the > Tax Expense = Tax Payable + Change in DTL - Change > in DTA to: > > Tax Expense = Tax Payable + Change in Net DTL > > DTL goes UP, income tax expense goes up, net > income and equity go down. > > Same sort of logic applies to the other cases. excellent. DONT FORGET MUNI BONDS HAVE ZERO DTA/DTL B/C THEY ARE PERM DIFF, NOT TEMP