DTL DTA Income Tax

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