Got a question. Lets say that while adjusting the balance sheet to reflect the funded status of a defined benefit pension plan, if the adjustment results in an increase in deferred tax asset, would you first add to or create a deferred tax asset account on the asset side, or would you first reduce the deferred tax liability account on the liability side? Which would you do first?
If you need to increase asset by X, you increase DTL by tax*X and Equity by (1-tax)*X //thanks to mumu for the formulas I wouldn’t worry too much about DTA/DTL: if DTL becomes negative (reduce it to zero) and then create DTA.
thanks, that should help. Its just that i think i saw it being treated differently in Schweser versus CFAI. I dont think the question if asked you leave any doubt as to which account to touch.