I don’t understand the concept of liability carrying cost vs tax base cost. I understand the asset side because I picture in my mind an example such as “you pay less (more) than you owe” and that creates a deferred tax liability or deferred tax asset. But I can’t picture this with a liability.
DTL - carrying amount of a liability is less than its tax base. DFA - tax base of a liability is less than its tax base.
Can someone explain this to me?