Be ready to do the adjustments: Increase in liabilty - offset - Decrease DTL & Equity Decrease in liability - offset - Increase DTL & Equity Good luck Anish
can you elaborate please!!!
When Increase in liability amount = X - Decrease in DTL by X*t - Decrease in Equity by X*(1-t) where t = Tax Rate Vice Versa if you have a a PBO on Assets side (Overfunded status) so Increase in Assets = Increase in DTL and Increase in Equity (same as above calculations) anish…did i get that right!?
Absolutely =) Anish
If they wanted to really test the candidate’s grasp, they’d start with a DTL or DTA (depending on the question) on the B/S with a level such that you’d have to wipe it out and then increase the other.
I did a couple of questions saying the increase in liability is completely offset by the decrease in equity. So is DTL/DTA above considered as liability or equity?