Deferred Tax Liability as stockholders equity

[simski81]

Hi
Struggling conceptually with a DTL (which becomes apparent that will never be reversed becoming part of of stockholders equity.
A liability is written off against assets to reduce the value of income. So by removing from here you boost income in that year and increase equity????
Could someone please explain, step by step, the accounting treatment.
On a related note on SS9 - learn depr on the TI BAII - its super easy then!
Also, if anyone else understands LIFO/FIFO but finds the questions confusing then I sympathise.
Simon

 

[wake2000]

go back to the first chapter bro, you dont understand equity

 

[JoeyDVivre]

So explain it to him.
Simon -
If the deferred tax liability will never come due (perhaps because the company is expanding rapidly) then there is a bill that will never need to be paid. It’s currently listed as a liability but since it never needs to be paid, it’s just nothing. If it’s nothing, liabilities go down so equity must go up as equity = assets - liabilities.