Increase in IT rate and impact on DTA/DTL decrease, increase, previous, because

sabina

Why is it that when the tax rate increases, DTL and DTA increase and when the tax rate decreases DTL and DTA decrease?

I am confused because, at a point in time you create entries in balanace sheet for DTA/DTL. Now, if the tax rate increases why do we need do increase the already recorded DTA/DTL. Doesn't this mean that we are erroneously adjusting previous DTA/DTL amounts based on current rates?

It makes sense that going forward DTA and DTL be increased/decreased based on the new rate, but why do we adjust the existing DTA/DTL accounts for the new rate?

Thanks!