DTL as Liability or Equity equity, confusion, increase, company, making

sabina

Hi Guys,
Pls help me with this confusion

If company has DTL (Deferred Tax Liability),
1) if company has been making good profits,what does it mean? Does it imply that company will have $$ to pay off DTL and hence DTL can be reversed and should be treated as Debt?

2) What if company runs in losses, what does it mean from DTL Perspective? Does it mean company will not have $$ to pay debt and hence DTL will never be paid and increase the equity?


If a company has DTA (Deferred Tax Asset),and if company has been incurring losses,DTA is reduced by Valuation Allowance because Company might never take advantage of Asset.
However,if company starts making profit,DTA can be moved up.

3) Is this revaluation of DTA allowed under US GAAP?


Will appreciate prompt responses.


All the best
Cheers,