Accounting for unfinished software
February 12, 2010 | 30,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
Hello,
due to a move to Switzerland, the tax office has requested me to create a balance sheet - I have been self-employed so far.
It concerns the valuation of brand rights and software applications for which costs have arisen in the balance sheet period.
Now I do not know how to report these in the balance sheet, as in both areas no value has been created and I do not want to tax expenses that have not led to any significant value. - The software had to be rewritten and the trademark registration is not yet complete.
Previous registered balance sheet positions:
Liabilities side
Profit: 10,000 (from income-statement calculation)
Liabilities: 5,000 (unpaid software invoices)
Assets side:
Concessions, intellectual property rights, etc.: 1
Work in progress: 1
Problem: Balance sheet total does not add up.
What do I need to do to make the balance sheet formally correct?
For any questions, I am available via email.
Kind regards,
Ralph Wieser
ralph.wieser@gmail.com
Dear inquirer,
Thank you for your inquiry, which I would like to answer based on the information provided and considering your situation in the context of an initial consultation:
If you are self-employed, you usually do not have to prepare a balance sheet. Instead, you determine your profit according to § 4 paragraph 3 EStG by comparing business income with business expenses in the form of an income surplus calculation. However, you also have the option to voluntarily prepare a balance sheet, which you probably have not done and also did not have to do. I can only explain the request for a balance sheet by the tax office by assuming that you have given up your activity due to moving to Switzerland, in which case you must change the method of profit determination and prepare a balance sheet. Please note: When changing the method of profit determination, additional profit adjustments must be made.
The software generally represents an intangible asset that must be activated, i.e. shown on the asset side of the balance sheet, only if you have acquired it for consideration. In this case, it must be shown in the balance sheet at its acquisition cost. If the costs mentioned by you are considered acquisition costs, then you must show the intangible asset on the asset side of the balance sheet. However, if it is a self-created intangible asset, there is a prohibition on activation, meaning you cannot show it in the balance sheet. This prohibition also applies if there has been labor, fees, or other expenses incurred in your business.
The difference in the balance sheet total can only be clarified by examining the documents.
I hope my explanations have been helpful to you.
Best regards,
Ulrich Stiller
Tax consultant
