Investment deduction amount / Special Purpose balance with reserve
February 21, 2011 | 30,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
In the balance sheet for 2007, I formed a special tax reserve with a total amount of 14,400 euros (investment deduction for 4 cars of 3,600 euros each). In 2009, three cars were purchased, and one in 2010. Now, as I am preparing the balance sheet for 2009, I realize that I should not have booked the deduction amount in the balance sheet, but rather it should have been deducted off-balance sheet.
How do I remove the 14,400 euros from the balance sheet? Should I book the reversals in the balance sheet (even though it is technically incorrect)? I need an answer with specific journal entries for 2009 and 2010.
How would I book it if I had not purchased the car in 2010? All requirements are met.
Dear inquirer,
Thank you for your inquiry, which I would like to answer based on your information and in the context of your commitment in a first consultation as follows:
In 2007, you accidentally booked the old investment reserve, although for financial years ending after 18.08.2007, the new investment deduction applies.
You book as of 1.1.2009, in the year for which you are preparing the balance sheet as follows:
Special item with reserve share in debit to initial capital in credit. The booking is profit-neutral and the reserve is dissolved. This settles everything.
If you do not purchase the vehicle in 2010, then the amount of Euro 3,600 booked in 2007 will be added to profits. Your income tax assessment for 2007 will then be changed to your disadvantage, as the profit for 2007 will be EUR 3,600 higher.
I hope I was able to assist you.
Best regards,
Ulrich Stiller
Tax consultant / Diploma in Business Administration
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