How can special depreciations be taken into account in the annual financial statements?
June 4, 2024 | 40,00 EUR | answered by Louis König
Dear tax advisor,
my name is Karl Lehmann and I run a medium-sized company in the automotive industry. This year, due to the economic situation and current market conditions, we had to make some investments to maintain our production. We also utilized special depreciation to reduce the financial burden.
Now I am facing the challenge of how to correctly account for these special depreciations in the annual financial statements. I want to ensure that everything is properly documented and that no tax issues arise. I have not delved deeply into the topic of annual financial statements before and therefore I am unsure of how to proceed.
My concern is that I might make mistakes in accounting for the special depreciations, which could result in tax payments or other consequences for us. Therefore, I would greatly appreciate it if you could explain to me how exactly special depreciations should be accounted for in the annual financial statements and what steps I need to take.
What options are there to correctly record the special depreciations and how can we ensure that everything complies with legal requirements? I want to make sure that we do everything correctly and avoid errors in preparing our annual financial statements.
Thank you in advance for your help and support.
Best regards,
Karl Lehmann
Dear Mr. Lehmann,
Thank you for your inquiry regarding the correct consideration of special depreciation in the annual financial statements of your medium-sized company in the automotive industry. I understand that you are concerned about how to properly document these depreciations and avoid possible tax issues. I am happy to explain to you how to proceed and what steps to consider.
Special depreciation is depreciation that goes beyond regular depreciation and is usually used to favor certain investments for tax purposes. In your case, where you had to make investments due to market conditions, special depreciation can play an important role in reducing the financial burden.
To correctly consider special depreciation in the annual financial statements, you should first comply with the exact provisions of the Income Tax Act (EStG). The legal regulations for special depreciation are specified there. Generally, you must record the special depreciation in the accounting and mark it accordingly in the asset register.
It is important to clearly separate the special depreciation from regular depreciation to ensure proper documentation. Additionally, you should ensure that the special depreciation complies with legal requirements and that no tax risks arise. It may be beneficial to seek advice from an experienced tax advisor to ensure that everything is correctly accounted for.
Furthermore, when preparing the annual financial statements, make sure that all special depreciation is disclosed in the profit and loss statement as well as in the balance sheet. This not only enhances transparency with stakeholders but also ensures compliance with legal requirements.
In summary, it is important to proceed carefully when considering special depreciation in the annual financial statements to avoid potential errors. By adhering to legal requirements, maintaining clear documentation, and seeking professional assistance if necessary, you can ensure that your annual financial statements are prepared properly.
If you have any further questions or need assistance, I am at your disposal. I hope that my explanations are helpful to you and wish you success in preparing your annual financial statements.
Sincerely,
Louis König
