Changes to Last Year’s Tax Book Values and Evaluation Amounts 

Use

When you prepare a tax declaration, you might have to adjust last year’s tax book values or tax evaluation amounts – for example, if there was an error in your declaration last year. You can do so by posting an adjusting entry.

Assume that in last year’s tax declaration, you stated an asset’s tax book value at JPY 34,800, when in fact it should have been JPY 34,700. In this year’s tax declaration, you want to correct the tax book value. Therefore, before you prepare the tax declaration, you post an adjusting entry to credit JPY 100 to the asset.

Activities

Customizing

Specify which transaction types you use for adjustment postings, in Customizing for Financial Accounting (FI), by choosing Asset Accounting  ® Information System  ® Property Tax Report  ® Make Settings for Property Tax Report.

Periodic Processing

If you need to adjust an asset’s tax book value or tax evaluation amount from last year, post an adjusting entry, following the standard procedure, and using the appropriate transaction type that you entered in Customizing.

If you post an adjusting entry with the wrong amount by mistake, reverse it completely by posting another adjusting entry. Then post another adjusting entry for the correct amount.

To continue the example: If you posted a credit entry for JPY 150 instead of a credit entry for JPY 100, you would reverse it by posting a debit entry for JPY 150. You would then post another credit entry, this time for JPY 100.

When you execute the Property Tax Report, it automatically increases or decreases last year’s tax book value or tax evaluation amount by the amount that you posted.