Adjustment of Deferred Taxes

If the tax rate changes from period to period, you can use the Adjustment of Deferred Taxes function to automate the required postings.

Depending on the legal requirements, if the tax rate changes you must adjust the balances of deferred taxes according to the new tax rate. Depending on the FS item, you must either post the required adjustments in a way that affects earnings via the income statement, or in a way that does not affect earnings.

Prerequisites

If you want to use the Adjustment of Deferred Taxes function, the following prerequisites must be met:

You have activated the Financials, Group Close, Adjustment of Deferred Taxes business function.
The posting items for deferred taxes in the balance sheet are identical in all periods. This also applies to posting items that are dependent on document type.
The location of the tax rate in the configuration of the document types is identical in all periods.

For more information, see Deferred Taxes.

Features

Activating the Function for Each Consolidation Area

If you have activated the Financials, Group Close, Adjustment of Deferred Taxes business function, you can activate or deactivate the Adjustment of Deferred Taxes function per consolidation area.

If you deactivate the Adjustment of Deferred Taxes function for a consolidation area, the system treats deferred taxes in this consolidation area in the same way it would if you had not activated the business function at all. No automatic adjustment of deferred taxes takes place in this consolidation area.

Specifying Account Assignments for Deferred Taxes in the Balance Sheet

You can flexibly configure the account assignments of deferred taxes. If you do not want to adjust deferred taxes for certain balance sheet items, you can suppress this function for these items. This is the case, for example, for capitalization and valuation allowances.

For more information, see Specifying Account Assignments for Deferred Taxes in the Balance Sheet.

Note Note

There cannot be any overlaps between the following balance sheet items:

Items in Customizing Balance Sheet Items for Deferred Taxes
Balance sheet items for deferred taxes that you define in Customizing for Selected Items or in the configuration of document types.

If these kinds of overlaps occur, the system issues an error message during the period initialization and you cannot carry out the period initialization.

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Configuring Balance Carryforward Tasks

In the configuration of balance carryforward tasks, you can specify an assignment to posting levels.

The following minimum prerequisite applies regarding the adjustment of deferred taxes: You must either execute one balance carryforward task that works on all posting levels, or use three separate balance carryforward tasks that cover all posting levels (assignment to posting level categories 1, 2, and 3).

Note Note

If you are using the Adjustment of Deferred Taxes function, you must carry forward all tax items in the balance sheet to the same item. This applies to the items in Customizing Start of the navigation path Master Data Next navigation step Items Balance Sheet Items for Deferred Taxes End of the navigation path as well as to the tax items in Customizing Master Data Items Selected Items .

End of the note.

For more information, see Balance Carryforward Tasks for Multiperiod Consolidation.

Configuring Automatic Posting of Tax Adjustments During Period Initialization

You make the postings for the adjustment of deferred taxes using tasks of category period initialization.

You make the following settings in the configuration of the period initialization:

You specify an offsetting item in the balance sheet for the adjustment of deferred taxes.
For more information, see Offsetting Item for the Adjustment of Deferred Taxes.
You create document types for the posting of the tax adjustments.
For more information, see Document Types for the Adjustment of Deferred Taxes.
You create period initialization tasks that work on different posting levels.
For more information, see Tasks for the Adjustment of Deferred Taxes.

When you execute these tasks in the consolidation monitor, the system selects the data records that are to be adjusted, calculates the required adjustments, and posts the documents.

Adding Tasks to the Task Hierarchy

The following restrictions apply when you add balance carryforward tasks and period initialization tasks to the task hierarchy:

You must execute at least one period initialization task for each of the three posting level categories.
A balance carryforward task with posting level category Reported Financial Data, Adjustment and Standardizing Entries (category 1) or All Posting Levels must be executed before the period initialization task with posting level category Adjustment and Standardizing Entries (category 1).
A balance carryforward task with posting level category Two-Sided Elimination Entries (category 2) or All Posting Levels must be executed before the period initialization task with posting level category Two-Sided Elimination (Tax Adjustment Only) (category 4).
A balance carryforward task with posting level category Consolidation Group-Dependent Entries (category 3) or All Posting Levels must be executed before the period initialization task with posting level category Other Posting Levels (category 2).
All period initialization tasks must be executed before the consolidation of investments.

Activities

To activate the adjustment of deferred taxes for a consolidation area, choose Start of the navigation path Data Model Next navigation step Consolidation Area End of the navigation path , tab page Settings.