When the elimination of hidden reserves is chosen in the overview screen of Method Definition, the following steps must be performed:
- FS items must be defined for the elimination of hidden reserves.
- these FS items are assigned to the C/I methods.
- transaction types can be defined for updating hidden reserves.
Procedure
- When eliminating hidden reserves, they are first assigned to an auxiliary item and only assigned to the underlying asset items in the next step. The auxiliary item must be defined in FS Item Maintenance in the Implementation Guide and entered in the detail screen. The FS item must be defined as an asset item, however, it should reside outside the balance sheet number range. The system stores the FS item as a selected item under the key RES.
- Hidden reserves are in general completely eliminated when the revaluation method is applied. The system calculates the group share as well as the minority share in hidden reserves. The group share can be restricted by the amount of the differential on the assets side and therefore influence the elimination of hidden reserves. In order to update minority interest, a minority interest item must be specified in the Minority interest detail screen. It is stored as a selected item under the key MIR.
The minority interest item entered under the key MIR must be different than all of the items used otherwise; it must especially differ from the item stored under MIN.
- The amortization of hidden reserves is entered in the income statement under the item which is specified as amortization item in the financial reporting table of hidden reserves.
- For updating the hidden reserves, transaction types can be defined in the detail screen for
- Acquisitions
- Amortization
- Write-ups
The procedure of the data entry and the elimination of hidden reserves is displayed by priorities in the following illustration. Due to the priorities, the hidden reserves of "Properties and buildings" are completely eliminated, while the hidden reserves of "Machines" are only eliminated proportionally. The amortization of the hidden reserves is carried out for the entire fiscal year.
