- A company mistakenly classified the cost of two semi-trailers as an expense instead of an asset.
- The company corrected the error in the following year’s financial statements.
- The correction involved reclassifying the cost of the semi-trailers as an asset and recording the depreciation expense for the previous year.
- The company asked the tax authorities if they needed to file an amended tax return for the previous year.
- The tax authorities confirmed that the correction could be made directly in the current year’s tax return.
- The tax authorities cited the principle of “strengthened derivation,” which allows for the use of accounting principles for tax purposes.
- This principle means that the timing of income and expense recognition in the financial statements is also relevant for tax purposes.
- Therefore, the company did not need to file an amended tax return for the previous year.
Source: eutekne.info
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
