Notes Process
Notes are entered for deferred tax, contingencies, tax-base reconciliation and number of personnel and shares. Each have their own row sets in the input templates and reports.
Consolidated notes include company notes and eliminations. All eliminations are allocated to units. Note that unit and counter unit cannot be the same for the consolidation entries not to be reported in company reports. Notes input is done in the functional currency of the unit (rate differences are calculated using ARD-rules). Unit data is used also in elimination entries, for example, in tax-base reconciliation: tax % of the unit is used in the "Tax on profit before taxes at the unit's tax rate" calculation (account T900000P).
Deferred tax
There are ready-made types of temporary differences for deferred tax. The sum accounts are:
N100189P Included in separate company balance sheets
N101189P Consolidation entries
N102189P Unused tax loss
N103189P Other timing differences
The changes of each ready-made type are entered to the following sub-accounts:
Nxxx020P Translation differences
Nxxx030P Changes through income statement
Nxxx040P Recorded directly in equity
Nxxx050P Other movements
Nxxx060P Changes through business arrangements
Contingencies
Debts recognized in the balance sheet are specified in the N2xxxxxP accounts. N9xxxxP accounts are used for contingencies not recognized in the balance sheet.
Tax-base reconciliation
The purpose of the tax-base reconciliation is to explain the difference between tax expense in income statement and the tax calculated with unit's tax rate from profit before tax. Tax-base reconciliation is a good check calculation for period's tax expense entries.
The following Notes accounts (and their sub-accounts) are used in Tax-base reconciliation:
T300299P Differences between accounting profit and taxable profit: Input the differences between accounting profit and taxable profit as gross amounts
T900399P Tax on taxable profit for the year at the unit's tax rate: Input the tax effect of previous amounts inputted to T300299P accounts (that is previous accounts multiplied by input unit's tax rate) and of tax on profit before taxes (account T900000P). Note that in Unit's input sheets (Notes input) this is automatically calculated. For eliminations the amounts need to be calculated and inputted manually, if input sheet Notes Input, Eliminations (190 000)is not used.
T900400P Effect of different tax rates (input account): The account is used for inputting tax effect when tax expense is not recorded using input unit's tax rate (manual input).
T900410P Effect of tax rate change on deferred taxes: The account is used for inputting effect of tax rate change on deferred taxes (manual input).
It is possible to calculate and report the tax effect of the gross amounts using parent company's tax rate. Example of this can be found in DR reports.
Input templates used for entering notes
Input / Company notes:
Predefined input templates with check sums (unit = counter unit)
Input/eliminations:
Predefined input templates (unit <> counter unit, 'allentriesallocated' parameter in use).
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Notes entries are one-sided entries: debit <> credit. We recommend that notes entries are saved to the same documents in which the original entries are located. For example, if deferred tax is recorded to document 60006, also the notes entries of deferred tax are recorded to document 60006. Note that after these entries the document entries total is not zero.
Now it is possible to save elimination entries for tax base reconciliation by using Notes input, Eliminations (190 000).
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These entries may also be saved in other eliminations type documents (70 000).
Note that in this case the entries are not reported on the same column in report Notes accounts by document series in input currency as the income entries from which they originated, which were created in, for example, document series 60 000 documents.
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No check sums in input templates, instead take advantage of the check sums in the reports.
Find out the amount to be specified in the notes accounts by using for example the PL report by each document in the functional currency (or alternatively find out the number of the document from the check sum of the report and make the notes entries to the same document).
With tax-base reconciliation, the check sum does not work correctly before entry to T900000P has been done (because T900000P is used in the check sum calculation).