Activated assets such as fixed assets , financial investments and large parts of the current assets (except cash in local currency ) are subject to a value fluctuation risk , which is the risk that the original acquisition or production costs fall below during the portfolio management. Since foreign currency loans a currency risk subject, they can be affected by an impairment. Then arises in the accounting on the balance sheet datethe question of how to deal with this. If the original higher book value were retained for assets in spite of a decrease in value, the operating assets would be shown too high in the balance sheet and, in addition , if a valuation loss was not taken into account in the profit and loss account, the profit would be too high or the loss would be too low. In the case of foreign currency debts, the reverse applies; a decrease in value can be seen in the exchange rate-related increase in debts. Retaining the original book values would contradict the principle of balance sheet truth .
May impairments on assets and liabilities arising from general economic and financial crises , disasters or technological progress , individual market price - or price decline or age impairment or other storage risk . If a decrease in value has occurred, its probable duration can be of interest. Only the amount and type of impairment can provide an indication of its probable duration.
The commercial law is different in para. 3 HGB between assumed to be permanent and not expected to be permanent impairment without this vague legal concept of creating accrual rules. In the tax balance sheet , too , the lower partial value according to Paragraph 1 No. 1 Clause 2 and No. 2 Clause 2 EStG can only be applied if there is an anticipated permanent decrease in value. In such cases, Section 6, Paragraph 1, No. 1, Clause 4 and No. 2, Clause 3 of the Income Tax Act stipulates a strict requirement to increase the value . The expected permanent decrease in value is a decrease in the fair value (tax law: partial value), which on the one hand does not have to be final, but on the other hand may not be temporary. Whether an impairment is "likely to be permanent" must be assessed taking into account the nature of the asset in question. In the specialist literature , an impairment was considered permanent if it persists for at least 50% of the remaining useful life or for more than 5 years.
The Federal Ministry of Finance commented on this issue in a letter dated July 16, 2014, taking into account some rulings by the Federal Fiscal Court (BFH). According to the BFH, depreciable fixed assets are likely to be permanently impaired if the value of the respective asset on the balance sheet date is below the planned residual book value for at least half the remaining useful life. In exceptional cases, fixed-income securities can only be written down below their nominal value if the issuer is at risk of creditworthiness or liquidity , as otherwise they can be redeemed at maturity . For listed shares is to start from a permanent impairment of value if the market value at the balance sheet date of the share purchase has dropped below those at the time and the price fall, the minimum limit of 5% of the quotation exceeds on acquisition. Changes in exchange rates between the balance sheet date and the time the balance sheet is drawn up are therefore not value-enhancing and therefore generally not to be taken into account. Receivables can be written off if on the balance sheet date it is largely probable that they can only be serviced to a certain percentage . Foreign currency liabilities are to be valued taking into account the principles set out in the quoted BMF letter for assets. A long-term increase in the market value of a liability is therefore only present in the event of a sustained increase in the exchange rate compared to the rate when the liability arises. If an increase in the exchange rate in connection with a liability in ongoing business transactions continues until the balance sheet is drawn up or the previous repayment date , it must be assumed that the increase in value is likely to be permanent (marginal no. 35).
A change is likely to be sustainable if it can be seriously expected from the perspective of the balance sheet date based on objective indications (marginal no. 5). Impairments due to special reasons (e.g. catastrophes or technical progress) are usually permanent. A presumably permanent decrease in value means a presumably lasting decrease in the value of the asset below the relevant book value. Sustainability is likely to exist if on the balance sheet date, from the perspective of a careful and conscientious businessman, there are more reasons for than against sustainability (No. 6). In principle, a permanent decrease in value can be assumed if the value of the asset does not reach the upper valuation limit during a significant part of the expected length of stay in the company. Knowledge that enhances the value must be taken into account until the balance sheet is drawn up, whereas knowledge that establishes value is not.
In order to comply with the lower of cost or market principle , impairments must be strictly differentiated according to whether they occur in fixed or current assets. The reduction in value through an unscheduled depreciation (lower partial value) can only be carried out for fixed assets in the event of an expected permanent reduction in value (Section 253 (3) sentence 3 HGB), while it is permissible for financial assets independently of such (Section 253 (3) Sentence 4 HGB; moderate lower value principle). In the case of current assets, however, the strict lower of cost or market principle applies, according to which the lower value on the balance sheet date is to be applied (Section 253 (4) HGB).
If an impairment has occurred, the book value of the asset is reduced either directly or through the creation of a value adjustment . If an impairment is not recorded in the annual financial statements because the law does not require it, this non-recording leads to the formation of a hidden burden .
Unforeseeable impairments are considered if they are not recorded by scheduled depreciation. A company must determine on each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets has been impaired ( IAS 39.58). According to IAS 36.1 is intended to ensure that an asset is not higher than (with its recoverable amount English amount recoverable is rated). According to IAS 36.59, there is an impairment if the achievable proceeds of an asset are below its current book value ( English carrying amount ). An unscheduled depreciation on the recoverable amount must be carried out regardless of the expected duration of this impairment (IAS 36.BCZ96-97). An impairment test is generally carried out for every asset as soon as there are internal or external signs of impairment in accordance with IAS 36.12 and the criteria of IAS 36.7-36.17 are met.
- Karlheinz Küting : The distinction between temporary and permanent depreciation in non-depreciable assets , in: DB 58, 2005, pp. 1125–1126.
- BMF letter of July 16, 2014, Az .: IV C 6 - S 2171-b / 09/10002, 2014/0552934
- BFH, judgment of April 29, 2009, Az.IR 74/08, BStBl. II, p. 899
- BFH judgment of June 8, 2011, Az .: IR 98/10, BStBl. II 2012, p. 716
- BFH, judgment of September 21, 2011, Az .: IR 89/10
- BFH, judgment of October 24, 2012, Az .: IR 43/11, BStBl. II 2013, p. 162