Double-edged balance sheet
The double- edged nature of the balance sheet describes the double relevance of each balance sheet for both past and future profit determination. This follows from the specification of the balance identity , after which the terminal value of the current fiscal year is also the initial capacity of the following year.
Example: To minimize the tax burden, depreciation options are fully utilized in the current year when preparing the tax balance sheet . This leads to a shift of profits into the future and thus to an interest gain , because a tax burden is shifted into the future without interest. Due to the double-edged nature of the balance sheet, the early depreciation now automatically leads to a reduced depreciation potential in later years. This must be taken into account when preparing the balance sheet: The correspondingly higher profit in the following years can , for example, wipe out the interest profit achieved with the early depreciation due to the tax progression .
