Enhanced Transfers and Divestments

Tax Reporting now allows you to enter Transfers and Divestments on a tax-effected basis, similar to the Acquisitions functionality, and account for the impact of changes in tax rates. The tax effect for Transfers and Divestments can differ from simply applying the current year’s tax rates, and rate changes may require balance sheet adjustments that are included in purchase accounting journal entries.
If no manual tax adjustment is made, Transfers and Divestments are tax effected using the current year’s rate. In other words, if Transfers and Divestments are entered only as pre-tax data, the application will automatically calculate tax based on the current year’s rate. Similarly, if no manual rate change amount is input, the application determines the impact of rate changes using the current tax rates.

The following new forms are available with this feature:

  • Under Library: Deferred Tax Provision: Deferred Provision:
    • Transfers
    • Divestments
    • Transfers Regional
    • Divestments Regional
  • Under Library: Tax Administration: FX Rates: FX Amount - Tax Override:

    • FX Amount - Pre Tax and Tax Input Override

Business Benefit: This enhancement captures the tax impact of mergers, acquisitions, and divestments more effectively. Users can now directly input the tax effects of deferred tax assets and liabilities acquired or disposed of during these transactions. Previously, the tax effects of divestments and transfers were determined by the entity-level tax rates.

Steps to enable and configure

The application must have the Hybrid Dense Sparse Optimization model enabled.

For new applications, enable the feature by navigating to Create Application: Features, selecting Transfers and Divestments Deferred Movements, and clicking Enable.

For existing applications, enable the feature by navigating to Application: Configuration, selecting Transfers and Divestments Deferred Movements, and clicking Enable Features.

Key resources