Bad Debt Relief Transactions

Use the Process Bad Debt Relief (tfacr2214m000)/ Process Bad Debt Relief (tfacp2214m000) sessions to print the process and/or the error report. To post the bad debt relief transactions, select the Post Bad Debt Relief check box. The Document Date and the Fiscal Period of the bad debt relief must be specified to post the transactions in the given fiscal, reporting, and tax period. Invoices can be relieved only when following conditions are met:

The invoice must be finalized, including the corrections.
The invoice and invoice schedules may not be selected for receipt or payment.
When the Segment Reporting check box is selected in the Group Company Parameters (tfgld0101s000) session, invoices must be segmented. Therefore, Purchase Invoices related to Order must be approved.
Related documents of the original invoice must be finalized.

The original tax transactions related to the open entry must be submitted as part of the tax declaration. The Bad debt relief transaction lines are created in the journal for each original tax transaction. The bad debt relief consists of a (debit) Tax account transaction to a (credit) Bad Debt Relief account. The Tax account is debited with the Tax account and dimensions of the original Tax transaction.

The bad debt relief process creates a summary of all transactions in the Bad Debt Relief / Recoveries by Invoice (tfacr2515m000) session. The details related to bad debt relief transaction lines, the original tax transactions and the invoice lines are recorded in the Bad Debt Tax Transaction Line.

Accounts in transactions for Bad Debt Relief and Recovery

Transactions in the journals are generated according to the following rules:

The amount of tax to be relieved is calculated with a pro-rata calculation on invoices that include supplies subject to varying VAT rates. The calculation of amounts generally depends on the ratio, which is determined from the outstanding tax base amount and the invoice tax base amount of the applicable tax.
if the Segment Reporting check box is selected in the Group Company Parameters (tfgld0101s000) session. the amount of tax to be relieved is calculated with the applicable outstanding amount and invoice amounts for each combination of segments.

Tax adjustments for Bad Debt Relief:

Sales Tax

Type	Account
Debit	Tax account for Bad Debt Relief of the original tax country-code	1
Credit	Bad Debt Relief account of the financial company	2

Purchase Tax

Type	Account
Debit	Bad Debt Relief account of the financial company	3
Credit	Tax account for Bad Debt Relief of the original tax country-code	4

Note

Accounts 1 and 4 are derived from the master data specified for Financial Data by Tax Code in Posting Data for Tax Codes (tfgld0171s000) or Posting Data for Multiple Tax Codes (tfgld0170s000) sessions.
Accounts 2 and 3 are derived from the company parameters specified in ACR Parameters (tfacr0100s000) or ACP Parameters (tfacp0100m000) sessions.

Purchase Expensed Tax Codes

Purchase Expensed Tax for the tax transactions of purchase invoices cannot be relieved. The expensed purchase tax is paid to the supplier, and is a cost that cannot be claimed. The Purchase Expense Tax in the Tax Analysis (tfgld1520m000) session does not impact the tax calculated for the sales invoice. When this type of tax is available on sales invoices, this tax can be relieved.

Calculation of Amounts

In LN, transactions can be segmented. Consequently, the tax transactions of open entries are segmented too. The Outstanding Amounts of segmented schedules are relieved proportionally. The related receipts transaction are also segmented. This information helps to determine the quantity of segmented transactions that has already been received, including the tax for these receipts. The relief is for tax on segments for which no receipts have been made.

Bad Debts Recovery Transactions

After the bad debt is relieved and the payment is received/made, use the Process Bad Debt Recovery (tfacr2216m000)/ Process Bad Debt Recovery (tfacp2216m000) sessions to recover bad debt relief. Prerequisite is that the transactions of all involved receipts or assignments of receipts to invoices must be finalized.

You can specify the Tax Period in the Process Bad Debt Recovery (tfacr2216m000) session . The payments that are received/paid in this period is selected for recovery. To post the bad debt recovery transactions, select the Post Bad Debt Recovery check box . The Document Date and the Fiscal Period of the bad debt recovery must be specified to post the transactions in the given fiscal, reporting, and tax period.

Accounts in Tax adjustments for Bad Debt Recovery

Transactions in the journals are generated according to the following rules:

The amount of tax to be relieved is calculated with a pro-rata calculation on invoices that include supplies subject to varying VAT rates. The calculation of amounts generally depends on the ratio, which is determined from the outstanding tax base amount and the invoice tax base amount of the applicable tax.
if the Segment Reporting check box is selected in the Group Company Parameters (tfgld0101s000) (tfgld0101s000) session. the amount of tax to be relieved is calculated with the applicable outstanding amount and invoice amounts for each combination of segments.

Tax adjustments for Bad Debt Recovery:

Sales tax

Type	Account
Debit	Bad Debt Recovery account of the financial company	5
Credit	Tax account for Bad Debt Recovery of the original tax country-code	6

Purchase Tax

Type	Account
Debit	Tax account for Bad Debt Recovery of the original tax country-code	7
Credit	Bad Debt Recovery account of the financial company	8

Note

Accounts 6 and 7 are derived from the master data specified for Financial Data by Tax Code in Posting Data for Tax Codes (tfgld0171s000) or Posting Data for Multiple Tax Codes (tfgld0170s000) sessions.
Accounts 5and 8 are derived from the company parameters specified in ACR Parameters (tfacr0100s000) or ACP Parameters (tfacp0100m000) sessions.