Table of Contents
Definition of debt consolidation
Debt consolidation is a form of consolidation in the context of accounting in the group. As a legal entity, the group cannot have any claims or liabilities towards itself.
Accruals and deferrals in accordance with Section 303 (1) HGB
Loans and other receivables, provisions and liabilities between the companies included in the consolidated financial statements as well as corresponding prepaid expenses are therefore to be omitted in accordance with Section 303 (1) HGB.
In terms of bookkeeping, the respective amount of the claim or liability appears with the opposite sign in the total balance sheet and is thus canceled out. The netting has no effect on income and leads to a shortening of the Consolidated balance sheet.
Types of set-off differences
In most cases, the intra-group accounts receivable and payable will match each other in the same amount. However, set-off differences can be e.g. B. result because:
- Foreign currency receivables and payables have different rates
- There is no corresponding asset item in relation to a provision
- Liabilities are recognized at their repayment amount (Section 253, Paragraph 1, Clause 2 of the German Commercial Code)
- Claims with their acquisition cost activated (Section 283 (1) sentence 1 HGB).
If the receivables are smaller than the liabilities, there is a passive, conversely, an active offset difference. Since Section 303 (1) of the German Commercial Code (HGB) requires the complete elimination of internal group receivables and liabilities, the differences are to be included in the consolidated income statement upon initial consolidation. In the following years, an accrual must be made.