Will inflation valuation be made for fixed assets that have no net book value but appear on the balance sheet?
No adjustment will be made for Depreciable Economic Assets (WEAP) whose useful life has ended. Settlement can be made by following the trace value before the adjustment.
It is optional to subject economic assets that are subject to depreciation and have completed their useful life and whose value has been completely destroyed through depreciation (including depreciable economic assets that continue to be followed with trace value in business records) and their accumulated depreciations to inflation adjustment.
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Communiqué No. 555 of the Tax Procedure Law
Correction of accumulated depreciations
ARTICLE 19- (1) Accumulated depreciations allocated for economic assets subject to depreciation are of a non-monetary value nature and are subject to inflation adjustment. However, in Article 298 (A) of Law No. 213, it is stipulated that in the event that inflation adjustment conditions reoccur after an accounting period in which inflation adjustment is not applied, the accumulated depreciations will be adjusted by taking into account the rate of increase in the value of the asset to which they belong as of the balance sheet date after the adjustment.
Therefore, in the adjustment of the balance sheet for the end of the 2023 accounting period, the accumulated depreciations will be adjusted by taking into account the rate of increase in the value of the asset to which they belong as of the balance sheet date after the adjustment.
For example; the value of an economic asset with a correction basis value of 1,000,000 TL and an accumulated depreciation of 600,000 TL will be (1,000,000×2.45=) 2,450,000 TL after being corrected with a correction coefficient of 2.45, and in this case, the increase rate in the value of the economic asset will be (2,450,000-1,000,000)/1,000,000=) 145%. The depreciation amount will be corrected by taking this rate into account and the corrected amount will be calculated as (600,000+600,000x%145=) 1,470,000 TL.
According to Article 320 of Law No. 213, depreciation amounts not allocated in previous years on economic assets subject to depreciation will not be considered as allocated and will not be taken into account in the inflation adjustment. It is natural that these amounts cannot be considered as expenses even after inflation adjustment.
(2) It is optional to subject economic assets that are subject to depreciation and have completed their useful life and whose value has been completely destroyed through depreciation (including economic assets subject to depreciation that continue to be followed with a trace value in business records) and their accumulated depreciations to inflation adjustment.
Source: Istanbul Chamber of Certified Public Accountants – Communiqué No. 555 of the Tax Procedure Law
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