Definicja transfer of reserves

The posting of gain (resulting from an asset sale) to replacement assets.

This is also called hidden reserves, or undisclosed reserves.

According to tax legislation in certain countries, the gain from an asset sale reduces the acquisition and production costs of newly acquired assets. The gain is treated as a value adjustment on the liabilites side to offset the acquisition and production costs. If these reserves cannot be transferred in the year they occur because there are no appropriate replacement assets, then a reserve can be created. This reserve neutralizes the gain from the sale. This reserve has to be transferred over the course of the following years to assets acquired during this time.