USA How to report overpaid taxes?

[CRios]

First question on this forum:
Company gets a check for $400K on overpaid real estate taxes from 2003-2009 which includes ~$100K in interest.
bookkeeper enters as
cash ------ $400k
rr.ee tax expense --------$400k

I'm not sure that this is right way to account for it.
Any Suggestion?

Thank you

 

[bklynboy]

That's what I would do is reduce the expense it originally was recorded through. Its not an error correction so no need to restate

 

[Deana]

If the bookkeeper has already established in books receivables in earlier years for overpaid taxes the posting should be simple:
Cash:.............................................................................400
Receivables for overpaid taxes for real estate....................................300
Receivables for calculated interest:.....................................................100

If he hasn`t established receivables for it in previous years you should first correct the balance sheet for previous year and the opening balance of current year:

Receivables for overpaid taxes for real estate..............300
Receivables for calculated interest...............................100
Profit(revenue,capital)..........................................................................400

Than,in current year,after receiving the check you can post:
Cash:..............................................................................400
Receivables for overpaid taxes for real estate......................................300
Receivables for calculated interest........................................................100

You need also ,in second case, correct the Tax on the revenue for previous years

 

[CRios]

Thank you!