![]() Requirements ensures a true and fair presentation, even if the law allows exceptions from GAAP, for instance, the creation of hidden reserves. ![]() It has been the dominant opinion in Germany for many years that compliance with legal Principles but its interpretation in Germany may be different compared to international standards. This principle is influenced by international accounting GAAP, but also that they provide a true and fair view of the net worth, financial position and results of the company. Should also be noted that in accordance with the prudence principle, provisions and allowances can be set up if it is possible, but not necessarily probable, that an asset has been impaired or aĪs mentioned earlier, the general rule for corporations requires not only that their financial statements comply with above Valuation of assets is based on historical cost, it is generally not allowed to use fair value that exceeds historicalĭeviations from the above principles are allowed only to the extent that exceptional circumstances exist.Valuation principles shall be applied consistently over the years.Accounting must be made on an accrual basis and with due consideration of the matching principle.Values must be determined prudently that is, all anticipated risks and losses that arise up to the balance sheet dateĪre to be recognized, even if they become known only after the balance sheet date but before the financial statements are prepared profits may be recognized only if they are realized.Valuation of assets and liabilities must be made on an item-by-item basis.To the extent not disproved by facts or action of law, a going concern must be assumed.The amounts included in the opening balance sheet must agree with those of the closing balance sheet of the preceding.Offsetting of assets against liabilities and income against expenses is prohibited.include all assets, liabilities, prepaid expenses, deferred income, revenues and The financial statements must be clear and understandable.They can be briefly summarized as follows: Incorporated in the third book of the German Commercial Code. 264 (2) HGB).īoth general rules require that the financial statements comply with German GAAP, which mostly were Their financial statements must, inĬompliance with generally accepted accounting principles, present a true and fair view of the net worth, the financial position, and the results of the company (Sec. 243 (1) HGB).įor corporations and since 1999 for CorpCo’s, the general rule has been expanded. Non-corporations that exceed certain size criteria the accounting, auditing, and publication rules of the Publicity Law have to be observed in addition to the Commercial Code.įor consolidated financial statements, especially for those of capital market orientated companies,Īdditional accounting standards as outlined in German Accounting Standards GAS have to be observed.Īs a general rule applicable for all businesses, financial statements are to be drawn up in accordance with generallyĪccepted accounting principles (Sec. Generally, all of the above entities have to follow the guidelines of the German Commercial Code HGB. Other non-corporations, for example, sole proprietorships, partnerships (Offene Handelsgesellschaft, OHG and.Partnerships with at least one limited liability company as general partner (“CorpCo’s”, e.g.KGaAs) and limited liability companies (GmbHs). ![]() Corporations, for example stock corporations (AGs), partnerships limited by shares (Kommanditgesellschaft auf Aktien,.This limits the range of entities taken into account to the following: ![]() Accordingly, all rules and regulations specifically relating to registered cooperatives,Īs well as to companies of particular industries such as banks and insurance companies, are not commented on further. Within the framework of this website, it would be impossible to cover every particular rule. ![]() The German accounting and publication rules are codified in various laws supplemented by German Accounting Standards ![]()
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