Once a founder complies with their commitment to initial contribution in the form of contribution in kind, a question arises about valuation of this in-kind contribution. Given the principle of continuity in fiscal statements between initial balance sheet and future annual statements, valuation of such in-kind contributions needs to refer to provisions of commercial law. However, §§ 242 and 253 of German Commercial Code (HGB) only provide general guidelines to refer in the measurement of in-kind contributions at enterprise formation to acquisition costs, which gives rise to the term of notional acquisition cost. With the regulation gap this leaves, the in-kind contributions can essentially be measured freely under common provisions. The values notional acquisition cost may assume range from fair value as maximum limit to the lower issue price of the shares subscribed as far as hidden reserves have been created.
The author undertakes a comparison of the aims in financial reporting to HGB and IFRS respectively in as far as relevant to valuation of the in-kind contributions, explores the different views on the scope of notional acquisition cost and extracts from the aims of financial reporting to the core question about the essential allowability of hidden reserves in initial balance sheet the key decision making criterion to refer to in valuation of the in-kind contributions. The descriptive exploration of the different views in existing sources as to the scope of notional acquisition costs and the comparative analysis of pertinent provisions of HGB and IFRS respectively give rise to the author’s conclusion and requirement to valuate the in-kind contributions at fair value.
Inhaltsverzeichnis
- ABSTRACT
- Key words: valuation of assets: in-kind contribution, contribution in kind, German enterprise formation: notional acquisition cost, acquisition cost principle, financial reporting aims, hidden reserves
- The German lawmaker does not clearly emphasise either the profit or loss quantification function or the information function of financial statements; the HGB-compliant (HGB = German Commercial Code) financial reporting provisions pursue both the targets. In contrast the aims in financial reporting to IFRS are exclusively identifiable with the information function.
- As in-kind contributions amount to separate acquisitions, the valuation rates in the initial balance sheet can be defined without reference to historical costs of the contributor. The legal definition of acquisition cost is provided in 255 1 HGB. Under the acquisition cost principle: first an asset is measurable at its acquisition cost and secondly, acquisition cost amounts to absolute maximum limit that must never be exceeded (highest-value principle). The measurement at acquisition cost is meant to facilitate treatment of the purchases generally with no effect on profit and loss. This is achieved through the principle of relevance of value provided in return, i.e.: the asset received is measured at the value the acquirer needs to provide to obtain it. Prerequisite to applicability of this principle is financial accounting-relevant comparability between the value received and the value provided in return.
- There is no doubt that in-kind contributions as part of enterprise formation qualify as acquisitions without which there could be no acquisition cost. However: the existence of acquisition cost in terms of origin must be rejected in this context due to a lack of financial accounting-relevant comparability of the in-kind contributions. In existing sources, rather the term of notional acquisition cost is preferred. The latter in itself does not yet provide a reference valuation rate for the in-kind contributions. In German Commercial Code as valuation rate for notional acquisition cost, the issue price applies as minimum limit and fair value of the in-kind contribution as maximum limit.
- Within IFRS as standard valuation rate, the framework defines historical costs, current cost, realisable value/settlement value and present value. Historical costs refer to the costs incurred in the financial accounting sense in the acquisition of the asset concerned. Consequently, the historical costs are equivalent to acquisition cost under HGB. The acquisition cost principle under IFRS also is based on the principle of non effect of the acquisition on profit and loss. Components of acquisition cost for specific balance sheet items are provided in detail in individual IFRS standards. Accordingly, acquisition cost is determined by the type of asset concerned and its form of acquisition according to financial accounting-relevant means spent or the asset fair value. Where for instance tangible assets are acquired through exchange, the assets received are to be capitalised at fair value unless the technical exchange transaction lacks commercial substance or a reliable determination of fair value is not possible for both the asset provided and the asset received. Fair value amounts to a valuation measure the aim of which is to hold assets of the reporting entity in balance sheet at or near their market value. The use of this valuation rate follows from the true and fair view principle the key purpose of which is communication of information. Actual applicability of measurement at fair value needs verification to the criterion as to whether the principles of the exchange theory apply accordingly. This has been answered negatively due to a lack of consistent arguments for a clear applicability already in the case of acquisition cost under German Commercial Code. In author's opinion, the same must logically apply also for acquisition cost under IFRS. Hence the term of notional acquisition costs also is used within the context of IFRS.
- The valuation rates for notional acquisition cost to German Commercial Code advocated in existing sources range from the issue Price through values from historical costs of the contributor and intermediate values up to fair value. Both the decision making criteria of allowability of hidden reserves in initial balance sheet and objectivity follow from both the tasks in financial reporting of profit or loss quantification and information. The decision making criterion of objectivity in this context does not clearly point to any specific valuation measure while the decision making criterion of allowability of hidden reserves only actually becomes relevant where the tasks of the particular financial reporting system in use — such as in the case of German Commercial code — include quantification of profit or loss. The principal decision making criterion of allowability of hidden reserves, fair value should be exclusively referred to in determining notional acquisition cost in author's opinion. Consequently, no hidden reserves can exist in initial balance sheet given the fact that the hidden reserves would be created in balance sheet with no effect on profit and loss, thus jeopardising and possibly diminishing corporate assets. The founders should use the available freedom of discretion they are given to protect corporate assets right from the start.
- The financial reporting rules to IFRS do not provide a profit or loss quantification function. The sole aim here is identifiable with providing decision making relevant information. With a creation of hidden reserves, the recipients would be deprived of information and the information communication function in reporting not fulfilled. Consequently, hidden reserves in start-up balance to IFRS are not allowable. For determining notional acquisition cost, fair value applies as the only viable option.
- Overall, the research carries out a comparison of aims in financial reporting to HGB and IFRS respectively as far as relevant to measurement of in-kind contributions, explores the different views on notional acquisition cost and extracts with the principal question of allowability of hidden reserves in initial balance sheet the key decision making criterion to refer to in measurement of the in-kind contributions from the financial reporting aims. From the descriptive analysis of the valuation measures for notional acquisition cost provided in existing sources and the comparative analysis of respective provisions of HGB and IFRS: a conclusion has been reached and a requirement to measure the in-kind contributions at fair value. With this clear message of measurement of the in-kind contributions at fair value as promotive to maintenance of corporate assets, the research findings may help mitigate economic crises and contribute to further harmonisation of different financial reporting systems.
- Concerning HGB: there have been demands voiced since some time for a harmonisation with IFRS. This shift in the direction of IFRS meanwhile has been already under way. Under the German Accounting Law Reform Act (BilReG) of 04/12/2004, companies incorporated to EU law are held to compile consolidated annual financial statements to IFRS on a mandatory basis where their securities are open for trade in a regulated market. Also non-capital market-oriented parent enterprises are given a discretionary option under S 31 Sa 111 HGB to compile corporate financial statements to IFRS that carries an exemption from the former. This optional choice is given exclusively for disclosure purposes but not for purposes of measurement of payouts/dividends and tax purposes. HGB thus remains committed to the principle of creditor protection on the basis of argument that IFRS due to its prevalent emphasis on fair value, hence on related profits classifiable as non-realised under HGB, is not suited to measure payouts and dividends. With the German Accounting Law Modernisation Act (BilMoG) of 29/05/2009, the information function of HGB has been reinforced in view of the advancing globalisation not least through elimination of a number of optional choices in capitalisation and measurement. S 325 IlaHGB provides an option to compile instead of an individual statement to HGB an annual statement to IFRS for better information purposes.
- Nevertheless in BilMoG, a number of originally intended approximations to IRFS have been cut in the end as measurement at fair value, "given its strong procyclical has an aggravating effect in crises", has been meeting with growing criticism from the ranks of practical economists. Accordingly: the duty to compile individual statements to HGB on a statutory basis has been retained. International financial reporting has been advancing steadily yet in spite of the useful and commendable harmonisation efforts: it is hardly feasible in author's opinion — and undesirable — for the German lawmaker to abandon the principle of creditor protection in the foreseeable future.
- Cf Thiele, Konstanze, Stille Reserven in der Rechnungslegung, Wiesbaden 1999, p. 177: HGB should be oriented consequently to its information task and its protection function, hence on capital market requirements, which in turn may promote harmonisation of the two financial reporting systems in the end.
- The discussion in the following concerning BilReG and BilMoG refers to Coenenberg, cf Coenenberg, Adolf Gerhard and Axel Haller and Wolfgang Schultze, Jahresabschluss und Jahresabschlussanalyse: 21 Edition, LandsbergLech 2009: p. 13ff.
- Cf Theile, Carsten: Der neue Jahresabschluss nach dem BilMoG, Beihefter zu Heft 18/2009, in: DStR 2009, p. 31
- Schlidtbacm Thomas, Systemvergleich IFRS und HGB, in: DStR: 50/2011, p. XIV.
- Cf Ibid.
- Cf Kirsch, Hanno, Einführung in die internationale Rechnungslegung nach IFRS, Edition, Herne p. 9.
- Cf Grünberger, David, IFRS 2011 —Ein systematischer Leitfaden, 9 Edition, Heme p. I
- Fazit
- Literaturverzeichnis
Zielsetzung und Themenschwerpunkte
Diese Arbeit befasst sich mit der Bewertung von Vermögenswerten in der Bilanz deutscher Start-ups, insbesondere im Zusammenhang mit Sacheinlagen. Sie analysiert die geltenden Vorschriften des Handelsgesetzbuchs (HGB) und der International Financial Reporting Standards (IFRS) und untersucht die verschiedenen Ansätze zur Bewertung von Sacheinlagen im Gründungsprozess.
- Bewertung von Sacheinlagen in der Gründungsphase
- Anwendbarkeit des Ansatzes des fiktiven Anschaffungspreises
- Vergleich der Zielsetzungen der Finanzberichterstattung nach HGB und IFRS
- Zulässigkeit stiller Reserven in der Eröffnungsbilanz
- Harmonisierungstendenzen zwischen HGB und IFRS
Zusammenfassung der Kapitel
Die Arbeit beginnt mit einer Einleitung, die den Kontext der Bewertung von Sacheinlagen in der Gründungsphase von Start-ups beleuchtet. Sie stellt die Problematik der Bewertung von Sacheinlagen vor und skizziert die relevanten Vorschriften des HGB und der IFRS.
Im nächsten Kapitel wird der Ansatz des fiktiven Anschaffungspreises im Detail analysiert. Die Arbeit erläutert die rechtliche Grundlage des Ansatzes, seine Grenzen und die verschiedenen Bewertungsmöglichkeiten, die sich daraus ergeben.
Das dritte Kapitel vergleicht die Zielsetzungen der Finanzberichterstattung nach HGB und IFRS. Es wird gezeigt, dass die IFRS primär auf die Informationsfunktion ausgerichtet sind, während das HGB sowohl die Informationsfunktion als auch die Gewinn- und Verlustquantifizierungsfunktion verfolgt.
Im vierten Kapitel wird die Zulässigkeit stiller Reserven in der Eröffnungsbilanz untersucht. Die Arbeit analysiert die verschiedenen Argumente für und gegen die Zulässigkeit stiller Reserven und kommt zu dem Schluss, dass stille Reserven im Rahmen der IFRS nicht zulässig sind, während sie im Rahmen des HGB unter bestimmten Bedingungen zulässig sein können.
Das fünfte Kapitel befasst sich mit den Harmonisierungstendenzen zwischen HGB und IFRS. Es werden die wichtigsten Reformschritte im deutschen Bilanzrecht dargestellt und die Auswirkungen dieser Reformen auf die Bewertung von Sacheinlagen in der Gründungsphase von Start-ups analysiert.
Schlüsselwörter
Die Schlüsselwörter und Schwerpunktthemen des Textes umfassen die Bewertung von Vermögenswerten, insbesondere Sacheinlagen, in der Gründungsphase von Unternehmen. Der Text analysiert die rechtlichen Rahmenbedingungen der Bewertung von Sacheinlagen im deutschen Handelsgesetzbuch (HGB) und den International Financial Reporting Standards (IFRS). Der fiktive Anschaffungspreis, die Zielsetzungen der Finanzberichterstattung, die Zulässigkeit stiller Reserven und die Harmonisierungstendenzen zwischen HGB und IFRS sind zentrale Themen.
- Citar trabajo
- Andreas Laux (Autor), 2011, Valuation of Assets in German Start-Up Balance, Múnich, GRIN Verlag, https://www.grin.com/document/188409