Cost principle
The acquisition value principle (also acquisition cost principle ) is one of the principles of proper bookkeeping . It states that an asset may be shown in the balance sheet at a maximum of its acquisition or production cost (AHK) .
German, Austrian and Swiss accounting law
This principle specifies the realization principle that follows from the principle of prudence , according to which income may only be recognized in profit or loss when it has been realized. The acquisition cost principle is also incorporated into tax accounting via the principle of relevance . Economic goods can therefore be assessed at most with the AHK. The acquisition cost principle creates hidden reserves when the value of an asset rises above the AHK.
Example:
An entrepreneur purchases a piece of land for business purposes at a price of EUR 60,000 (= valuation in the balance sheet). In the following year the value of the property increases to EUR 75,000. Due to the acquisition value principle, the property may not be shown in the balance sheet with the higher value, as otherwise an unrealized profit would be recognized in profit or loss (strict realization principle). This creates a hidden reserve of EUR 15,000. Only a write-up to EUR 60,000 would be permissible or mandatory for corporations if the property was written down at an earlier point in time. A profit on dormant assets may only be realized when the asset / asset is sold.
The acquisition value principle is laid down in Section 253 of the German Commercial Code and Section 201 of the Austrian Commercial Code.
In Switzerland too, according to Art. 960a of the Swiss Code of Obligations are accounted for at most at acquisition or production cost.
IFRS and US GAAP
In IFRS , the cost principle is only mandatory for a few items (especially inventories). Because of the many valuation options , IFRS users have the option of accounting for many balance sheet items in accordance with the acquisition value principle or with a breach of the same. Only relatively few individual regulations provide for a mandatory breach of the acquisition value principle (IAS 11; IAS 41; partly IAS 39).
In this respect, US GAAP is similar to IFRS.
Individual evidence
- ↑ Acquisition cost principle in the Gabler Verlag business dictionary
