The realization principle is a principle for the time delimitation of income in bookkeeping and accounting . It represents the central delimitation principle. In the relevant German-language literature, the term realization principle is often used as a synonym for the strict realization principle. Terminologically, this is a bit imprecise, since in other legal circles there are principles for the effective acquisition of positive components of success which differ from the German principles, but can also be subsumed under the term realization principle.
The term realization principle relates in a broader sense to the principles for realization that apply within an accounting system - i.e. H. income effective receipt - positive success components. The realization principle determines when a service or a product is considered "realized" and can thus be used to determine the company's success. On the other hand, it determines the value at which unrealized services and products are to be recognized in the balance sheet .
The strict implementation principle of German commercial law accounting
In German commercial accounting - and due to the principle of relevance also in tax accounting - the strict implementation principle applies . There it is one of the principles of proper accounting . In addition to the principle of imparity as one of the concretizations of the precautionary principle, the realization principle is one of the central accounting principles ; it is anchored in (1) No. 4 HGB , last half-sentence (“Profits are only to be taken into account if they have been realized on the reporting date”).
Contrary to the heading ofHGB (“General Valuation Principles”), the realization principle also has consequences for the recognition of balance sheet items.
The acquisition / production cost principle follows from the realization principle , which states that the acquisition or production costs of assets form the upper limit of their value. This is precisely what prevents the disclosure of unrealized profits. Accordingly, for example, self-made goods that are to be sold may not be accounted for at the likely realizable sales price , but at most at production costs.
At the same time, however, as a rule, no loss should be shown through the purchase of assets, procurement processes are generally not profitable, any depreciation takes place later (see lowest value principle ).
Time of realization
Of the various points in time that can be considered as the point in time of realization, a medium level of caution is chosen with the act of sales ( delivery and service ; the claim to consideration - usually payment of the purchase price - must have arisen). This stipulates that, for example, when a sales contract was concluded, no profit was realized, but there is no need to wait until the purchase price debt has been paid in full before a profit can be made. The profit is deemed to have been realized at the time of the transfer of risk - i.e. at the time of handover to the buyer or a transport person commissioned for delivery (e.g. forwarding agent). At this point in time, the sales revenue can be taken into account in the income statement and the payment or (in the case of a target sale) receivable in the balance sheet.
Questions of interpretation
From the wording of the regulation ("Profits ...") it is concluded that the realization principle applies not only to the consideration of income , but also to the question of when expenses are to be recorded (profit = income - expense). The realization principle therefore requires that expenses are added to the income associated with them, so they are to be recognized when the associated income has already been realized. On the other hand, they may not be passivated if they are attributable to income that will arise in the future (alimentation principle). Baetge and others use a supplementary "principle of delimitation of the thing" and the final principle in order to ultimately arrive at the same result: the realized income must be compared with the (directly and indirectly) attributable expenses.
The principle of implementation in other systems of standards
Other accounting systems may have principles of profit accrual that differ from those in German commercial law accounting. According to the realization principle of IFRS as well as US-GAAP, successes can in some cases already be recognized when they are realizable but not yet realized. As a result, the implementation principle in the Anglo-Saxon systems of standards is interpreted more broadly than under German trade balance sheet law.
The fair value accounting (fair value model / full fair value accounting) promoted primarily by the IASB always implies the receipt of unrealized income in the event of increases in value above historical costs.
The IFRS see u. a. In the following cases, the income is recognized for income that has not yet been realized, provided certain conditions are met:
- Accounting for multi-period construction contracts (IAS 11)
- Accounting for financial instruments (IAS 39; IFRS 9)
- Accounting for investment properties (IAS 40)
- Accounting for biological assets (IAS 41)
- Adolf G. Coenenberg , u. a .: Annual accounts and annual accounts analysis , 21st edition, Schäffer-Poeschel Verlag, Stuttgart 2009, ISBN 3-7910-2770-0 .
- Harald Wedell, Achim A. Dilling: Fundamentals of accounting: bookkeeping and annual accounts. Cost and performance accounting , 13th edition, NWB-Verlag 2010, ISBN 978-3-482-54783-6 .
- Moxter, A. , Economic Determination of Profits and Accounting Tax Law, in: StuW 1983, pp. 300–307.
- Baetge / Kirsch / Thiele, Bilanzen, 6th edition, 2002, p. 109 f.