Accounting law: What is an observable market price?

With the new accounting law, a distinction between a primary and a subsequent valuation of assets is created. This concept is responsible for ensuring that the assets may be carried at an observable market price. As maximum of these balance sheet items, the purchase price was so far exclusively allowed.

New is a distinction between:

Initial measurement: At their initial recognition the assets are to be valued most about cost.

Subsequent measurement: Subsequent assets may not be rated higher than the cost. Exceptions are individual types of assets such as inventories or assets with observable market prices.

Consequences of assets with observable market prices:

  • The subsequent assets may be valued with an observable market price at the market price stated in the balance sheet date.
  • The appendix is ​​to point out this review.
  • If assets have the market price at the balance sheet date, impairment is charged to the income permitted to take fluctuations in price in the development bill.

"Observable market price" must be handled with care. An observable market price is given, provided that a prudential regulation exists on each “market”. The "Eurotax" for vehicles would probably not withstand a revision.

It is not recommended to exhaust the interpretation of observable market price, especially since those gains have not an operationally related origin.

Add new comment

To prevent automated spam submissions leave this field empty.
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.