Assessment of the balance sheet items

At the end of the year, the balance sheet items to be entered in the balance must be valued. This process is called evaluation. In this regard, it is necessary to observe the valuation regulations and, in particular, the principle of prudence.

All assets must be valued. The liabilities on the liabilities side must also be evaluated, but not the equity (net assets), as this results from the balance. In certain balance sheet items, such as a property, the valuation is not very simple.

In particular, the valuation regulations of the code of obligations must be taken into account. For assets, the OR stipulates maximum valuation rules, meaning an asset may not be recorded in the balance sheet higher than mentioned in the law. In contrast, minimum valuation rules apply to liabilities, which means that debts are to be recorded higher in case of doubt. The focus is on creditor protection. However, tax law pursues fiscal purposes, which is why sometimes opposite regulations apply (e.g., there are maximum depreciation rates in tax law, but not in the code of obligations).

Of central importance is the principle of prudence anchored, among others, in OR 960 II: When establishing them, all assets must be assessed at most according to the value they have for the business at the time the balance sheet is drawn up. The principle of prudence is concretized by the realization and imparity principles. The former states that profits can only be considered if they are already realized at the time of booking, i.e., when there is a legal claim to them. According to the imparity principle, losses must be booked before their realization, provided they are recognizable.