Handelsgesetzbuch (HGB)

What Is Handelsgesetzbuch (HGB)?

Handelsgesetzbuch (HGB) is a law that oversees the primary commercial code for companies in Germany. The law incorporates a regulation connected with the planning of financial statements and lays out accounting rules and best practices. HGB is like generally acknowledged accounting principles (GAAP), which is continued in the United States.

Grasping Handelsgesetzbuch (HGB)

The commercial code of Germany, known as Handelsgesetzbuch, was first settled on May 10, 1897. In 1998, the code was adjusted to adjust to new laws inside the European community.

The HGB has additionally been utilized in Austria starting around 1938. In 2007, the HGB in Austria was supplanted by a more up to date unified commercial code called the Unternehmensgesetzbuch (UGB). German accounting law was additionally refreshed in 2010 with the Bilanzrechtsmodernisierungsgesetz (BilMoG).

HGB remembers the governance for the registration of companies in Germany and the laws they must comply with. For instance, HGB remembers provisions for the utilization of commercial brokers, agents, and the formation and disintegration of partnerships with outsiders.

The commands of HGB incorporate paying representatives' salaries before every month's over. Under the law, non-compete clauses in workers' hiring contracts must in compose. There are likewise provisions in regards to charter contracts for boats and salvage rights.

Handelsgesetzbuch (HGB) versus IFRS

Germany's commercial code and accounting laws share likenesses and differences with International Financial Reporting Standards (IFRS). For instance, Germany's laws and IFRS both use historical costs as the core of accounting, yet German law generally doesn't consider revaluations.

IFRS takes into account the revaluation of the fair value of property, intangible assets, investment property, equipment, and creations inside set industries. German accounting law offers a few exemptions for the fair value assessment of financial instruments from banks and financial institutions that are held for trading.

Income statements are to a great extent comparative under one or the other set of accounting laws, yet differences do exist. There is no statement of comprehensive income under German account rehearses. Income statements can be issued by utilizing the cost of sales or total cost methods. Moreover, income drawn from discounting provisions must be incorporated with other interest and comparative income.

With IFRS, a company can choose to show its income or expenses as a single statement of exhaustive income or as two statements. The separate statements can show parts of profit or loss, plus one more statement for other income.

HGB just requires a statement of cash flows for consolidated financial statements and for publicly traded companies that are not required to file consolidated financial statements. IFRS and German accounting rehearses both arrange cash flows by operating, investment, and financing activities.

Features

• Handelsgesetzbuch (HGB) is Germany's commercial code and accounting standards for how companies must prepare and report financial statements.
• The HGB likewise commands different corporate mandates and regulations dealing with the treatment of workers.
• Germany's laws and IFRS both utilize historical costs as the core of accounting, however German law generally doesn't take into consideration revaluations as the IFRS does.
• In numerous ways, the rules illuminated in the HGB are like the U.S. GAAP and IFRS with a couple of eminent differences.