In certain business situations, it is necessary to prepare special balance sheets. In the case of a carve-out, a merger or the liquidation of a company, for example, a company must prepare a special balance sheet. It is also often necessary to implement special “closing accounts” in the context of company sales.
Special Aspects of Carve-out Balance Sheets
As part of a carve-out (for example, a spin-off), it is necessary to prepare separate carve-out balance sheets for the carve-out object (for example, a business unit or profit center) in order to report the area to be carved out on a “stand-alone” basis. The main challenge here is the appropriate allocation of positions that cannot be clearly separated from the carve-out property and the parent company. The breakdown is often complex, particularly for shared assets, intangible assets such as patents and trademarks, or items such as cash and cash equivalents and pension obligations.
Special Aspects of Merger Balance Sheets
When companies merge, it is necessary to prepare a merger balance sheet. From the point of view of the acquiring company, the merger represents an acquisition transaction. This can be reported either according to the general acquisition cost principle (Sections 253 (1), 255 (1) of the German Commercial Code (HGB)) or as a book value link (Section 24 of the German Transformation Act (UmwG)). It is even more complex because there are different regulations for mergers depending on whether or not there will be a capital increase. There are also additional options within the framework of the preparation of the merger balance sheet. This requires in-depth expertise and practical experience in order to interpret and apply these options in the best possible way for the company.
Special Aspects in the Liquidation of a Company
If a company is to be liquidated, it is necessary to prepare both an opening balance sheet for liquidation and a closing balance sheet for liquidation. The opening balance sheet shall be drawn up within three months of the date of the resolution to dissolve the company. This comprises a balance sheet and an explanatory report. The general regulations for the financial statements apply to this balance sheet. There may also be a disclosure and audit obligation. As a rule, a new fiscal year begins with the dissolution. The closing balance sheet for liquidation must be prepared at the end of the last (short) financial year. This comprises the closing balance sheet, the income statement and an explanatory report.
FAS AG as a Partner for the Preparation of your Special Balance Sheets
We support our clients by preparing special balance sheets with the appropriate technical knowledge of the specific legal requirements applicable in each case. Our experts have many years of experience, extensive expertise and are well versed in special accounting topics and the relevant laws (e.g. German Transformation Act (Umwandlungsgesetz)) and announcements (e.g. statements by the Institute of German Public Auditors (IDW)). We have already prepared various special balance sheets for numerous companies of different sizes and industries, such as merger balance sheets or “closing accounts,” as part of a company sale.
If you are interested or have any questions, please contact us.