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Legal valuation
principles in results analysis (German-speaking countries)
In German law, you should remember the
following principles when valuating long-term orders and projects:
Profit can only be
realized after all contractual services have been carried out.
- Recognition-of-loss principle
If only some of the
services are settled, no profit can yet be realized. However, all losses that
have already been incurred and all expected losses have to be included in the
valuation.
Valuation extending
over a number of years should be carried out according to the same
method.
Each order must be
valuated separately.
If the cost of goods manufactured exceeds the sales price of the
product, the sales prices have to be used in inventory valuation.