Imparity principle

In accounting, losses must be taken into account even if they are emerging but are not yet due for payment. Profits, on the other hand, may only be recognized when they have been received as a payment. For reasons of prudence, profit and loss are thus treated unequally – in Latin: IMPAR. The imparity principle is binding for the accounting of institutions, and its application is monitored accordingly by the auditors. – The imparity principle is often subdivided into the – principle of lower cost of market, according to which impairments of assets must be anticipated by means of depreciation, and – precautionary principle, according to which provisions must be made for impending losses and for uncertain liabilities. – See contingent loss, IAS 39, loss, expected.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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