The moderate lower of cost or market principle is a regulation in German commercial law that relates to the valuation of fixed assets. It states that no depreciation or amortisation is required in the event of a temporary reduction in value. Depreciation is only mandatory if the reduction in value is to be regarded as permanent. This principle is in contrast to the strict lower-of-cost-or-market principle, which stipulates that a write-down must be recognised in the event of temporary impairment. The application of this principle influences the amount of profit recognised and the balance sheet structure. Special valuation requirements can be met through add-ons such as the Versino Financial Suite that enable advanced financial analyses.
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