Accounting Conventions

Swedish financial statements are based on accrual accounting and the historical-cost convention. The principle of conservatism recognising anticipated losses but deferring unrealised gains considered important but, as a practical matter, revenues are generally recognised as prescribed by the tax laws.

Tax System

Taxation rules have a significant effect on Swedish accounting principles. Income for tax purposes must generally be the same as book income, and financial reporting is therefore significantly affected by tax rules. This produces unusual elements in Swedish financial statements, especially the untaxed reserves permitted by tax rules. Good accounting and reporting practice segregates, if possible, the effect of transactions made only to follow tax rules or to gain a tax advantage.

The contents of this article are intended as a general guide to the subject matter. Specialist advice should be sought for your specific circumstances.

For further information contact Per Snellman on Tel: +468 613 9000 0r Fax: +468 791 7511; or enter a text search 'Ernst & Young' and 'Business Monitor'.