Module I· HGB vs. IFRS — Structural DifferencesIntermediate
Question
How does pension valuation differ under HGB versus IFRS?
Answer
IFRS uses market-based IAS 19 DBO measurement; HGB uses local German provision rules with smoothing effects.
Deep diveShow more details
Pension underfunding is usually a debt-like item. The book value under HGB may not equal the economic burden a buyer underwrites.