Abgegrenzte Aufwendungen

English translation: prepaid expenses

GLOSSARY ENTRY (DERIVED FROM QUESTION BELOW)
German term or phrase:abgegrenzte Aufwendungen
English translation:prepaid expenses
Entered by: Steffen Walter

16:50 Jan 22, 2016
German to English translations [PRO]
Bus/Financial - Accounting / IFRS statement of financial position
German term or phrase: Abgegrenzte Aufwendungen
A customer is querying some terminology in a translation done three months ago...

In an IFRS statement of financial position I had written "Prepayments" for "Abgegrenzte Aufwendungen" and "Deferred revenue" for Abgegrenzte Erträge" based on what I found in Ernst & Young illustrative financial statements.

The customer wants to know whether "Abgegrenzte Aufwendungen" should be "Accrued expenses". Based on the explanation in the notes (see below), I think Prepayments is ok, but what do others think (Robin, Ted?)?

"Es handelt sich um Aufwendungen, deren Gegenleistungen in zukünftigen Dienstleistungen bestehen und innerhalb des kommenden Jahres verrechnet werden. Die Bewertung erfolgt zum Marktwert. Im Vorjahr erfolgte der Ausweis inhaltsgleich unter der Bezeichnung „Übrige Vermögenswerte“."
nruddy
Mexico
Local time: 22:41
prepaid expenses
Explanation:
... was my first thought when opening this question (the 'classic' German equivalent being 'aktive Rechnungsabgrenzungsposten' - I suspect the German is some sort of back-translation of the English term). I'd be reluctant to using 'accrued' here because this could be mistaken for 'Rückstellungen' - cf. http://www.proz.com/kudoz/english_to_german/accounting/23145...
Selected response from:

Steffen Walter
Germany
Local time: 05:41
Grading comment
Thanks everyone!
4 KudoZ points were awarded for this answer



Summary of answers provided
3 +3prepaid expenses
Steffen Walter
4(AmE) allocated > (BrE) apportioned > expenses
Adrian MM. (X)
3Prepayments
Edgar Bettridge
Summary of reference entries provided
This says "accrued"
philgoddard

Discussion entries: 6





  

Answers


12 mins   confidence: Answerer confidence 3/5Answerer confidence 3/5 peer agreement (net): +3
abgegrenzte Aufwendungen
prepaid expenses


Explanation:
... was my first thought when opening this question (the 'classic' German equivalent being 'aktive Rechnungsabgrenzungsposten' - I suspect the German is some sort of back-translation of the English term). I'd be reluctant to using 'accrued' here because this could be mistaken for 'Rückstellungen' - cf. http://www.proz.com/kudoz/english_to_german/accounting/23145...

Steffen Walter
Germany
Local time: 05:41
Specializes in field
Native speaker of: Native in GermanGerman
PRO pts in category: 440
Grading comment
Thanks everyone!

Peer comments on this answer (and responses from the answerer)
agree  Ted Wozniak
3 hrs

agree  Henry Schroeder
5 hrs

agree  RobinB: See also my comment in the discussion entry.
18 hrs
  -> Thank you for backing this up.
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26 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5
(AmE) allocated > (BrE) apportioned > expenses


Explanation:
pace Robin B. and Ted W., I don't believe - despite the explanation in the notes - this can be speculatively narrowed down to prospectively prepaid or retrospectively accrued.


    Reference: http://https://www.business-case-analysis.com/cost-allocatio...
Adrian MM. (X)
Local time: 05:41
Specializes in field
Native speaker of: Native in EnglishEnglish
PRO pts in category: 86
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1 day 9 hrs   confidence: Answerer confidence 3/5Answerer confidence 3/5
Prepayments


Explanation:
I am submitting this because a number of other answers and discussion entries are not answering your question, or answering it in the negative, when I think they are just saying "I would have done this differently".

So, to your question: "is Prepayments ok". My answer, yes absolutely fine. Why? -

1) Vorauszahlung is translated in the eIFRS glossary as prepayment, see my discussion entry as to why this is relevant;
2) prepayments and prepaid expenses are used interchangeably by a number of practitioners - see example sentence from IFRS clarification on long term prepayments for inventory supply contracts (i.e. prepayments are equated here to prepaid expenses to explain why they are not included in financial assets) and CIMA link below;
3) Oxford dictionary of accounting definition of prepayment: A payment made for goods or services before they are received;
4) Ted makes a good point about prepayments: "Care needs to be taken with "prepayments" so that it is clear whether they are prepayments made or prepayments received" - True, but your example is from the notes to the asset side of the balance sheet, so the context makes it obvious;
5) inconclusive point this - a number of large UK companies do not use "prepaid expenses" anywhere in their annual reports, but do use "prepayments" - eg Tesco and Sainsbury.

This is not to say that "prepaid expenses" is not a better answer, it probably is. Also, some caution is warranted as I do not understand RobinB's point that "You should avoid using "prepayments" here, because this is the term normally reserved for prepayments on assets, i.e. "geleistete Anzahlungen" in German GAAP." - this goes against my understanding (e.g. see points 1,2 and 3 above), but I could be wrong so it would be interesting to hear more on this. (Besides, even supposing RobinB is right here - and he usually is - his use of "normally" suggests that you could be justified in putting something else, he would just do it differently, which brings me back to my reasons for writing this answer...)

Example sentence(s):
  • prepayments are not financial instruments (IAS 32 AG11) and are scoped out from IAS 39 Financial Instruments: recognition and Measurement for measurement purposes...
  • ...IAS 32 AG11 Assets (such as prepaid expenses) for which the future economic benefit is the receipt of goods or services, rather than the right to receive cash or another financial asset, are not financial assets.

    Reference: http://www.cimaglobal.com/Students/Student-e-magazine/Veloci...
Edgar Bettridge
United Kingdom
Local time: 04:41
Works in field
Native speaker of: English
PRO pts in category: 12
Notes to answerer
Asker: Edgar: Thanks for taking the time to explain your point. As regards what UK companies do or don't do, that isn't always relevant to German companies IMHO. A lot of German companies are very much influenced by HGB so I think drawing a parallel with aktivistische RAP is valid.

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Reference comments


12 mins
Reference: This says "accrued"

Reference information:
... though the terminology may have changed.


    Reference: http://www.proz.com/kudoz/german_to_english/accounting/64998...
philgoddard
United States
Works in field
Native speaker of: Native in EnglishEnglish
PRO pts in category: 73
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