Accruals & Deferrals

Accruals and deferrals under HGB: the Rechnungsabgrenzungsposten

German accounts allocate income and expense to the period they belong to, and the tool for that is the Rechnungsabgrenzungsposten (RAP) under § 250 HGB. This page explains the accrual basis behind it, the difference between prepaid expenses and deferred income, the special case of Disagio, and how a deferral differs from a provision or an accrued liability.

The accrual basis (Periodenabgrenzung)

German GAAP is an accrual system. § 252 Abs. 1 Nr. 5 HGB requires expenses and income to be recognised in the financial year to which they relate, regardless of when cash actually moves. Combined with the realisation principle (§ 252 Abs. 1 Nr. 4), this ensures the GuV reports the performance of the period rather than its cash flows.

Where a payment and the expense or income it represents fall in different periods, an adjusting item is needed to move the effect into the right year. For payments already made or received that straddle the balance sheet date, that item is the Rechnungsabgrenzungsposten.

The two RAP under § 250 HGB

Active RAP (aktiver RAP)

Cash paid before the balance sheet date that is an expense of a later period — prepaid rent, insurance premiums, licence fees paid in advance. It sits on the asset side and is released to the GuV as the period it covers arrives.

Passive RAP (passiver RAP)

Cash received before the balance sheet date that is income of a later period — rent or a service fee collected in advance. It sits on the liabilities side as deferred income and is recognised as revenue when earned.

Only transitory items belong in a RAP

A RAP is strictly a transitory item (transitorischer Posten): the cash has already changed hands, and only the period allocation is open. Classic examples are an insurance premium paid in December covering the following January to December, or annual software licences billed in advance.

So-called anticipatory items (antizipative Posten) — where the expense or income has arisen but the cash has not yet moved — are not RAP. Interest owed but not yet paid, or a delivery made but not yet invoiced, are recognised as a liability (Verbindlichkeit) or a receivable (Forderung), not as a deferral. Getting this direction wrong is the most common RAP error.

Disagio and other special cases

When a loan is paid out below its nominal amount, the difference (Disagio or Damnum) may be capitalised as an active RAP under § 250 Abs. 3 HGB and amortised over the loan term, spreading the effective borrowing cost across the years it relates to. It is an option rather than a duty, and any amount capitalised must be disclosed in the notes (§ 268 Abs. 6 HGB).

Small corporations are relieved from some deferral-related disclosures, but the core § 250 mechanics apply to every company that keeps double-entry books. RAP balances are usually short-lived and reverse in the following year as the covered period elapses.

RAP vs provisions and accruals

  • A RAP records a payment already made or received; a provision (Rückstellung) records an obligation whose payment is still to come.
  • A RAP has a certain amount and timing; a provision is uncertain in amount or timing.
  • Anticipatory accruals — expense incurred but not yet paid — become liabilities or receivables, never a RAP.
  • A RAP smooths the profit-and-loss effect of a known cash flow across periods; it never creates a new obligation.

Frequently asked questions

What is a Rechnungsabgrenzungsposten?

A Rechnungsabgrenzungsposten (RAP) is a deferral item under § 250 HGB used to allocate a payment already made or received to the period it economically belongs to. An active RAP is a prepaid expense on the asset side; a passive RAP is deferred income on the liabilities side.

What is the difference between an active and a passive RAP?

An active RAP (aktiver Rechnungsabgrenzungsposten) is cash paid in advance for a future-period expense, such as prepaid insurance. A passive RAP (passiver Rechnungsabgrenzungsposten) is cash received in advance for future-period income, such as rent collected early. One is an asset, the other a liability.

How is a RAP different from a provision?

A RAP records a payment that has already happened and only needs allocating across periods, so its amount and timing are certain. A provision (Rückstellung) records a future obligation that is uncertain in amount or timing. A deferral smooths a known cash flow; a provision anticipates an uncertain one.

Can a Disagio be spread over the loan term?

Yes. Under § 250 Abs. 3 HGB the discount on a loan (Disagio or Damnum) may be capitalised as an active RAP and amortised over the loan's term, matching the effective interest cost to the periods it relates to. It is an option, and any capitalised amount must be disclosed in the notes.

Where do accrued expenses that are unpaid go?

They do not go into a RAP. An expense that has been incurred but not yet paid is an anticipatory item and is recognised as a liability (Verbindlichkeit) or, if uncertain, a provision (Rückstellung). RAP are reserved for transitory items where the cash has already moved.