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A newly proposed Accounting Act is scheduled to be adopted by the Norwegian parliament before the summer break and to go into effect on January 1 1999. This will involve major changes to the financial year, dividend distribution and how assets are reported in mergers.

After the new Act has been adopted, a company's financial year must follow the calendar year. Previously, a company could apply for an exemption from the Banking, Insurance and Securities Commission. Any company previously granted an exemption must now adopt the calendar year as its financial year within two years of the act coming into force. If a foreign parent company uses a non-calendar financial year, the subsidiary or branches in Norway will have to prepare two sets of accounts, one for the Norwegian authorities and one for the parent company.

Reporting of assets has also changed. Floating assets held in stocks, bonds or other financial instruments are to be reported based on their real, instead of purchased, value, and traded financial instruments must be reported based on their average acquisition costs. Further, it will no longer be possible to write up the value of fixed assets to take into account increased market value.

Accounting for mergers between similarly situated companies will be based on the continuity model for both companies. However, in a takeover situation, the company doing the takeover will continue to use the continuity method for its accounts, but the wholesale method will be applied to the assets of the company being taken over.

The maximum payment of dividends will now be calculated by taking the year's results plus other capital, less the reported expenditures for research and development and goodwill (not to apply to group accounts) and net deferred tax obligations. The equity after the payment of dividends must be 10% of the total balance.

The present accounting law was written 20 years ago, and the new Act is mainly a codification of principles already in practice. However, there is a stronger emphasis on IASC regulations.

Generally, all accounts must be filed with the central accounts registry within one month of their adoption, no later than by the end of July after the accounting year, and are available to the public by post or fax.

Peter Brechan

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