Determination of profits according to sound business practice

The profits should be determined according to sound business practice and consistent accounting methods. The concept of sound business practice has mainly been developed in case law. For example unrealized losses may be taken into consideration, while unrealized profit may be ignored. The requirement of consistent accounting methods means that the method of determining profits may be changed only if this is compatible with sound business practice. Companies exploiting sea- going vessels may opt for a tonnage-based profit determination, providing that certain requirements are met. An important requirement is that the decision is binding for a period of ten years.