Tax-Free Stock Dividends and the New Model Income Statement for German Corporations.

Abstract As a whole, the new Model Income Statement represents a giant step forward in the direction of full disclosure. Although its basic structure is entirely different from that of the conventional American income statement, the information to be gained by it is equally informative. The disclosure of net sales, of the value of production, and of profit or loss from pooling agreements truly represents a climax in the history of German financial reporting. In conclusion it may be noted that the new Model Income Statement is mandatory only for stock corporations of which there are about 2,500 in Germany today. while about 25,000 "Gesellschaften mit beschrankter Haftung" (roughly: closely held corporations) are still free to use the form they see fit. Nevertheless, the new Model Income Statement is regarded as the codification of good accounting principles, and as was the case with the former income statement, it will certainly be adapted also by many of the other companies.