Accounting and Auditing
What is an Opening Balance? Assets, Liabilities, and Equity at Start-up
The opening balance shows assets, liabilities, and equity at the start-up or restructuring of a business. See when it's used and what needs to be documented.
2 min read · Translated from Norwegian. Read the original
An opening balance shows what assets, what liabilities, and what equity a business starts an accounting period or corporate situation with. It follows the fundamental accounting equation:
Assets = Equity + Liabilities
When is an Opening Balance Used?
The term is used, among other things, at start-up, restructuring, merger, demerger, or when a business is transferred to a new company. In ordinary bookkeeping, opening balances are normally carried forward from the close of the preceding period.
Contribution in Kind and Valuation
When share capital is not only paid in cash but with assets such as equipment, vehicles, or an existing business, special requirements apply to the description, valuation, and confirmation. The values must be sound and documented.
An opening balance is not a market valuation of the company. It is based on accounting and company law rules for the specific items.
What Should Be Checked?
Look for the date, which assets and liabilities are included, valuation principles, and necessary confirmation. When buying or restructuring, agreements and notes should be read in conjunction with the balance sheet.
Opening Balance on Proffi
Proffi should show the document as a source when it is publicly available, but not mix the figures with subsequent annual accounts. Note the date, event type, and whether the figures relate to formation, restructuring, or another transaction.
Frequently asked questions
- Is the opening balance the same as the balance sheet in the annual accounts?
- No. The opening balance applies to the start of a situation or period; the annual balance sheet applies to the end date.
- Does an auditor need to confirm it?
- The requirement depends on the transaction and regulations. Contributions in kind (tingsinnskudd) and restructuring (omdanning) may trigger specific confirmation requirements.