3Accounting Principles Sample Clauses
The 'Accounting Principles' clause defines the specific set of accounting standards and rules that will govern the preparation and presentation of financial statements under the agreement. Typically, this clause specifies whether generally accepted accounting principles (GAAP), International Financial Reporting Standards (IFRS), or another framework will be used, and may clarify how any ambiguities or changes in standards are to be handled. By establishing a clear accounting basis, the clause ensures consistency and comparability in financial reporting, reducing the risk of disputes over financial data and interpretations.
3Accounting Principles. Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial matters (including financial ratios and other financial covenants) and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP (including principles of consolidation where appropriate), applied on a consistent basis and, except as provided herein, in a manner consistent with that used in preparing audited financial statements in accordance with Section 6.1(b) and all accounting or financial terms have the meanings ascribed to such terms by GAAP; provided, however, that all accounting terms used in any financial ratio or financial covenant (and any definitions used in any financial ratio or financial covenant) have the meaning given to such terms (and defined terms) under GAAP as in effect on the Closing Date applied on a basis consistent with those used in preparing the financial statements referred to in Section 5.10. In the event of any change after the Closing Date in GAAP, and if such change would affect the computation of any financial ratio or financial covenant set forth herein, then the parties hereto agree to endeavor, in good faith, to agree upon an amendment to this Agreement that would adjust such financial ratio or financial covenants in a manner that would preserve the original intent thereof, but would allow compliance therewith to be determined in accordance with the financial statements of the Loan Parties at that time, provided that until so amended such financial ratio or financial covenant shall continue to be computed in accordance with GAAP prior to such change therein. Notwithstanding the foregoing, for purposes of determining compliance with any ratio or covenant (including the computation of any financial ratio, financial covenant or component thereof) contained herein, Indebtedness of any Loan Party and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded. Notwithstanding anything to the contrary contained in Section 1.1 or in the definition of “Capital Lease”, all calculations, ratios, covenants or restrictions hereunder or under any other Loan Documents shall not give effect to the accounting for leases pursuant to GAAP resulting from the adoption of Financial Accounting Standards Board Accounting Standards Updat...