Contingency balance sheet under K2 and K3 – what are the differences?
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Fact-checked: October 1, 2026 · Swedish law
The balance sheet for liquidation purposes is primarily governed by Chapter 25 of the Swedish Companies Act and applicable annual accounts legislation. However, K2 or K3 impacts the accounting starting point. Furthermore, the Swedish Accounting Standards Board (BFN) has explicitly stated how the K-frameworks may be used when a balance sheet for liquidation purposes is prepared.
K2 and K3 do not replace the rules for balance sheets for liquidation purposes
The older version of this article described a balance sheet for liquidation purposes as something K2 or K3 companies could use prior to annual accounts, audits, or external reporting. That was an incorrect premise.
A statutory balance sheet for liquidation purposes is triggered when the conditions in Chapter 25, Section 13 of the Swedish Companies Act are met. K2 and K3 influence how the underlying accounting is structured, but the actual obligation to prepare a balance sheet for liquidation purposes stems from the Swedish Companies Act.
The Swedish Accounting Standards Board's guidance on K2 and K3 for balance sheets for liquidation purposes
The BFN states four important starting points for non-financial companies:
- Smaller companies can use K3 instead of K2 when preparing a balance sheet for liquidation purposes.
- Larger companies cannot use K2 for the balance sheet for liquidation purposes.
- A mixture of rules from K2 and K3 is likely not possible.
- According to the BFN, K2's focus on prudence means that the requirements of the Annual Accounts Act can be met even if a simplified K2 rule in an individual case provides a more favorable view than K3.
What can differ in practice?
K2 and K3 differ on several accounting issues, including how certain assets, components, leasing arrangements, estimates, and disclosures are handled. These differences can affect the balance sheet that serves as the basis for the liquidation balance sheet work.
At the same time, Chapter 25, Section 14 of the Swedish Companies Act allows for special adjustments to the balance sheet for liquidation purposes, such as valuing certain assets at a higher value if the valuation principles are consistent with generally accepted accounting principles, and allowing assets to be reported at net realizable value. It is therefore important to distinguish between:
- which accounting framework the company uses as a starting point, and
- which special adjustments the Swedish Companies Act subsequently permits for the balance sheet for liquidation purposes.
Read more in Balance sheet for liquidation purposes – valuation of assets and liabilities.
What is important to know in 2026?
The Swedish Accounting Standards Board's revised K2 rules, which were decided in 2025, are primarily to be applied to financial years beginning after December 31, 2025. This means that many companies will need to ensure during 2026 that they are still permitted to use K2 and that they are applying the correct version of the framework.
The BFN has also published extensive questions and answers regarding the transition to K3 for companies that are no longer allowed to use K2. For such companies, the choice of accounting framework becomes not just an issue regarding the balance sheet for liquidation purposes, but part of the entire annual report and transition accounting.
Separately, in 2026, the BFN has decided on amendments to the guidance for Annual Financial Statements. These have their own effective dates and transition rules and should not be confused with the 2026 amendments to K2 for annual reports.
How should a company choose when preparing a balance sheet for liquidation purposes?
- First, determine which framework the company uses or is required to use.
- Check if the company is still covered by K2 after the 2026 amendments.
- If a smaller company is considering K3 for the balance sheet for liquidation purposes, assess the consequences for all relevant items – not just a single item.
- Document which framework was used and how the adjustments for the balance sheet for liquidation purposes were made.
- Seek assistance from an accounting specialist or auditor when the transition or valuations are complex.
See also how documentation and adjustments for a balance sheet for liquidation purposes should be recorded.
For private limited companies without a selected auditor, there is a Balance Sheet for Liquidation Purposes Template – Without Auditor (Excel) available for 49 SEK. Which accounting framework and which valuations should be used must be assessed based on the company's actual circumstances.
