This is a lengthy read but should suffice for anyone not wanting to do the research. This is copied and pasted from
http://www.musclecarclub.com/library/dictionary/engine-terms.shtml
SAE Gross Horsepower or Brake horsepower (bhp) was the standard horsepower measurement by the automotive industry up until 1971. Brake Horsepower Power is measured at the flywheel with no load from a chassis or any accessories and with fuel and ignition operations under ideal conditions. An accessory is anything attached to the engine, by any means, which is not required for basic engine operation. By this definition, this would include a power steering pump, smog pump, air conditioning compressor and an alternator. Ideal conditions, often called laboratory conditions, are standardized settings for use during horsepower measurement. During the 1960s they consisted of a barometric pressure of 29.92 Hg and a temperature of 60 degrees F.
SAE Net Horsepower became the standard measurement in 1972, and is still used today. SAE Net horsepower is the horsepower generated by the engine at the flywheel with all accessories attached. This change was made to reflect the numerous energy sapping accessories that cars began to have, such as an A/C Compressor and alternator, and thus was a better representation of the actual power generated by the engine. This number is always lower than the SAE Gross horsepower. Therefore, the same engine could have been rated in 1971 as 360 SAE Gross Horsepower and in 1972 as 300 SAE Net horsepower without any reduction in "power."
Wheel horsepower is horsepower measured at the actual drive wheels, taking into account the load from the chassis and all accessories. It is the most accurate measure of the amount of energy that the car actually generates to move it forward. Wheel horsepower is measured using a dynamometer. This is done by placing the vehicle's driven wheels on a large roller and accelerating the wheels up to redline in first or second gear. The vehicle's ability to turn this roller is measured and calculated (formula below) to come up with a figure that represents how much horsepower is actually available to move the vehicle around. Because a frictional loss between the engine and the driven wheels is unavoidable, wheel-driven horsepower will always be less than SAE Net Horsepower. How much less wheel-driven horsepower will depend on how many mechanical parts exist between a vehicle's engine and its driven wheels. This is usually measured as a percentage loss due to the "friction" of the intermediate components between the flywheel and the actual wheel. For a Rear Wheel Drive car, engine power has to travel through a transmission, driveshaft, rear-differential, and two axle shafts (one for each rear wheel). That's four separate mechanical components taking a bite out of the car's horsepower before the rear wheels even begin to turn. Front-wheel drive cars with transverse-mounted engines usually have a lower frictional loss because horsepower only has to travel from the engine, through the transmission and down two short driveshafts before reaching the wheels. Typical "powertrain" losses run between 15-22% but vary greatly between cars.
Hope this helps.
