Division of long-term fixed assets

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Division of long-term fixed assets
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• Long-term intangible fixed assets
• Long-term tangible fixed assets
• Long-term financial assets

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Long-term intangible fixed assets

• setting-up expenses,
• intangible results of research and development,
• software,
• valuable rights,
• and other asset which input price is higher than
  CZK 60,000 and its useful life is higher than one
  year.

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Long-term tangible fixed assets

• buildings, houses, and flats or non-residential
  premises,
• separate movable objects or set of movable
  objects which can only function together as an
  independent technical and economic unit the input
  price of which is over CZK 40,000 and their
  operational and technical life expectancy exceeds
  one year,
• fields of perennial vegetation (orchards and
  vineyards) yielding a harvest for more than three
  years,
• basic livestock herds and draught animals.

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Long-term financial asset

• This asset is not depreciated. This group
  includes ownership interests and other long-term
  credit securities.

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Depreciation of long-term tangible fixed assets

• No. 586/1992 Coll., Act on Income Taxes

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Depreciation category Period of depreciation Tangible assets (examples)
1 3 years laboratory glass, computers, TV cameras,office machines .
2 5 years horses for working, breeding or rearing, wire products (cables and belts), cooling and freezing equipment, automatic vending machines, tractors, motor vehicles...
3 10 years turbines, motors and metal structures, elevators, air conditioning equipment, trams, boilers...
4 20 years houses and buildings wooden and plastic, towers, industrial chimneys...
5 30 years bridges, highways, tunnels, swimming pools, roads, streets, waterworks...
6 50 years buildings of hotels, museums, department stores, libraries, culturic relics...
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Depreciation methods of long-term tangible fixed
assets
the straight line depreciation
the accelerated depreciation
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The straight method of depreciation
Annual depreciation rate Annual depreciation rate
Depreciation category Period of depreciation First year of depreciation Subsequent years of depreciation For increased input price
1. 3 20 40 33.3
2. 5 11 22.25 20
3. 10 5.5 10.5 10
4. 20 2.15 5.15 5.0
5. 30 1.4 3.4 3.4
6. 50 1.02 2.02 2.0
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Annual depreciation rate for the first year of
depreciation
Input price

• 1st year - IP x ADR1
• 2nd year and subsequent years
• IP x ADRs

Annual depreciation rate for subsequent years of
depreciation
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Example of straight method of depreciation (an
ultra-sound machine)(input price CZK 300,000)
2007 300,000 x 0.11 CZK 33,000
2008 300,000 x 0.2225 CZK 66,750
2009 300,000 x 0.2225 CZK 66,750
2010 300,000 x 0.2225 CZK 66,750
2011 300,000 x 0.2225 CZK 66,750
total CZK 300,000
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The accelerated method of depreciation
Coefficient for accelerated depreciation Coefficient for accelerated depreciation
Depreciation Category Period of depreciation First year subsequent years for increased output price
1. 3 3 4 3
2. 5 5 6 5
3. 10 10 11 10
4. 20 20 21 20
5. 30 30 31 30
6. 50 50 51 50
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Input price
Coefficient for Accelerated Depreciation

• 1st year - IP / c1
• 2nd year and subsequent years -
  (2 x RC) / (cs- n)

Period of depreciation
Residual value
Coefficient for Accelerated Depreciation in
subsequent years
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Example of accelerated method of depreciation (an
ultra-sound machine) (input price CZK 300,000)
2007 300,000 5 CZK 60,000
2008 (240,000 x 2) 5 CZK 96,000
2009 (144,000 x 2) 4 CZK 72,000
2010 (72,000 x 2) 3 CZK48,000
2011 (24,000 x 2) 2 CZK 24,000
Total CZK 300,000
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The example of calculation for increased
residual value(personal motor car IP CZK
300,000,improvement CZK 50,000 in 2009)
2006 300,000 5 60,000 CZK
2007 (240,000 x 2) (6-1) 96,000 CZK
2008 (194,000 x 2) 5 77,600 CZK
2009 (116,400 x 2) (5-1) 58,200 CZK
2010 (58,200 x 2) (5-2) 38,800 CZK
2011 19,400 CZK
Total CZK 350,000
CZK 50,000