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Depreciation

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					Division of long-term
     fixed assets
 Long-term intangible fixed assets

 Long-term tangible fixed assets

 Long-term financial assets
  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.
    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.
Long-term financial asset:

This asset is not depreciated. This
group includes ownership interests
    and other long-term credit
             securities.
Depreciation of long-term
  tangible fixed assets

   No. 586/1992 Coll., Act on
         Income Taxes
Depreciation    Period of
                                     Tangible assets (examples)
 category      depreciation
                                  laboratory glass, computers, TV
     1          3 years              cameras,office machines .
                              horses for working, breeding or rearing,
                              wire products (cables and belts), cooling
     2          5 years          and freezing equipment, automatic
                                 vending machines, tractors, motor
                                             vehicles...
                               turbines, motors and metal structures,
     3          10 years       elevators, air conditioning equipment,
                                          trams, boilers...
                              houses and buildings wooden and plastic,
     4          20 years           towers, industrial chimneys...
                               bridges, highways, tunnels, swimming
     5          30 years        pools, roads, streets, waterworks...
                              buildings of hotels, museums, department
     6          50 years           stores, libraries, culturic relics...
  Depreciation methods of
  long-term tangible fixed
           assets


the straight line   the accelerated
  depreciation       depreciation
          The straight method of depreciation:

                                Annual depreciation rate

Depreciation                                  Subsequent
 category       Period of     First year of                  For increased
                                                years of
               depreciation   depreciation                    input price
                                              depreciation

     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
                        Annual depreciation rate
 Input price            for the first year of depreciation



1st year - IP x ADR1

2nd year and subsequent years –
              IP x ADRs

         Annual depreciation rate
         for subsequent years of depreciation
   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
 The accelerated method of depreciation
                              Coefficient for accelerated
                                     depreciation

Depreciation
 Category       Period of                  subsequent       for increased
                              First year
               depreciation                   years         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
      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
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
   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
+ CZK
50,000   2010          (58,200 x 2) : (5-2)   = 38,800 CZK

         2011                                 =19,400 CZK

                                              Total = CZK 350,000

				
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posted:2/15/2013
language:English
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