Anglicky v odborných předmětech "Support of teaching technical subjects in English“

1. Anglicky v odborných předmětech"Support of teaching technical subjects in English“ Tutorial: Business Academy Topic: Fixed assets – depreciation ( 2nd part) Prepared by: Ing. Jana Šustrová Projekt Anglicky v odborných předmětech, CZ.1.07/1.3.09/04.0002 je spolufinancován Evropským sociálním fondem a státním rozpočtem České republiky.

2. Accounting depreciation • They objectively reflect the actual rate of property depreciation • Accounting Act sets companies to have the depreciation schedule in which calculation of depreciation will be determined • Depreciation period is not specified, but it should not be less than 1 year • Accounting depreciation is calculated to the nearest month for more accurate business results • Accounting depreciation must be accounted to the latest balancing account

3. The most common methods of calculation • Accrued depreciation • Depreciation amounts are calculated according to the estimated serviceable and useful life of the asset • It is usually determined for a month Example: The company bought a copy machine on 30.9.2011 for CZK 144.000,-, usable life was set for 3 years (36 months). Depreciation has started since 1.10.2011. Calculation: monthly depreciation: 144 000/36 = 4 000,-- accounting depreciation – year 2011: 3 x 4 000 = 12 000,--

4. Output depreciation • The calculation is based on the planned output – e.g. Mileage, number of manufactured products, planned capacity provided by the manufacturer Example: The company bought a passenger car for CZK 600.000,-. Depreciation basis is estimated number of kilometres for its useful life that is CZK 150.000,-. In the first year the car was driven 15.000km. Calculation: Depreciation for 1 km: 600 000 / 150 000 = CZK 4,- Accounting depreciation in the first year: 15 000 x 4 = 60 000,-

5. Tax depreciation of intangible assets • They are accurate to the month • Depreciation period depends on whether the company has the fixed-term or unspecific-term assets. Fixed-time property: monthly depreciation = input price/negotiated period Unspecific-time property:monthly depreciation=input price/ periods according to the months

6. The period of depreciation of intangible assets according to he Law on Income Tax Act (ITA) • Audio visuals...................................18 months • Software, research & development...36 months • Organization costs………………….…60 months • Other intangible assets....................72 months Depreciation starts on the first day of the following month after the asset is put into use.

7. Example: • The company bought software on 5.4.2011 for CZK 72.000,-. Calculate the depreciation for a year 2011. Calculation: The depreciation period of software by ITA is 36 months. Monthly depreciation: 72 000 / 36 = 2 000,-- Depreciation for 2011:od 1. 5., i.e. 8 months = 8 x 2 000 = 16 000,--

8. Fixed assets depreciation from an increased input price(after technical evaluation) • Straight-line depreciation: Increased input price x rate for increased price • Accelerated depreciation: a) In the year of increased input price2 x increased residual price/coefficient for increased price b) in the following years2 x residual price/ coefficient for increased p. (number of years of increased input price depreciation)

9. Task: Choose a correct answer: • According to which law are tangible assets classified into depreciation groups? • commercial code • trade law • income tax law • accounting law • Accumulated depreciation • positive difference between input price of property and depreciation • Small repairs • Positive difference between input price and residual price of property • Sum of deprecations for the period of use • When using accounting depreciation of fixed assets is it possible to write it off earlier than when using tax depreciation? • yes • no • yes, when accelerated tax depreciation

10. Accounting depreciation of fixed assets: • They should agree with the actual depreciation of fixed assets. Rates are set by Income Tax Act • They should agree with the actual depreciation of fixed assets. Rates are set by the company. • They set a level of maximum depreciation that can be applied as tax deductible expenses. • The company has bought a production line, purchase price is CZK 1 270 000,-. Estimated number of products that should this production line produce during its service life is 63 500 pieces. In this year it has been produced 4800 products. Calculate the amount of depreciation for this year.

11. Bibliography: • Štohl, P. Učebnice účetnictví 2011 – 2. díl pro střední školy a pro veřejnost. Znojmo: NAKLADATELSTV Í ŠTOHL PAVEL ING. – VZDĚLÁVACÍ STŘEDISKO,2011.ISBN 978-80-87237-36-6 • Švarcová J. a kol. Ekonomie -stručný přehled, teorie a praxe aktuálně a v souvislostech. Zlín: TOPPEX, s. r. o., 2009. ISBN 978-80-903433-7-5