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Slide 2 Tutorial: Business Academy Topic: Fixed Assets Depreciation (1 st part) Prepared by : Ing. Jana ustrov Projekt Anglicky v odbornch pedmtech, CZ.1.07/1.3.09/04.0002 je spolufinancovn Evropskm socilnm fondem a sttnm rozpotem esk republiky. Slide 3 Physical as a result of use, by external influence Moral as a result of technical development Depreciation = tangible fixed assets depreciation per an accounting period Accumulated depreciation = total depreciation of the fixed assets for the entire period of use Purchase priceaccumulated depreciation=residual price Slide 4 Accounting depreciation They express the actual assets depreciation They are in accordance with physical and moral depreciation of assets They are based on the Accounting Act. The company determines them in their depreciation schedule. Tax depreciation They are based on the Income Tax Law They express maximum amount that can be as depreciation applied as a tax deductible expense Slide 5 1. The inclusion of depreciation in the property under the Income Tax Act Depreciation class Minimum useful life Example 13 yearsOffice machinery, computers 25 yearsCars, television receivers, pumps 310 yearsCranes, lifts, turbines, boilers 420 yearsWooden and plastic buildings, chimneys 530 yearsProduction buildings, bridges, roads 650 yearsOffice buildings, hotels, schools Slide 6 2. Determination of depreciation method S TRAIGHT - LINE DEPRECIATION The maximum depreciation rates are assigned to the depreciation groups Annual depreciation = (input price x annual rate) / 100 Depreciation category Rate in the 1 st yearRate in following years 120,040,0 211,022,25 35,510,5 42,155,15 51,43,4 61,022.02 Slide 7 A CCELERATED DEPRECIATION The rules are defined in the Income Tax Act The basis are coefficients that are assigned to depreciation groups The period of depreciation is not shorter, but the depreciation is higher at the beginning in comparison with straight-line depreciation 1. year = input price following years= 2 x residual price k1 k n k1 = coefficient in the 1st year of depreciation k = coefficient for following years n = number of years that has been depreciated Slide 8 Depreciation category Coefficient for the 1 st year Coefficient for following years 134 256 31011 42021 53031 65051 Slide 9 Fixed assets that were assigned to use have been depreciated Pieces of land, works of art and collections have not been depreciated The selected method of depreciation cannot be changed over the depreciation period Depreciation is possible up to the amount of the purchase price Tax depreciation has been expressed as annual Owner depreciates the property Depreciation should be rounded up to the nearest crown Slide 10 How have been fixed assets worn? What is the depreciation group? Which law does the tax depreciation govern? What does accumulated depreciation mean? What is the relationship between the accumulated depreciation and the residual price? How do we recognise that the property is fully depreciated? Is it possible to change depreciation method during the depreciation period? Slide 11 tohl, P. Uebnice etnictv 2011 2. dl pro stedn koly a pro veejnost. Znojmo: NAKLADATELSTV TOHL PAVEL ING. VZDLVAC STEDISKO,2011.ISBN 978-80-87237-36-6. varcov J. a kol. Ekonomie -strun pehled, teorie a praxe aktuln a v souvislostech. Zln: TOPPEX, s. r. o., 2009.ISBN 978-80-903433- 7-5.