Nový zákon o účetnictví – novinky v oceňování

New Accounting Act - new valuation rules

Following our previous alerts, we are coming up with another change in relation to the new Accounting Act. This time, we will focus on the initial valuation of assets and the consideration of related disposal costs.

Compared to the current practices, the entity will additionally need to identify the expenses related to the future disposal of the asset, which should now be included in the value of the asset at the time of its recognition.

The disposal expense will increase the initial measurement of the tangible fixed asset. The disposal expense shall be determined as the book value of the provision for removing or dismantling the asset and restoring its location to its original condition.

Typical examples are the restoration of industrial sites or the removal of technical installations at the end of their useful life or use in connection with other assets. A similar obligation may arise in the case of restoring of technical (or additional) improvements made by the lessee to the leased premises.

Since the actual disposal of an asset will only occur at the end of useful life, i.e., in practice after several years, future disposal costs should be recognised in the balance sheet at present value.

Provisions will generally be measured at the present value of the expected cash flows required to settle the liability. The basic principle of determining the present value is to discount future payments using a discount rate that reflects the current present value of money.

It will be interesting to see whether the estimated future disposal liability will also affect the value of the asset for tax purposes.

For completeness, we add that the concept of present value measurement should also be applied when a tangible fixed asset is acquired on debt with a maturity of more than one year. The book value of the debt should be increased each accounting period, and the increase should be recognised as a finance cost in profit or loss.

Please note that this alert is based on current proposals for amendments to accounting and related tax legislation.

If you would like more detailed information, please contact the authors of this article or other members of the EY team with whom you work.

Authors:

Kateřina Dedková

Ivan Zhurkin

Lucie Vrabcová