Nová interpretace NÚR I-51

Are you showcasing your goods and unsure how to properly report them in accounting? This question is posed by many accounting entities. The newly approved interpretation I-51, available HERE, provides the necessary answers.

In practice, situations arise where it is unclear whether demonstration goods should be recorded as inventory or if they already meet the conditions for classification as fixed assets.

From an accounting perspective, questions arise particularly when goods are used for demonstration for more than one year or when legal conditions for commissioning are met. However, these facts alone do not automatically mean that they are fixed assets.

The decisive factor is primarily the purpose of use and the expected duration of use.

If the goods are intended exclusively for demonstration and are expected to be used for more than one year or longer than the normal sales cycle, and their value exceeds the internal limit for fixed assets, they should be classified as long-term assets. Where this limit is not met, the goods are directly expensed at the moment of the decision to use them for demonstration. For more significant costs, it is advisable to spread their impact over time using accruals.

If the goods are primarily intended for sale and demonstration is only a supplementary part of the sales process, they remain recorded as inventory. This is the case even if legal conditions for commissioning are met.

What if the marketing department cannot estimate in advance how long the product will be demonstrated? How to proceed in case of early termination of the campaign? The accounting entity must primarily be able to substantiate its intention and base its decision on available information.

The same rules apply to products of own production.

Correct classification thus has a direct impact not only on the balance sheet structure but also on the timing of expense recognition in the income statement and thereby on the tax base itself.

Author:

Kateřina Dedková