Agris on-line Papers in Economics and Informatics

Faculty of Economics and Management CULS Prague, Kamýcká 129, 165 00 Praha - Suchdol

The international peer-reviewed scientific journal, ISSN 1804-1930


Method of Component Depreciation of Fixed Assetsts and Its Comparision with Traditional Methods

Stárová M., Čermáková H.

Agris on-line Papers in Economics and Informatics, No 3 /2010, September

Abstract

This contribution analyzes, based on specific examples, accounting procedures and tax implications of depreciation of tangible fixed assets. It compares the component method, which has recently appeared in the Czech legal regulations, with the traditional methods. To compare the effects that the traditional methods have on profit or loss, or rather on the tax base, also the generation of provisions is used. The use of component depreciation is governed solely by the accounting regulations while the Income Tax Act has not been changed in this respect. Profit of loss has to be adjusted by a difference amount between accounting depreciation and tax depreciation in tax return.

Keywords

Component depreciation, tax depreciation, accounting depreciation, profit or loss, costs, expenses; provisions.

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ISSN 1804-1930
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