Tutorial:Business Academy Topic:Fixed Assets - Valuation Prepared by : Ing. Jana Šustrová Projekt Anglicky v odborných předmětech, CZ.1.07/1.3.09/ je spolufinancován Evropským sociálním fondem a státním rozpočtem České republiky.

 Purchase price  Actual costs  Replacement cost

Purchase price is the value of acquired property. The price includes the costs associated with acquisition – it comprises such costs as the following ones: ◦ transport ◦ customs duty ◦ commission ◦ assembly ◦ exploration, geological and geodetic work ◦ project work ◦ administrative fees ◦ costs associated with bringing the assets into use

◦ Penalties, default interest, damage caused in connection with the acquisition of property ◦ Expenditure on training staff to use new assets ◦ Expenditure on supplies ◦ Expenditure incurred after putting the assets into use ◦ Exchange differences on foreign currency purchase

It is used for valuation of the property which the company acquired as a result of its own activities (e.g. a warehouse built by the employees, a special apparatus made by the employees, etc.)  Includes all direct costs and a part of indirect costs which were spent on production of assets ◦ direct material ◦ direct wages ◦ indirect (overhead) costs

It is used for valuation of the property acquired free of charge, e.g.  gift  shareholder´s investment  newly identified in inventory It is the price at which the asset would be acquired at the accounting time. It is determined on the basis of professional expertise.

The price of fixed assets can be increased by technical evaluation, i.e. expenditures for extensions, reconstruction and modernization of the assets, if they exceeded the amount of CZK 40,000 in one accounting period. ATTENTION! Do not confuse with the repair and maintenance!!!  Repair, maintenance = fault removing, worn-out reducing  Reconstruction = changing the purpose or technical parameters of the asset  Modernization = extension of the equipment and usability of the asset

 By subsidies received from the state budget, municipality or city budget  By the value of wearing-out of fixed assets, i.e. accumulated depreciation = book value

The company purchased a new machine on the invoice; the invoiced amount is CZK 320,000. Transportation fee was CZK 5,000, installation fee was CZK 12,000. Training for the staff who will operate the new machine cost CZK 3,500. Find out the purchase price of the new machine.

 1. Purchase price  2. Replacement cost  3. Actual costs  A. Donation of property  B. Shareholder´s deposit  C. Own production  D. Purchase

Choose the items that are part of the cost of the fixed assets a) project for the construction of a production hall b) transportation of procured machinery c) exchange-rate differences when buying abroad d) fee for building permits e) training of workers to service machine f) equipment inventory of fixed assets g) payment of damages caused in building the foundations for a new building Technical evaluation of the tangible property by a) cargo b) increasing the price of fixed assets c) lowering the price of fixed assets As the technical evaluation of the tangible property shall be considered expenditure on a) the total repair of tangible assets b) the total repair of tangible property if the value for the financial year exceeds the amount of CZK ,-- c) construction, reconstruction and modernization

 Zákon č. 563/1991 Sb., o účetnictví