1. Division of long-term fixed assets

2.  Long-term intangible fixed assets  Long-term tangible fixed assets  Long-term financial assets

3. Long-term intangible fixed assets: setting-up expenses, intangible results of research and development, software, valuable rights, and other asset which input price is higher than CZK 60,000 and its useful life is higher than one year.

4. Long-term tangible fixed assets: buildings, houses, and flats or non-residential premises, separate movable objects or set of movable objects which can only function together as an independent technical and economic unit the input price of which is over CZK 40,000 and their operational and technical life expectancy exceeds one year, fields of perennial vegetation (orchards and vineyards) yielding a harvest for more than three years, basic livestock herds and draught animals.

5. Long-term financial asset: This asset is not depreciated. This group includes ownership interests and other long-term credit securities.

6. Depreciation of long-term tangible fixed assets No. 586/1992 Coll., Act on Income Taxes

7. Depreciation category Period of depreciation Tangible assets (examples) 13 years laboratory glass, computers, TV cameras,office machines. 25 years horses for working, breeding or rearing, wire products (cables and belts), cooling and freezing equipment, automatic vending machines, tractors, motor vehicles... 310 years turbines, motors and metal structures, elevators, air conditioning equipment, trams, boilers... 420 years houses and buildings wooden and plastic, towers, industrial chimneys... 530 years bridges, highways, tunnels, swimming pools, roads, streets, waterworks... 650 years buildings of hotels, museums, department stores, libraries, culturic relics...

8. Depreciation methods of long-term tangible fixed assets the straight line depreciation the accelerated depreciation

9. The straight method of depreciation: Annual depreciation rate Depreciation category Period of depreciation First year of depreciation Subsequent years of depreciation For increased input price 1.3204033.3 2.51122.2520 3.105.510.510 4.202.155.155.0 5.301.43.4 6.501.022.022.0

10. 1st year - IP x ADR 1 2nd year and subsequent years – IP x ADR s IP x ADR s Annual depreciation rate for subsequent years of depreciation Annual depreciation rate for the first year of depreciation Input price

11. Example of straight method of depreciation (an ultra-sound machine) (input price = CZK 300,000) 2007300,000 x 0.11 = CZK 33,000 2008300,000 x 0.2225 = CZK 66,750 2009300,000 x 0.2225 = CZK 66,750 2010300,000 x 0.2225 = CZK 66,750 2011300,000 x 0.2225 = CZK 66,750 total = CZK 300,000

12. The accelerated method of depreciation Coefficient for accelerated depreciation Depreciation Category Period of depreciation First year subsequent years for increased output price 1.3343 2.5565 3.10 1110 4.20 2120 5.30 3130 6.50 5150

13. 1st year - IP / c 1 2nd year and subsequent years - (2 x RC) / (c s - n) Coefficient for Accelerated Depreciation Coefficient for Accelerated Depreciation in subsequent years Input price Residual value Period of depreciation

14. Example of accelerated method of depreciation ( an ultra-sound machine) (input price = CZK 300,000) 2007300,000 : 5 = CZK 60,000 2008(240,000 x 2) : 5 = CZK 96,000 2009(144,000 x 2) : 4 = CZK 72,000 2010(72,000 x 2) : 3 = CZK48,000 2011(24,000 x 2) : 2 = CZK 24,000 Total = CZK 300,000

15. The example of calculation – for increased residual value (personal motor car – IP = CZK 300,000, improvement = CZK 50,000 in 2009) 2006300,000 : 5 = 60,000 CZK 2007(240,000 x 2) : (6-1) = 96,000 CZK 2008(194,000 x 2) : 5 = 77,600 CZK 2009(116,400 x 2) : (5-1) = 58,200 CZK 2010(58,200 x 2) : (5-2)= 38,800 CZK 2011 =19,400 CZK Total = CZK 350,000 + CZK 50,000