Legislation

1.1 Disposals

Fixed asset disposal means, for the purposes of the Czech Accounting Standards Nr. 409, legal transfer (sale) with price according to Act no. 526/1990, or free transfer (donation - only in the public interest) or physical liquidation.

 

1.2 Unnecessary

Unnecessary property is property that company no longer needs to perform its tasks and cannot be used even in a different organizational unit. Unnecessary property may be offered for purchase or donated to good causes.

 

1.3 Inapplicability

Inapplicable is the property that for its complete wear or damage, obsolescence or apparent inefficiency in service or other serious reasons can no longer serve its purpose or is in poor condition, does not meet the technical and safety standards and the cost of repair or reconstruction exceeds the value from its use. Inapplicable property may be offered for purchase to other person, or it can be disposed as waste in accordance with applicable laws and regulations for waste disposal.

 

1.4 Basic methods of assets disposals

  • Sale – unnecessary assets can be sold.
  • Donation - unnecessary assets can be donated.
  • Physical liquidation - the property unusable can be liquidated. It is necessary to proceed in accordance with the hazardous waste law.

 

Act no. 586/1992 Coll. - Income Tax § 24

g) expenses (costs) incurred as a result proven disposal of materials, goods, work in progress, semi-finished and finished products; for drugs, medicines or food products only if the period of application of these drugs, medicines or food products has undergone and are not in accordance with special regulations. To prove the liquidation the taxpayer is obligated to prepare a report, indicating the reasons for the liquidation, the method, time and location of disposal, details of the disposal and the treatment of liquidated, and list staff responsible for carrying out the liquidation.

 

Act no. 586/1992 Coll. - Income Tax § 25

As expenses (costs) for tax purposes cannot be recognized, in particular:

...

o) the net book value §29 article. 2) tangible assets and intangible assets disposed as a result of donation or free of charge transfer, to which the taxpayer is not obligated under a special law. This also applies to tangible and intangible assets depreciated under special legislation only.