To calculate Czech tax depreciation

LN allows you to calculate the tax depreciation for Czech republic in two methods:
  • Czech Tax Straight Line Depreciation
  • Czech Tax Accelerated Depreciation

Czech Tax Straight Line Depreciation

To calculate the Czech tax straight line depreciation, this data must be defined in the Depreciation Method (tffam7110s000) session in accordance with the depreciation category of the Czech authorities:
  • The Depreciation Method field to Czech Tax Depreciation
  • The Tax Method Type field to N/A
  • The Class Life for the asset

Specify the corresponding coefficients in the Yearly Rates (tffam7165m000) session.

Depreciation formula:

current cost * (coefficient / 100)

Example

For an asset with Depreciation category 2; coefficients defined for the yearly rate in the first year is 11, in the next years is 22.25 and for technical upgrade in the next year is 20. This is the depreciation calculation:

A car is purchased and capitalized. The cost of the asset is 1,000,000 CZK.

Depreciation:

year 1: 1,000,000 * (11 / 100) = 1,10,000 CZK
next years: 1,000,000 * (22.25 / 100) = 2,22,500 CZK

In the subsequent year, the cost of the asset is increased by a technical upgrade or evaluation adjustment of 50,000 CZK. The updated depreciation for the next years:

(1,000,000 + 50,000) * (20 / 100) = 2,10,000 CZK

Czech Tax Accelerated Depreciation

To calculate the Czech tax accelerated depreciation, this data must be defined in the Depreciation Method (tffam7110s000) session in accordance with the depreciation category of the Czech authorities:
  • The Depreciation Method field to Czech Tax Depreciation
  • The Tax Method Type field to Months
  • The Class Life for the asset

Specify the corresponding coefficients in the Yearly Rates (tffam7165m000) session.

Depreciation formula:

year 1: current cost / coefficient
next years: 2 * net book value / (coefficient - number of depreciation years)
next years with technical upgrade: 
2 * net book value / (coefficient - number of depreciation years after technical upgrade)

Example

For an asset with Depreciation category 2; coefficients defined for the yearly rate in the first year is 5, in the next years is 6 and for technical upgrade in the next year is 5. This is the depreciation calculation:

A car is purchased and capitalized. The cost of the asset is 1,000,000 CZK.

First year depreciation:  1,000,000 / 5 = 2,00,000 CZK
Depreciation year 1:  2 * (1,000,000 - 2,00,000)/(6 - 1) = 3,20,000 CZK
Depreciation year 2:  2 * (1,000,000 - 2,00,000 - 3,20,000)/(6 - 2) = 2,40,000 CZK

In the subsequent year, the cost of the asset is increased by a technical upgrade or evaluation adjustment of 50,000 CZK. The updated depreciation for the next years:

Depreciation year 3:  2 * (1,000,000 + 50,000 - 2,00,000 - 3,20,000 - 2,40,000)/(5 - 0) = 1,16,000 CZK