CzeCh airlines - České aerolinie

Notes to the Consolidated Financial Statements
For the Year ended 31 December 2010
annual report 2010 | 101
the financial and operating policies so as to obtain benefits from their operations are
treated as ‘Equity investments in subsidiaries’.
For consolidation purposes, a subsidiary is a Company where the Parent Company
has a controlling influence through the ownership of more than 50 percent of shares/
share capital interests.
These companies are consolidated using the full consolidation method.
When the full consolidation method is used, mutual transactions between the Parent
Company and subsidiaries and between subsidiaries themselves are eliminated. The
elimination of mutual transactions that influence the profit or loss is carried out in
accordance with the stated consolidation rules.
Tangible Fixed Assets
Tangible fixed assets include assets with an estimated useful life greater than one year
and an acquisition cost greater than CZK 5 thousand on an individual basis.
Tangible assets with an acquisition cost less than CZK 5 thousand on an individual
basis are expensed upon acquisition.
Acquisition Cost
Purchased tangible fixed assets are stated at acquisition cost less accumulated
depreciation and allowances for diminution in value. The acquisition cost includes the
purchase cost and costs attributable to the acquisition.
Tangible fixed assets developed internally are valued at direct costs, which include direct
material and payroll costs and incidental costs directly attributable to the internal
production of assets (production overheads).
The following tangible fixed assets are stated at replacement cost: tangible fixed assets
acquired without consideration on the basis of a contract to purchase a leased asset
(finance lease) and tangible fixed assets recently identified and recognized (accounted
for by a corresponding entry in the relevant accumulated depreciation account). The
replacement cost of tangible fixed assets is determined by reference to the normal
market price effective at the time that these assets are acquired/identified.
The cost of a technical improvement exceeding CZK 40 thousand per asset for the
taxation period increases the acquisition cost of the related tangible fixed asset.
Depreciation
Depreciation is charged with respect to tangible fixed assets, other than land and
assets under construction, over their estimated useful lives, using the straight line
method, on the following basis:
Number of years
Buildings 30–50
Computer equipment with an acquisition cost
above CZK 40 thousand
4
Computer equipment with an acquisition cost
between CZK 5 thousand to CZK 40 thousand
3
Radio and communication equipment and
systems
4
Vehicles - other than aircraft 4
Vehicles - newly purchased aircraft
Airbus A320/A319/A310, Boeing B737 20
ATR 18
Rotables
Over the expected useful life
of the relevant aircraft
Technical improvements of assets held under
operating leases
Over the term of the operating lease
Furniture and fixtures 8 or 15
Other tangible fixed assets with an acquisition
cost between CZK 5 thousand to
2
CZK 40 thousand
Rotables are depreciated to the expected residual value of 10% of cost.
Assets held under finance leases are depreciated by the lessor. Following the expiration
of finance leases, aircraft acquired under finance leases are depreciated over
their remaining estimated useful lives.
Retirement of Assets
The gain or loss arising from the disposal or retirement of an asset is determined as
the difference between the sales proceeds and the net book value of the asset at the
sale date and is recognized in the profit and loss account.
Allowances
If the carrying value of an asset is greater than its estimated recoverable value, the