CzeCh airlines - České aerolinie

NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 31 December 2010
annual report 2010 | 51
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
carrying value is reduced by an allowance to the recoverable value. If the impairment
of an asset is other than temporary, the asset is written off.
Intangible Fixed Assets
Intangible 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.
Intangible assets with an acquisition cost of less than CZK 5 thousand on an individual
basis are expensed in the period of acquisition.
Acquisition Cost
Purchased intangible fixed assets are stated at acquisition cost less accumulated
amortization and allowance for diminution in value.
With respect to long term projects that relate to software acquisition and bringing
the software into use, the Company capitalizes internally incurred costs linked to the
software development and bringing the software into use.
The cost of technical improvements exceeding CZK 40 thousand per asset for the
taxation period increases the acquisition cost of the related intangible fixed asset.
Amortization
Amortization of intangible fixed assets is recorded on a straight line basis over their
estimated useful lives as follows:
Number of years
Software 3–10
Licences
Over the contract term
Patents
Over the useful life
Allowance
If the carrying value of an asset is greater than its estimated recoverable value, the
carrying value is reduced through an allowance to the recoverable value. If the impairment
of an asset is other than temporary, the asset is written off.
Non-Current Financial Assets
Non-current financial assets principally consist of provided loans with maturity
exceeding one year, equity investments, securities and equity investments available
for sale.
Upon acquisition, securities and equity investments are carried at cost. The cost of
securities or equity investments includes the direct costs of acquisition, such as fees
and commissions paid to brokers, advisors and stock exchanges.
The investments in newly-established subsidiaries are carried at cost that includes
the net book value of the non-monetary investment.
At the date of acquisition of the securities and equity investments, the Company
categorizes these non-current financial assets based on their underlying characteristics
as:
▶ equity investments in subsidiaries;
▶ equity investments in associates; or
▶ securities and equity investments available for sale.
Investments in enterprises in which the Company has the power to govern the financial
and operating policies so as to obtain benefits from their operations are treated
as “Equity investment in subsidiaries”.
Securities and equity investments intended to be held for an indefinite period of
time, which may be sold in response to liquidity requirements or changes in market
conditions (for example, interest rates), are classified as available for sale. These securities
and investments are included in non-current assets unless the Management
has the express intention of holding the investment for less than 12 months from
the balance sheet date. The Management determines the appropriate classification
of securities and investments at the time of purchase.