TŽ Annual Report 2008 in pdf, 7.5 MB - Třinecké železárny

3.5. ReceivablesUpon origination, receivables are stated at their nominal value as subsequently reduced by appropriate provisions for doubtful and bad amounts.ProvisioningThe Company recognises provisions against receivables, the recoverability of which is doubtful. Tax deductible provisions against receivables are madepursuant to the Income Taxes Act and the Provisioning Act.Non-tax deductible provisions (other than intercompany) are created as follows:a) Receivables past due over 360 days are provisioned in full; andb) Receivables past due over 180 days but less than 360 days are provisioned at 50 percent.In addition, the Company recognised provisions against specific receivables following an assessment of their collectability.The Company creates provisions against interest-free long-term receivables. This provisioning charge is calculated as equal to the difference betweenthe nominal value and the discounted value of these receivables.3.6. PayablesTrade payables are stated at their nominal value. Long-term bills of exchange to be settled are recorded at nominal value. Interest on these bills is accruedover their maturity period.3.7. Loans and BorrowingsValuationLoans are reported at nominal value. The portion of long-term loans maturing within one year from the balance sheet date and revolving loans which areregularly rolled over to the following period are included in short-term loans.3.8. ReservesThe Company creates other reserves to provide for future risks known at the balance sheet date. In addition, the Company records tax allowable reservesfor repairs of tangible fixed assets in accordance with the Provisioning Act, and a reserve for restoration and maintenance of a dump site and clean-up aftertermination of the operation of the site in accordance with Regulation of the Environmental Ministry No. 294/2005 Coll. If the reserves are not drawnwithin the statutory period, they are released.3.9. Foreign Currency TranslationsTransactions in foreign currencies conducted during the year are translated using the exchange rate of the Czech National Bank prevailing on the datepreceding the transaction date.Financial assets denominated in foreign currencies (foreign currency cash) are translated into Czech crowns using the fixed monthly exchange rate asnotified by the Czech National Bank as of the first day of the month in which they were recorded.At the balance sheet date, the relevant assets and liabilities are translated at the Czech National Banks exchange rate prevailing as of that date.3.10. Finance LeasesA finance lease is the acquisition of a tangible fixed asset such that, over or after the contractual lease term, ownership title to the asset transfers from thelessor to the lessee; pending the transfer of title, the lessee makes lease payments to the lessor for the asset that are charged to expenses.The initial lump-sum payment related to assets acquired under finance leases are amortised and expensed over the lease period.3.11. Taxation3.11.1. Depreciation of Fixed Assets for Tax PurposesDepreciation of fixed assets is recorded on an accelerated basis for tax purposes under Section 32 of Act No. 586/92 Coll., with the exception of assets usedin the Univerzální trať Bohumín plant which are depreciated using the straight line method.3.11.2. Current Tax PayableThe tax currently payable is based on taxable profit for the reporting period. Taxable profit differs from net profit as reported in the profit and loss accountbecause it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible.The Companys liability for current tax is calculated using the tax rate that has been enacted by the balance sheet date.3.11.3. Deferred TaxDeferred tax is accounted for using the balance sheet liability method.Under the liability method, deferred tax is calculated at the income tax rate that is expected to apply in the period when the tax liability is settled.The balance sheet liability method focuses on temporary differences which are differences between the tax base of an asset or liability and its carryingamount in the balance sheet. The tax base of an asset or liability is the amount that will be deductible for tax purposes in the future.Deferred tax is charged or credited to the profit and loss account, except when it relates to items charged or credited directly to equity, in which casethe deferred tax is also dealt with in equity.A N N U A L R E P O R T T Ř I N E C K É Ž E L E Z Á R N Y , a . s . 2 0 0 841