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

Provisions against the inventory of finished products and semi-finished products are charged based on the analysis of movement, selling prices and realisability.3.2.4. ReceivablesUpon origination, receivables are stated at their nominal value as subsequently reduced by appropriate provisions for doubtful and bad amounts.ProvisioningThe Group recognises provisions against receivables, the recoverability of which is doubtful. Tax deductible provisions against receivables are made pursuantto the Income Taxes Act and the Provisioning Act. Non-tax deductible provisions (against receivables from other than Group companies) are createdas follows:(a) Receivables past due over 360 days are provisioned in full; and(b) Receivables past due over 180 days but less than 360 days are provisioned at 50 percent.In addition, provisions are recognised against specific receivables following an assessment of their collectability.The Group recognises provisions against other interest-free long-term receivables. This provisioning charge is calculated as equal to the differencebetween the nominal and the discounted value of repayments of these receivables.3.2.5. Current Financial AssetsCurrent financial assets principally consist of cash on hand and cash at bank and short-term debt securities with a maturity of less than one year and othersecurities available for sale.Current financial assets are carried at cost upon acquisition.3.2.6. 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.3.2.7. 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.3.2.8. ReservesThe Group creates other reserves to provide for future risks known at the balance sheet date. In addition, the Group records tax allowable reserves for repairsof tangible fixed assets in accordance with the Provisioning Act, and a reserve for restoration and maintenance of a dump site and clean-up after terminationof the operation of the site in accordance with Regulation of the Environmental Ministry No. 294/2005 Coll. If the reserves are not drawn withinthe statutory period, they are released.3.3. Foreign Currency TranslationTransactions 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.3.4. 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.3.5. TaxationDepreciation 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 and assets of Slévárny Třinec, a.s., which are depreciated using the straight line method.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 Groups liability for current tax is calculated using tax rates that have been enacted by the balance sheet date.78F I N A N C I A L P A R T