012 - ČEZ Distribuce

ČEZ Distribuce, a. s. Notes to the Financial Statements as of December 31, 2012
2. Basis of Presentation of the Financial Statements
The accompanying financial statements were prepared in accordance with the Czech Act on Accounting and the related
guidelines as applicable for 2012 and 2011.
Explanation Added for Translation into English
These financial statements are presented on the basis of accounting principles and standards generally accepted in the Czech
Republic. Certain accounting practices applied by the Company that conform with generally accepted accounting principles
and standards in the Czech Republic may not conform with generally accepted accounting principles in other countries.
3. Summary of Significant Accounting Policies
The accounting policies applied by the Company in preparing the 2012 and 2011 financial statements are as follows:
a) Intangible Fixed Assets
Intangible fixed assets are recorded at their acquisition cost and related expenses and are amortized over their useful
economic lives (3 years to 6 years).
Since 2011, intangible fixed assets include software provided that it has been developed internally for trading purposes, or it
has been acquired from other parties, irrespective of its cost. The above also applies to software licenses, if such licenses are
not part of the valuation of the acquired software, or part of the technical improvement of the existing software.
b) Tangible Fixed Assets
Purchased tangible fixed assets with a cost exceeding CZK 20 thousand are recorded at their acquisition cost, which consists
of purchase price, freight, customs duties and other related costs. Internally-developed tangible fixed assets are recorded at
their accumulated cost, which consists of direct material, labor costs and production overheads.
Tangible fixed assets acquired free of charge are valued at their replacement cost and are recorded with a corresponding
credit to the ‘Other capital funds account’ on the date of acquisition. The costs of technical improvements are capitalized.
Repairs and maintenance expenses are expensed as incurred.
Depreciation
Depreciation is calculated based on the acquisition cost and the estimated useful life of the related asset. The useful economic
lives are as follows:
Years
Constructions 40–50
Machinery and equipment 4–30
Vehicles 4–8
Furniture and fixtures 4–25
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Acquisition costs and net book values of depreciated intangible and tangible fixed assets were revalued in an expert opinion as
at 1 January 2010. The revaluation of acquisition costs and net book value of assets was made in connection with the merger
project.
c) Financial Assets
Short-term financial assets consist of liquid valuables.
d) Inventory
Purchased inventory is stated at actual cost being determined using the weighted average method. Costs of purchased
inventory include acquisition-related costs (freight, customs, commission, etc.).
Finished goods and work-in-progress (services) are recorded at actual cost. Actual cost includes, in particular, direct external
costs of material, manufacturing costs of relaying and cost of inventory produced internally. The cost of inventory produced
internally includes direct labor costs, including overhead costs, and are allocated to work-in-progress on the basis of hours
actually worked.
e) Receivables
Both long- and short-term receivables are carried at their realizable value after allowance for doubtful accounts. Additions to the
allowance account are charged to income.
f) Equity
The basic capital of the Company is stated at the amount recorded in the Commercial Register maintained in the Registry
Court. Any increase or decrease in the basic capital made pursuant to the decision of the General Meeting which was not
entered in the Commercial Register as at the financial statements date is recorded through changes in basic capital.
Contributions in excess of basic capital are recorded as share premium. Other capital funds consist of monetary and
non-monetary contributions in excess of basic capital.