Český finanční a účetní časopis 2007(3):21-26 | DOI: 10.18267/j.cfuc.229

Prepayments for Purchase of Property, Plant and Equipment

Libor Vašek
Ing. Libor Vašek - odborný asistent; Katedra finančního účetnictví a auditingu, Fakulta financí a účetnictví, Vysoká škola ekonomická v Praze, nám. W. Churchilla 4, 130 67 Praha 3; <vasek@vse.cz>.

The article provides an illustrative example whose aim is to show an accounting treatment for a purchase of property, plant and equipment when the purchase price is denominated in foreign currency and prepayments are provided by entity. The following question arises in connection with that transaction: Shall be the prepayments denominated in foreign currency translated at balance sheet date using closing rate or not? The solution results from IAS 21 where the requirement to translate non-monetary items (including property, plant and equipment) using historical rate is included. This policy leads to different results than Czech accounting standards.

Keywords: Foreign currency; Property, plant and equipment; International Financial Reporting Standards; Czech Accounting Standards.
JEL classification: M41

Published: October 1, 2007  Show citation

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Vašek, L. (2007). Prepayments for Purchase of Property, Plant and Equipment. Czech Financial and Accounting Journal, 2007(3), 21-26. doi: 10.18267/j.cfuc.229
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    References

    1. IASB (2005a): IAS 21 The Effects of Changes in Foreign Exchange Rates. Londýn, IASB, 2005.
    2. IASB (2005b): Mezinárodní standardy účetního výkaznictví včetně Mezinárodních účetních standardů a Interpretací. Praha, Svaz účetních, 2005.

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