Český finanční a účetní časopis 2010(1):59-67 | DOI: 10.18267/j.cfuc.59

Negative Impact of Tax Deductable Provisions for Repair of Long-term Tangible Assets on True and Fair View of the Financial Statements

Marie Zelenková
Ing. Marie Zelenková, Ph.D. - odborná asistentka; Katedra finančního účetnictví a auditingu, Fakulta financí a účetnictví, Vysoká škola ekonomická v Praze, nám. W. Churchilla 4, 130 67 Praha 3, Česká republika; <zelenm@vse.cz>.

In the Czech Republic it is allowed to create a provision for the repair of the long-term tangible assets. In consequence of this creation the supposed expenses for the repair of the long-term tangible assets will reflect in the decrease of the net income before the repair is executed. The scheduled repair will not even be carried out most of the times but none the less the net income of the past years was influenced (reduced). The legislative imbedding of the creation of the repair of the long-term tangible assets in the provision tax law and the cross-reference of the income-tax law to this law because of the tax deductable expenses affects the predicative ability of the financial statements in a negative way; in particular by the act of reducing the tax from profit (or at least putting off a part or whole tax duty) and creation of this provision on the part of the companies.

Keywords: Tax from profit; Depreciation; Provisions; Financial statements; Profit or loss; Changes in tax laws.
JEL classification: M41

Published: March 1, 2010  Show citation

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Zelenková, M. (2010). Negative Impact of Tax Deductable Provisions for Repair of Long-term Tangible Assets on True and Fair View of the Financial Statements. Czech Financial and Accounting Journal, 2010(1), 59-67. doi: 10.18267/j.cfuc.59
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