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A physical inventory count must be performed at least once a year. Closing balances outstanding on all other accounts must also be reconciled and documented (balances of receivables and payables can be agreed directly with contractors).

Summary of Slovak Accounting Principles

Slovak accounting principles are gradually converging with IFRS, although some differences remain. When valuing assets and liabilities and preparing the income statement, the following major principles apply:

assumption of the going concern basis use of accruals and matching concepts generally, prudent valuation of each asset item takes place on a cost basis

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    fixed assets are valued at acquisition cost, net of depreciation

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    raw materials and merchandise, finished products and work in progress are valued at the lower of cost or net realisable value

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    cost of inventories may be established either on a specific identification, weighted average or FIFO basis

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    certain financial investments can be valued based on the equity method

value adjustments should be made for impaired fixed assets, financial investments, obsolete and slow-moving inventory and doubtful receivables valuation of creditors and debtors at their nominal amount; if denominated in foreign currency they need to be recalculated into EUR in accordance with the exchange rate determined and announced by the European Central Bank (ECB) or the National Bank of Slovakia (NBS) on the date preceding the date of accounting transaction and on the balance sheet date. Non-current receivables should be discounted to net present value; provisions should be made for certain or probable future liabilities (being in principle an obligation resulting from past events), when the amount can be reliably estimated consistency between accounting periods. Full disclosure and retrospective correction of significant changes in accounting policies and significant errors directly through equity (insignificant items can be recognised in the current year income statement).

Compared to accounting standards commonly used elsewhere, the Slovak GAAP offers similar possibilities for creating provisions for losses and costs, as well as writing down the value of inventory or receivables. However, accruals and provisions, although justified from an economic point of view, and obligatory according to accounting standards, may not necessarily be fully tax-deductible.

Statutory rules in respect of finance leases approximate the IFRS in some common cases, however with certain basic deviations , e.g. the statutory definition of a finance lease has to have a purchase option of the underlying asset.

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©2010 KPMG Slovensko spol. s r.o. , a Slovak limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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