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Prepayments for Purchase of Property, Plant and Equipment
[Zálohy na pořízení dlouhodobého majetku v cizí měně]

Author

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  • Libor Vašek

Abstract

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.

Suggested Citation

  • Libor Vašek, 2007. "Prepayments for Purchase of Property, Plant and Equipment [Zálohy na pořízení dlouhodobého majetku v cizí měně]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2007(3), pages 21-26.
    • Handle: RePEc:prg:jnlcfu:v:2007:y:2007:i:3:id:229:p:21-26
    DOI: 10.18267/j.cfuc.229
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    More about this item

    Keywords

    Foreign currency; Property; plant and equipment; International Financial Reporting Standards; Czech Accounting Standards; Cizí měna; Dlouhodobý majetek; Mezinárodní standardy účetního výkaznictví; České účetní standardy;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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