In the following article, we will show you how to register an asset in the long-term intangible depreciable asset register. In ABRA Flexi, navigate to the "Assets" module.
Until the end of 2020, long-term intangible assets as defined by the Income Tax Act were assets whose acquisition cost exceeded CZK 60,000 and whose useful life was longer than one year. Typical examples of intangible assets included investments in research and development, software, or valuable rights.
As of January 1, 2021, the category of intangible assets has been abolished from the Income Tax Act, and taxpayers may now deduct expenses related to the acquisition of intangible assets gradually in the amount of their accounting depreciation. From the perspective of the Accounting Act, everything remains as it was before. However, tax depreciation of intangible assets is now derived from the Accounting Act and from the entity's internal accounting directives. An entity's internal directives specify the method by which intangible assets are depreciated, and from 2021 onwards, these depreciation charges will be tax-deductible expenses within the meaning of Section 24(2)(v). Depreciation of intangible assets may be set differently for different types of assets and cannot be interrupted.
For assets placed into use before the amendment took effect, the entity will continue to apply tax depreciation under the original wording of the Act, including any technical improvements made to such assets. The new rules for tax depreciation may be applied retroactively as early as 2020, for assets placed into use from January 1, 2020.
In Flexi, monthly tax depreciation (corresponding to accounting depreciation) is used for this purpose, with accounting depreciation disabled.
Open a new asset card by clicking the "New" button and, on the "Basic Sheet" tab, fill in the asset type and category, the acquisition cost, the method of acquisition, and optionally the acquisition document.
!!!WARNING!!! Do not fill in the purchase date, as doing so will disable the option to modify accounting depreciation generation. To process the asset card, you must first set accounting depreciation to NO on the "Depreciation" tab.
If you enter the purchase date immediately, before setting accounting depreciation generation to NO, an error message will appear and the asset card cannot be saved.
In that case, go to the "Basic Sheet" tab and change the asset type to tangible long-term, then switch it back to intangible long-term. The accounting depreciation generation will automatically be set to NO. Then confirm the notification about the change in asset parameters.
Then navigate to the "Depreciation" tab and set accounting depreciation to NO.
You can now return to the "Basic Sheet" tab and enter the purchase date without any issues.
In the next step, go to the "Depreciation" tab, where you select the depreciation method — monthly — and the depreciation group (number of depreciation months based on the asset type).
Click "Generate Depreciation" in the top right corner of the asset card. The result will be accounting and tax depreciation entries generated according to the configured parameters.
Accounting entries will simultaneously be processed in the Accounting module. You can find them under Accounting / Accounting Outputs / Accounting Journal.
As shown in the depreciation screenshots, tax depreciation has been posted for the current accounting period only. Depreciation posting for the following accounting period — for example, 2022 — is carried out using the Accounting / Initialize Next Accounting Period function. For more information on this topic, please refer to the article here.
Checking "Post asset placement" will create an entry on the "Events" tab.
More examples of asset record-keeping can be found here.