Abstract
The paper deals with the analysis of existing Czech accounting procedures in the case of land accounting. The method of process analysis is used, where the currently valid methodological procedures are examined. The strengths and weaknesses of this methodology are defined. It is found that the accounting and valuation of land according to Czech Accounting Standards is in conflict with the Accounting Act, according to which accounting data should provide a true picture of the status and value of the entity’s assets. The purchase price of the land is entered into bookkeeping and any decrease or increase in value is never accounted for again. In the case of forest land, the value of the land and the value of the plants grown on it are not accounted for separately. The accounting therefore does not provide users with true and current information. The good thing is that these accounting policies do not burden the accounting entity in any way. Furthermore, a proposal for new methodological procedures is presented. According to them, it would be possible to update the accounting data depending on the condition of the land and the development of market prices. Based on an expert opinion, a significant increase or decrease in the current value of the land would be accounted for. In the case of a forest, it would be possible to use analytical accounts to account separately for the condition of the land and the condition of the forest foliage. These new procedures would make it possible to reflect in bookkeeping the actual state of the entity’s assets. However, the disadvantage is the higher financial and time demand. Subsequently, the advantages and disadvantages of the currently effective and proposed methodology are compared.
Highlights
The issue of accounting for land that is not a commodity is not addressed very often in literature
It is found that the accounting and valuation of land according to Czech Accounting Standards is in conflict with the Accounting Act, according to which accounting data should provide a true picture of the status and value of the entity's assets
Accounting for land is the subject of Act No 563/1991, On Accounting, and the Czech Accounting Standard for Entrepreneurs No 013
Summary
The issue of accounting for land that is not a commodity is not addressed very often in literature. This is probably, among other things, because economic theory considers land to be a fixed factor of production that is not consumed. The author believes that this rule in some cases makes it impossible to show the actual value of land. This is, for example, a plot of land on which there is a forest. As the forest grows, so does the amount of wood and other forest functions improve The value of this land is objectively increasing. This fact will not be reflected in Czech accounting
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