Changes in the financial statements for the year 2018

We have completed the end of the year 2018, which for most companies means the end of the accounting period and the closing of accounting books, including the preparation of financial statements.

Let's summarize the changes in the financial statements compared to the year 2017.

Some of them are just "cosmetic". These include:

1. Change of the name of the Asset line B. from ”Dlouhodobý majetek” to “Stálá aktiva” (in English version the name remained “Fixed assets”)
   
   
2. Change of the name of Assets line B.I.1. from “Research and Development” to “Development”.
   This change relates to the cancelation of the recognition of research results within the Intangible fixed assets. Entities will continue in amortization of existing research and then they will dispose it according to the wording of Regulation 500/2002 Coll. valid as on 31 December  2017.
   
   
3. Merging of liabilities rows A.IV.1. Accumulated profits brought forward and A.IV.2. Accumulated losses brought forward (-) into one line A.IV.1. Accumulated profits or losses brought forward (+/-)
   This change will simplify the presentation of retained earnings.

However, I would like to focus on one change in more detail. The change relates to the extension of the options for presentation of Other assets and liabilities (“Časové rozlišení aktiv a pasiv”) in the balance sheet. Up to now, there was a separate item D for Other assets and Other liabilities in the balance sheet. Newly, there is an option to choose between the existing presentation in item D and the presentation within receivables (under C.II.3. Other assets) and liabilities (under C.III, Other liabilities). It should be noted that these two methods cannot be combined, so the same methodology should be used for both assets and liabilities.

Are you wondering which methodology to choose?
It always depends on the entity's individual assessment which items prevail on accounts of other assets and other liabilities of the particular accounting entity. In a case that a major part are items which in fact have the nature of receivables and payables, it makes sense to present these items within receivables and payables. If a major part of items do not have the nature of receivables and payables, but they are supposed to split costs or revenues over several years, I recommend to keep the existing methodology of the presentation under items D. of the balance sheet.