Výroční zpráva\Annual Report - CETELEM ČR, as

Notes to 2006 Financial Statements
b) Valuation method
The accounting unit values receivables and liabilities at nominal value.
c) Method of creating provisions for receivables
I. Accounting provisions
The Company created provisions for trading receivables to cover losses from bad debt. To determine the probability of a loss
and the appropriate amount of the provision, the Company uses a statistical model analyzing the portfolio of receivables and
historical data.
II. Statutory provisions
Pursuant to Act No. 593/1992 Coll., on allowances, as amended, since 2004, non-banking entities are also allowed to create
provisions provided they fulfil certain conditions. Such provisions are deemed income tax-reducing costs.
5.2.5 Credits
Credits are posted at their nominal value. Long-term credits that are payable within one year from the date of Financial Statements
and passive balance of bank accounts are considered short-term credits.
5.2.6 Reserves
The Company does not pursue activities that would entitle it to the creation of reserves pursuant to special legal regulations. In
2006, the accounting unit created accounting reserves for potential Company’s liabilities due to the lease agreement and liabilities
due to reimbursement of costs related to vain enforcement of debts via execution.
5.2.7 Translation of foreign currency figures into Czech currency
The accounting unit carries accounting transactions in foreign currencies based on generally applicable procedures. During the
accounting period, the translation of figures in foreign currencies was based on the fixed rate stipulated pursuant to internal policy
based on rates published by the Czech National Bank. The accounting unit uses fixed exchange rates determined at the beginning
of the accounting period for accounting of foreign exchange cash transactions.
Banking transactions and foreign exchange purchases are carried to account using daily exchange rates of the relevant financial
institutions.
Assets, liabilities, and receivables in foreign currencies are translated upon account closing using the applicable CNB rate published
for the relevant day. The accounting unit has carried any determined rate differences on financial cost accounts or financial
revenue accounts as at the closing date.
VÝROČNÍ ZPRÁVA\ANNUAL REPORT 2006 65