MINISTRY
OF FINANCE
-------- |
SOCIALIST
REPUBLIC OF VIETNAM
Independence - Freedom - Happiness --------------- |
No.
200/2014/TT-BTC
|
Hanoi,
December 22, 2014
|
CIRCULAR
ON GUIDELINES FOR ACCOUNTING POLICIES FOR ENTERPRISES
Pursuant
to the Law on Accounting dated June 17, 2003;
Pursuant
to the Decree No. 129/2004/NĐ-CP dated May 31, 2004 of the Government on
guidelines for the Law on Accounting in the business operation.;
Pursuant
to the Government's Decree No. 215/2013/NĐ-CP dated December 23, 2013 defining
the functions, tasks, entitlements and organizational structure of the Ministry
of Finance;
At
the request of Director of the Department of Audit and Accounting Regulation,
The
Minister of Finance issues a Circular on guidelines for accounting policies for
enterprises.
Chapter
I
GENERAL PROVISIONS
Article
1. Regulated entities
This
Circular promulgates accounting policies applying to enterprises in every
business lines and every economic sector. Small and medium-sized
enterprises applying the accounting policies for small and medium-sized
enterprises may apply regulations in this Circular for accounting.
Article
2. Scope
This
Circular promulgates bookkeeping, preparation and presentation of financial
statements, not applying to determination of tax liabilities of enterprises to
government budget.
Article
3. Monetary unit in accounting
“Monetary
unit in accounting” means Vietnamese dong (national sign: “đ”; international
sign: “VND”) used for bookkeeping, preparation and presentation of financial
statements of enterprises. If an accounting unit that mainly receives revenues
and pays expenses in foreign currencies, provided that it conforms to standards
prescribed in Article 4 of this Circular may choose a type of foreign
currencies as a monetary unit for bookkeeping.
Article
4. Selection of monetary unit in accounting
1. Any
enterprise that mainly receive revenues and pays expenses in foreign currencies
shall base on regulations of the Law on accounting for consideration of
selection of monetary unit in accounting and take legal responsibility. When
selecting the monetary unit in accounting, the enterprise must notify
supervisory tax authority.
2. The
monetary unit in accounting means a monetary unit meeting requirements below:
a) It is
mainly used in sales, provisions of services of the enterprise, which have
great impact on selling prices and service fees and it is normally used as
posting prices and used for payments; and
b) It is
mainly used in purchases of goods or services, which have great impact on labor
costs, materials costs and other production costs or operating costs and it is
normally used for payments of that costs.
3. The
following factors may also be considered as evidence of monetary unit in
accounting of the enterprise:
a) The
monetary unit used in mobilization of financial resources (such as issuance of
shares or bonds);
b) The
monetary unit which is regularly collected from business operation and
accumulated.
4. The
monetary unit in accounting reflects transactions, events, condition pertaining
to the operation of the enterprise. After choosing the certain monetary unit in
accounting, the enterprise shall not change it unless there are major changes
in the transactions, events or condition.
Article
5. Conversion of financial statements made in foreign currency into Vietnamese
dong
1. If an
enterprise uses a foreign currency as monetary unit in accounting, it must not
only prepare a financial statement in foreign currency but also converse their
financial statement into Vietnamese dong when announcing and submitting the
financial statement to regulatory authorities.
2. Rules
for conversion of financial statements made in foreign currency into Vietnamese
dong, comparison information between them shall be reported in accordance with
Chapter III of this Circular.
3. When
converting the financial statement made in foreign currency into Vietnamese
dong, the enterprise must clarify the impact (if any) on the financial
statement due to the conversion in the Description of financial statement.
Article
6. Audit of financial statements using foreign currency as monetary unit in
accounting
The
lawful financial statement used to announce and submit to Vietnamese competent
agencies is a financial statement made in Vietnamese dong and audited.
Article
7. Changes in monetary unit in accounting
If there
are major changes in managerial and business operations leading to the monetary
unit in accounting used in economic transactions failing to satisfy the
requirements specified in Clause 2 and 3 of Article 4 of this Circular,
enterprises may change their monetary units in accounting. The change of a
monetary unit for bookkeeping to another may be effected only at the beginning
of a new fiscal year. The enterprise must notify supervisory tax
authority of the change in monetary unit in accounting within 10 working days
after the final day of the fiscal year.
Article
8. Rights and obligations of enterprises pertaining to organization of
accounting in dependent accounting units having no legal status (hereinafter
referred to as dependent accounting unit)
1.
Enterprises must organize their accounting structures and accounting task
delegation of dependent accounting unit in conformity with their operation and
management requirements and not contrary to regulations of law.
2. The
following accounts shall be kept records by dependent accounting units having
accounting divisions according to the decision issued by the enterprise:
a)
Operating capital granted by the enterprise: the operating capital shall be
recorded to liabilities or owner's equity according to the decision of the
enterprise;
b)
Transactions in sale, purchase or circulation of goods or services
intra-company: revenues or costs of goods sold only are separately recorded in
every dependent accounting unit if such circulation creates added value in the
goods or services. The recording of revenues from internal transactions to the
financial statement does not depend on the format of accounting records
(invoices or internal transaction documents);
c) Task
delegation: Depending on centralized or decentralized accounting model, the
dependent accounting units may record undistributed post-tax profit or record
revenues and expenses.
Article
9. Registration for amendments to Accounting policies
1. Chart
of accounts
a)
According to chart of accounts of accounting policies for enterprises issued
together with this Circular, the enterprise shall apply and detail chart of
accounts in conformity with requirements pertaining business and management of
every business line and unit, provided that it conforms to content, structure
and method of accounting of equivalent ledger accounts.
b) If
the enterprise need to add accounts or sub-accounts or modify accounts or
sub-accounts about names, signs, content and accounting methods, the approval
issued by the Ministry of Finance before the supplement or modification is
required.
c) The
enterprise may open sub-accounts or sub-sub accounts if the Chart of accounts
prescribed in Appendix 1 of this Circular does not regulate such accounts
without the approval of the Ministry of Finance.
2.
Financial statements
a)
According to forms and contents of items of the financial statement prescribed
in Appendix 2 of this Circular, the enterprise shall detail the items
(available) of the financial statement system in conformity with operation and
management of every business line and unit.
b) If
the enterprise need to add or modify names, signs, content of items of the
financial statement, the approval issued by the Ministry of Finance before the supplement
or modification is required.
3.
Accounting documents and accounting records
a) All
accounting documents are optional, enterprise may use forms issued together
with Appendix No. 3 of this Circular or design their forms in conformity with
their operation and management provided that their forms satisfy all
requirements as prescribed in the Law on Accounting and their amended
documents.
b) All
forms of accounting records (including Ledgers or Journals) are optional. The
enterprise may apply the forms as prescribed in Appendix No. 4 of this Circular
or amendments to forms or accounting cards in conformity with their operation
and management provided that they are sufficient, clear and easy to control.
Article
10. Accounting policies applying to foreign contractors
1.
Foreign contractors having permanent resident facilities in Vietnam which are
not an independent unit having legal status shall carry out accounting policies
in Vietnam as follows:
a) There
are particular contractors eligible for particular accounting policy issued by
the Ministry of Finance;
b)
Contractors not eligible for particular accounting policy issued by the
Ministry of Finance may whether fully and partly apply Accounting policies for
Vietnamese enterprises in conformity with their operation and management.
c) If
the contractor applies Accounting policies for Vietnamese companies fully, it
is required to apply during the fiscal year.
d) The
contractor must notify the tax authority of the accounting policy applied
within 90 days from the date on which it runs business in Vietnam. If there is
any change in applying of accounting policy, the contractor must notify the tax
authority within 15 working days from the date on which the change occurs.
2.
Foreign contractor must keep records of every contract license, every
transaction in details to settle contract and make tax declaration.
3. If a
foreign contractor who applies fully Accounting policies for Vietnamese
companies wishes to supplement or modify the policies, it is required to comply
with Article 9 of this Circular and obtain approval issued by the Ministry of
Finance. Within 15 working days from the date on which the sufficient documents
are received, the Ministry of Finance must send response on registration of
amendments of accounting policies to the foreign contractor.
Chapter
II
CHART OF ACCOUNTS
Article
11. Rules for cash accounting
1. The
accountant must keep records of revenues, expenses, dispatching or receiving of
cash funds or foreign currencies in the Journals and then calculate the fund
balance and every account in the bank at all times for verification.
2.
Deposits made by other enterprises or individuals in the enterprise shall be
managed and recorded similarly to money of the enterprise.
3. When
obtaining revenues or paying for expenses, the receipt or payment slips with
sufficient signatures are required as prescribed in regulations on accounting
source documents.
4. The
accountant must keep records of cash according to currency in details when
generating transactions in foreign currencies, the foreign currencies shall be
converted into VND following rules below:
- Debit
accounts shall apply actual exchange rates;
- Credit
accounts shall apply weight average bookkeeping rates;
5. When
preparing financial statements as prescribed, the enterprise must re-evaluate
balance of foreign currencies and monetary gold according to actual exchange
rates.
Article
12. Account 111 – Cash on hand
1.
Rules for accounting
a) This
account is used to record revenues, expenses and balance of the enterprise’s
fund, including: Vietnamese dong, foreign currencies and monetary gold. Only
received, dispatched or inventoried cash, foreign currencies, monetary gold
shall be recorded to account 111 “Cash”. If the receipts are transferred immediately
to bank (not through enterprise ‘cash fund), these amounts shall not be
recorded to Dr 111 “cash”, but recorded to Dr 113 “cash in transit”.
b) Cash
deposits made by other enterprises and individuals shall be managed and
recorded similarly to monetary assets of the enterprise.
c) When
receiving or dispatching cash fund, receipt slips, payment slips with
signatures of payees and payers, competent persons are required in accordance
with accounting source document. Deposit order and payment order must be
attached in special cases.
d) The
accountant of cash fund must write a Cash daybook and record all day-to-day
financial transactions: revenues, expenses, dispatch or receiving of cash
funds, foreign currencies and then calculate the fund balance at all times.
dd) The
cashier shall be responsible for management, receiving and dispatch of the cash
fund. The cashier must verify the actual cash balance, then collate the figures
between cash fund book and cash ledger every day. If there is any difference,
the accountant and the cashier must verify them again in order to uncover
reasons and propose solutions for the differences.
e) When
entering into transactions in foreign currencies, the accountant shall convert
the foreign currencies into VND according to the following rules:
-
Actual exchange rate shall be applied to Dr 1112. If the foreign currencies are
withdrawn from banks to pay in the cash fund, the bookkeeping rate of account
1122 shall be applied;
-
Weighted average rate shall be applied to Cr 1112
The
actual exchange rate shall be determined as prescribed in guidelines for
account 413 - Differences between exchange rates and relevant accounts.
g)
Monetary gold recorded in this account is gold used for value storage, not
including the gold recorded to inventory account and used as raw materials for
production of goods for sale. The management and use of monetary gold shall
comply with regulations of law in force.
h)
Whenever preparing financial statements as prescribed, the enterprise must
re-evaluate the balance of foreign currencies and monetary gold following the
rules below:
-
The actual exchange rate applied in the re-evaluation of the balance of foreign
currencies in cash is the foreign currency-selling rate of the commercial bank
where the enterprise regularly enters into transactions (chosen by the
enterprise) at the time in which the financial statement is prepared.
- The
monetary gold shall be re-evaluated according to the buying prices on the
domestic market at the time in which the financial statement is prepared. The
buying prices on the domestic market are prices announced by the State bank. In
case the State bank fails to announce gold buying-prices, the buying-prices
announced by enterprise entitled to trade in gold as prescribed shall be
chosen.
2.
STRUCTURE AND CONTENTS OF ACCOUNT 111 – CASH
Debit:
-
Received cash, foreign currency or monetary gold;
- Cash,
foreign currency or monetary gold in excess detected under verification;
-
Exchange differences due to re-evaluation of foreign currency balance at the
reporting time (if foreign currency rate rises against VND);
-
Differences due to re-evaluation of monetary gold at the reporting time.
Credit:
-
Dispatched cash, foreign currency or monetary gold;
- Cash,
foreign currency or monetary gold in deficit detected under verification;
-
Exchange rate differences due to re-evaluation of foreign currency balance at
the reporting time (if foreign currency rate falls against VND);
-
Differences due to re-evaluation of monetary gold at the reporting time.
Debit
balance:
Inventoried
cash, foreign currency or monetary gold at the reporting time;
Account
111 – Cash, comprises 3 sub-accounts:
-
Account 1111 – VND: reflecting revenues, expenses, balance in VND of the cash
fund.
-
Account 1112 – Foreign currencies: reflecting revenues, expenses, exchange rate
differences and foreign currency balance of cash fund which is converted into
VND.
-
Account 1113 – Monetary gold reflecting the fluctuation and value of monetary
gold of the enterprise’s fund.
3. Method
of accounting for several major transactions
3.1.
When selling products, goods or providing services for immediate cash, the
following accounts shall be recorded:
a) With
regard to products, goods, investment property subject to VAT, special excise duty,
import duty, environmental protection tax, revenues according to the
tax-exclusive selling prices shall be recorded as follows (indirect taxes
payable must be separated, including VAT payable using subtraction method:
Dr 111 –
Cash (total payment)
Cr 511 –
Revenues (tax-exclusive prices)
Cr 333 –
Taxes and other payables to the State.
b) In
case it fails to separate the taxes payable, the taxes payable must be included
in the revenues. Tax liabilities and the decrease in revenues shall be
recorded as follows:
Dr 511 –
Revenues
Cr 333 –
Taxes and other payables to the State.
3.2 When
receiving payments of allowance or subsidy in cash from government budget, the
following accounts shall be recorded:
Dr 111 -
Cash
Cr 333 –
Taxes and other payables to the State (3339).
3.3.
When generating financial income or other incomes in cash, the following
accounts shall be recorded:
Dr 111 –
Cash (total payment)
Cr 515 –
Financial income (prices excluding VAT)
Cr 711 –
Other incomes (prices excluding VAT)
Cr 3331 –
VAT payable (33311).
3.4.
When withdrawing cash in bank to pay in cash fund; applying for long-term or
short-term loans in cash (VND or foreign currency according to actual exchange
rates), the following accounts shall be recorded:
Dr 111 –
Cash (1111, 1112)
Cr 112 –
Cash in bank (1121, 1122)
Cr 341 -
Financial loan and financial lease liabilities (3411).
3.5.
When recovering amounts receivables, granting loans, making deposits in cash;
receiving deposits in cash from other enterprises, the following accounts shall
be recorded:
Dr 111 –
Cash (1111, 1112)
Cr 128,
131, 136, 138, 141, 244, 344.
3.6.
When selling short-term or long-term investment and collect cash, the
accountant shall record the difference between collected amount of money and
cost price of investment (according to weighted average method) to financial
income or financial expenses, the following accounts shall be recorded:
Dr 111 –
Cash (1111, 1112)
Dr 635 -
Financial expenses
Cr 121 –
Trading securities (cost price)
Cr 221,
222, 228 (cost price)
Cr 515 –
Financial income.
3.7.
When receiving stakes in cash of owners, the following accounts shall be
recorded:
Dr 111 -
Cash
Cr 411 –
Owner's invested equity.
3.8.
When receiving money of contracting parties of Business Cooperation Contract
(BCC) without establishment of legal entity to cover general operation, the
following accounts shall be recorded:
Dr 111 -
Cash
Cr 338 -
Other payables.
3.9.
When dispatching cash fund then crediting to bank’s accounts or depositing, the
following accounts shall be recorded:
Dr 112 –
Cash in bank
Dr 244 –
Pledge, mortgage or deposit
Cr 111 –
Cash.
3.10.
When dispatching cash fund to buy securities, granting loans or investing in
subsidiary companies or joint-venture companies, the following accounts shall
be recorded:
Dr 121,
128, 221, 222, 228
Cr 111 –
Cash.
3.11.
When dispatching cash fund to buy inventory (using regularly declared method),
buying fixed assets, spending on capital investment, the following accounts
shall be recorded:
- If
input VAT is eligible for deduction, the buying price excluding VAT shall be
recorded as follows:
Dr 151,
152, 153, 156, 157, 211, 213, 241
Dr 133 –
Deductible VAT (1331)
Cr 111 –
Cash.
- If
input VAT is not eligible for deduction, the buying price including VAT shall
be recorded as follow:
3.12.
When dispatching cash fund to buy inventory (using periodically declared
method), if input VAT is eligible for deduction, the following accounts shall
be recorded:
Dr 611 –
Good purchase (6111, 6112)
Dr 133 –
Deductible VAT (1331)
Cr 111 –
Cash.
If input
VAT is not eligible for deduction, the buying price including VAT shall be
recorded as follows:
3.13.
When buying raw materials immediately used in business in cash, if input VAT is
eligible for deduction, the following accounts shall be recorded:
Dr 621,
623, 627, 641, 642, etc.
Dr 133 –
Deductible VAT (1331)
Cr 111 –
Cash.
If input
VAT is not eligible for deduction, the costs including VAT shall be recorded.
3.14.
When dispatching cash fund to pay amounts payable, the following accounts shall
be recorded:
Dr 331,
333, 334, 335, 336, 338, 341
Cr 111 –
Cash.
3.15.
When dispatching cash fund for financial activities or other activities, the
following accounts shall be recorded:
Dr 635,
811, etc.
Dr 133 –
Deductible VAT (if any)
Cr 111 –
Cash.
3.16. If
the cash deficit is detected under verification without reasons, the following
accounts shall be recorded:
Dr 138 –
Other receivables (1381)
Cr 111 –
Cash.
3.17. If
the cash excess is detected under verification without reasons, the following
accounts shall be recorded:
Dr 111 -
Cash
Cr 338 -
Other payables (3381).
3.18.
Accounting contract of resale of Government bonds: in accordance with Account
171 – Trading in Government bonds.
3.19.
Foreign currency related-transactions in cash.
a) When
buying goods or services in foreign currencies in cash.
- If
losses on exchange rates are generated, the following accounts shall be
recorded:
Dr
151,152,153,156,157,211,213,241, 623, 627, 641, 642, 133, etc. (according to
actual exchange rates on the transaction date)
Dr 635 -
Financial expenses (losses on exchange rates)
Cr 111
(1112) (according to bookkeeping rates).
- If
profits on exchange rates are generated, the following accounts shall be
recorded: 0}
Dr
151,152,153,156,157,211,213,241, 623, 627, 641, 642, 133, etc. (according to
actual exchange rates on the transaction date)
Cr 111
(1112) (according to bookkeeping rates).
Cr 515 –
Financial income (profits on exchange rates).
b) When
paying debts payable in foreign currencies:
- If
losses on exchange rates are generated, the following accounts shall be
recorded:
Dr 331,
335, 336, 338, 341, etc. (according to bookkeeping rates).
Dr 635 -
Financial expenses (loss of exchange rate)
Cr 111
(1112) (according to bookkeeping rates).
- If
profits on exchange rates are generated, the following accounts shall be
recorded:
Dr 331,
336, 341, etc. (according to bookkeeping rates).
Cr 515 –
Financial income (profits on exchange rates).
Cr 111
(1112) (according to bookkeeping rates).
- When
paying advances in foreign currencies to sellers, the Debit account – Trade
payables shall apply actual exchange rates at the prepayment time, the
following accounts shall be recorded:
Dr 331 –
Trade payables (actual exchange rates)
Dr 635 -
Financial expenses (losses on exchange rates)
Cr 111
(1112) (according to bookkeeping rates).
Cr 515 –
Financial income (profits on exchange rates).
c) When
generating revenues or other incomes in foreign currencies in cash, the
following accounts shall be recorded:
Dr 111
(1112) (actual exchange rates)
Cr 511,
515, 711, etc. (actual exchange rates).
d) When
collecting debts receivables in foreign currencies:
- If
losses on exchange rates are generated, the following accounts shall be
recorded:
Dr 111
(1112) (according to actual exchange rates on the transaction dates)
Dr 635 -
Financial expenses (losses on exchange rates)
Cr 131,
136, 138, etc. (according to bookkeeping rates).
- If
profits on exchange rates are generated, the following accounts shall be
recorded:
Dr 111
(1112) (according to actual exchange rates on the transaction dates)
Cr 515 –
Financial income (profits on exchange rates).
Cr 131,
136, 138, etc. (according to bookkeeping rates).
- When
paying advances in foreign currency to sellers, the Credit account – Trade
receivables shall apply actual exchange rates at the pre-receipt time, the
following accounts shall be recorded:
Dr 111
(1112) (actual exchange rates at the pre-receipt time)
Cr 111
(1112) (actual exchange rates at the pre-receipt time)
3.20.
The actual exchange rates (selling rates of banks) shall be used to re-evaluate
foreign currencies in cash at the time in which the financial statements are
prepared:
- If the
foreign currency rate rises against VND, the profits on exchange rate shall be
recorded as follows:
Dr 111
(1112)
Cr 413 -
Exchange differences (4131).
- If the
foreign currency rate falls against VND, the losses on exchange rates shall be
recorded as follows:
Dr 413 -
Exchange differences (4131)
Cr 111
(1112).
- After
balancing profits or losses on exchange rates generating due to
re-verification, the differences in profits or losses shall be transferred to
financial income (if profits are larger than losses) or to financial expenses
(if profits are smaller than losses).
3.21.
Re-evaluation of monetary gold
- If re-evaluated
value of monetary gold generates profits, financial income shall be recorded as
follows:
Dr 1113
– Monetary gold (according to domestic buying prices)
Cr 515 –
Financial income.
- If
re-evaluated value of monetary gold generates losses, financial income shall be
recorded as follows:
Dr 635 -
Financial expenses
Cr 1113
– Monetary gold (according to domestic buying prices)
Article
13. Account 112 – Cash in bank
1.
Rules for accounting
This
account shall be used to record current amounts and increases and decreases in
demand deposits of the enterprise in a bank. Credit notes, debit notes or bank
statements enclosed with original documents (payment order, collection order,
depository transfer check, certified check, etc) shall be recorded to Account
112 "Cash in bank".
a) When
receiving documents sent from the bank, the accountant must collate them with
enclosed original documents. If there is any difference between figures in
enterprise's ledger, in original documents and in the bank’s documents, the
enterprise must notify the bank to collate, verify and promptly handle. At the
end of the month, if it fails to uncover the reasons for differences, the
accountant shall record according to the bank's figures stated in debit notes,
credit notes or bank's statements. The difference (if any) shall be recorded to
Dr 138 “Other receivables” (1388) (if the accountant’s figures are larger than
the bank’s figures) or recorded to Cr 338 “Other payables” (3388) (if the
accountant's figures are smaller than the bank’s figures). In the following
month, the reasons shall be kept collating, verifying and uncovering to adjust
the figures.
b) With
regard to enterprises having dependent accounting organizations or departments,
they may open collection-only accounts, payment-only accounts or appropriate
payment accounts serving the transactions or payments. The accountant must keep
records of every type of deposits in details (VND, foreign currencies).
c) It is
required to record particularly the deposits conformable to every account in
bank for verification and collation.
d) The
bank overdrafts are not recorded as “-“(negative sign) on bank deposit
accounts, they shall be recorded similarly to bank loans.
dd) When
entering into transactions in foreign currencies, foreign currencies shall be
converted into VND according to the following rules:
- Dr
1122 applies actual exchange rate. If the cash fund is withdrawn to send to
banks, they must be converted into VND according to bookkeeping rates of
account 1112.
- Cr
1122 applies weighted average rates.
The
actual exchange rate shall be determined as prescribed in guidelines for
account 413 - Differentials between exchange rates and relevant accounts.
e)
Monetary gold recorded in this account is the gold used for value storage, not
including the gold recorded to inventory account used as raw materials for
production of goods for sale. The management and use of monetary gold shall
comply with regulations of law in force.
g)
Whenever preparing financial statements as prescribed, the enterprise must
re-evaluate the balance of foreign currency and monetary gold following the
rules below:
- The
actual exchange rates applied when re-evaluating the balance of cash in bank in
foreign currency is the foreign currency-buying rate of the commercial bank
where the enterprise opens foreign currency account at the time in
which the financial statement is prepared. In case the enterprise has multiple
foreign currency accounts in different banks and their buying rates are not
considerately different, a buying rate of any bank may be chosen as the basis
for re-valuation.
- The
monetary gold shall be re-evaluated according to the buying prices on the
domestic market at the time in which the financial statement is prepared. The
prices on the domestic market are prices announced by the State bank. In case
the State bank fails to announce gold buying-prices, the buying-prices
announced by enterprise entitled to trade in gold as prescribed.
2.
Structure and contents of account 112 – Cash in bank
Debit:
-
Deposited VND, foreign currencies or monetary gold;
-
Exchange rate differences due to re-evaluation of foreign currency balance at
the reporting time (if foreign currency rate rises against VND).
-
Positive differences due to re-evaluation of monetary gold at the reporting
time.
Credit:
-
Withdrawn VND, foreign currencies or monetary gold;
-
Exchange rate differences due to re-evaluation of foreign currency balance at
the end of accounting period (if foreign currency rate falls against VND);
-
Negative differences due to re-evaluation of monetary gold at the reporting
time.
Debit
balance:
Actual
deposited VND, foreign currencies or monetary gold at the reporting time.
Account
112 – Cash in bank, comprises 3 sub-accounts:
- Account
1121 – VND: reflecting deposits, withdrawals and balance in the bank in
VND.
- Account
1122 – Foreign currency: reflecting deposits, withdrawals and balance in
the bank in foreign currencies converting into VND.
- Account
1123 – Monetary gold: reflecting the fluctuation and value of monetary gold
deposited in the bank of the enterprise at the reporting time.
3.
Method of accounting for several major transactions
3.1.
When selling products, goods or providing services for immediate cash using
cash in bank, the following accounts shall be recorded as follow:
a) With
regard to products, goods, investment property subject to indirect taxes (VAT,
special excise duty, import duty, environmental protection tax), the revenues
according to the tax-exclusive selling prices shall be recorded as follows
(indirect taxes payable must be separated, including VAT payable using
subtraction method):
Dr 112 –
Cash in bank (total payment)
Cr 511 – Revenues (tax-exclusive prices)
Cr 333 –
Taxes and other payables to the State.
b) In
case it fails to separate the taxes payable, the accountant shall record the
revenue including the taxes payable.
Tax
liabilities and the decrease in revenues shall be recorded as follows:
Dr 511 –
Revenues
Cr 333 –
Taxes and other payables to the State.
3.2.
When receiving payments of allowance or subsidy by cash in bank from government
budget, the following accounts shall be recorded:
Dr 112 –
Cash in bank
Cr 333 –
Taxes and other payables to the State (3339).
3.3.
When generating financial income or other incomes in cash in bank, the
following accounts shall be recorded:
Dr 112 –
Cash in bank (total payment)
Cr 515 –
Financial income (prices excluding VAT)
Cr 711 –
Other incomes (prices excluding VAT)
Cr 3331
– VAT payable (33311).
3.4.
When dispatching cash fund to deposit in bank’s accounts, the following
accounts shall be recorded:
Dr 112 –
Cash in bank
Cr 111 -
Cash
3.5.
When receiving an advance or any customer pays debts using wire transfer,
according to the credit note of the bank, the following accounts shall be
recorded:
Dr 112 –
Cash in bank
Cr 131 –
Customers receivable
Cr 113 –
Cash in transit
3.6.
When recovering amounts receivables, granting loans, making deposits by cash in
bank; receiving deposits in cash from other enterprises, the following accounts
shall be recorded:
Dr 112 –
Cash in bank (1121, 1122)
Cr 128,
131, 136, 141, 244, 344.
3.7.
When selling short-term or long-term investment by cash in bank, the difference
between collected amount of money and cost price of investment (according to
weighted average method) shall be recorded to financial income or financial
expenses as follows:
Dr 112 –
Cash in bank (1121, 1122)
Dr 635 -
Financial expenses
Cr 121 -
Trading securities (cost price)
Cr 221,
222, 228 (cost price)
Cr 515 –
Financial income.
3.8. When
receiving stakes in cash of owners, the following accounts shall be recorded:
Dr 112 –
Cash in bank
Cr 411 –
Owner's invested equity.
3.9.
When receiving money of contracting parties of Business Cooperation Contract
(BCC) without establishment of legal entity to cover general operation, the
following accounts shall be recorded:
Dr 112 –
Cash in bank
Cr 338 –
Others payable.
3.10.
When withdrawing cash in bank to pay in cash fund then crediting to bank’s
accounts or depositing, the following accounts shall be recorded:
Cr 111 -
Cash
Dr 244 -
Pledge, mortgage, deposits.
Cr 112 –
Cash in bank.
3.11.
When buying securities, granting loans or investing in subsidiary companies or
joint-venture companies by cash in bank, the following accounts shall be recorded:
Dr 121,
128, 221, 222, 228
Cr 112 –
Cash in bank.
3.12.
When buying inventory (using regularly declared method), buying fixed assets,
spending on capital investment by cash in bank, the following accounts shall be
recorded:
- If
input VAT is eligible for deduction, the buying price excluding VAT shall be
recorded as follows:
Dr 151,
152, 153, 156, 157, 211, 213, 241
Dr 133 –
Deductible VAT (1331)
Cr 112 –
Cash in bank.
- If
input VAT is not eligible for deduction, the buying price including VAT shall be
recorded as follow:
3.13.
When buying inventory by cash in bank (using periodically declared method), if
input VAT is eligible for deduction, the following accounts shall be recorded:
Dr 611 –
Good purchases (6111, 6112)
Dr 133 –
Deductible VAT (1331)
Cr 112 –
Cash in bank.
If input
VAT is not eligible for deduction, the buying price including VAT shall be
recorded.
3.14.
When buying raw materials immediately used in business by cash in bank, if
input VAT is eligible for deduction, the following accounts shall be recorded:
Dr 621,
623, 627, 641, 642, etc.
Dr 133 –
Deductible VAT (1331)
Cr 112 –
Cash in bank.
If input
VAT is not eligible for deduction, the cost including VAT shall be recorded.
3.15.
When paying amounts payable, the following accounts shall be recorded:
Dr 331,
333, 334, 335, 336, 338, 341
Cr 112 –
Cash in bank.
3.14.
When paying financial expenses or other expenses, the following accounts shall
be recorded:
Dr 635,
811, etc.
Dr 133 –
Deductible VAT (if any)
Cr 112 –
Cash in bank.
3.17.
When paying stakes or dividends or profits to contributing partners, paying
welfare fund by cash in bank, the following accounts shall be recorded:
Dr 411 -
Owner’s equity.
Dr 421 -
Unallocated post-tax profits
Dr 353 -
Welfare fund
Cr 112 –
Cash in bank.
3.18.
When paying commercial discounts, sales rebates or sales returns accounts, the
following accounts shall be recorded:
Dr 521 –
Revenue deductions
Dr 3331-
– VAT payable (33311).
Cr 112 –
Cash in bank.
3.19.
Accounting contract of resale of Government bonds: in accordance with Account
171 – Trading in Government bonds.
3.20.
Foreign currency related-transactions: the accounting methods applying to
foreign currency-related transactions by cash in bank shall be carried out
similarly to those in cash (refer to account 111).
3.21.
Accounting for re-evaluation of monetary gold
- If the
re-evaluation price of monetary gold generates profits, the following accounts
shall be recorded:
Dr 1123
– Monetary gold (according to domestic buying prices)
Cr 515 –
Financial income.
- If the
re-evaluation price of monetary gold generates losses, the following accounts
shall be recorded:
Dr 635 -
Financial expenses
Cr 1123
– Monetary gold (according to domestic buying prices).
Article
14. Account 113 – Cash in transit
1.
Rules for accounting
This
account shall be used to record amounts of money which an enterprise paid to
the State bank, the State Treasury, or transferred by post to a bank, but no
credit note or confirmation of payment to other enterprises has been received; or
the enterprise made wire transfer from their bank account to other enterprises,
but no debit note or bank statement has been received.
Cash in
transit includes VND and foreign currencies which are transited in following
cases:
-
Collecting cash or checks then paying directly in a bank;
- Making
postal remittance in order to pay other enterprises;
-
Collecting revenues from good sales then transferring to Treasuries to pay
taxes (payment collected from purchaser shall be transferred to State Treasury
by the enterprise).
2.
Structure and contents of account 113 – Cash in transit
Debit:
- Cash
or checks in VND, or foreign currencies which are paid to a bank or transferred
to a bank by post, but the credit note has not been received;
-
Exchange rate differences due to re-evaluation of foreign currency balance at
the reporting time.
Credit:
- The
amounts of money transferred to account 112 – Cash in bank, or relevant
accounts;
-
Exchange rate differences due to re-evaluation of foreign currency balance at
the reporting time.
Debit
balance:
The
amounts of money in transit at the reporting time.
Account
113 – Cash in transit, comprises 2 sub-accounts:
-
Account 1131 – amounts in VND: recording amounts in VND in transit.
-
Account 1132 – Foreign currencies: recording foreign currencies in transit.
3.
Accounting methods for several major transactions:
a) When
collecting money from good sales or customers' debts or other incomes in cash
or check then transferring to the bank (not via the fund), but the credit note
of bank has been received, the following accounts shall be recorded:
Dr 113 –
Cash in transit (1131, 1132)
Cr 131 –
Customers receivable (of customers' debts)
Cr 511 –
Revenues
Cr 515 –
Financial income.
Cr 711 –
Other incomes
Cr 3331
– VAT payable (33311) (if any).
b) When
dispatching cash fund to deposit in bank’s accounts but the credit note of bank
has not been received, the following accounts shall be recorded:
Dr 113 –
Cash in transit (1131, 1132)
Cr 111 –
Cash (1111, 1112).
c)
Completing wire transfer from bank’s accounts to pay creditors, but the debit
note of the bank has not been received; the following accounts shall be
recorded:
Dr 113 –
Cash in transit (1131, 1132)
Cr 112 –
Cash in bank (1121, 1122).
d) When
a customer pays an advance of good purchase in check, the enterprise has paid
check to a bank, but the credit note of bank has not been received, the
following accounts shall be recorded:
Dr 113 –
Cash in transit (1131, 1132)
Cr 131 –
Customers receivable.
dd) When
the cash in transit has been credited in the deposit account of the enterprise
and the credit note is received; the following accounts shall be recorded:
Dr 112 –
Cash in bank (1121, 1122)
Cr 113 –
Cash in transit (1131, 1132).
e) When
the cash in transit has been transferred to sellers or service provider and the
debit not is received, the following accounts shall be recorded:
Dr 331 –
Trade payables
Cr 113 –
Cash in transit (1131, 1132).
g) The
re-evaluation of foreign currency balance in transit shall be carried out
similarly to foreign currency balance in cash (refer to account 111)
Article
15. Account 121 - Trading securities
1.
Rules for accounting
a) This
account is used to record the sales, purchases and payments of securities as
prescribed which are held for business purposes (including over-12-month
matured securities which are traded for profits). Trading securities include:
-
Shares, bonds listed on securities market;
-
Securities and other financial instruments.
This
account is not used to record the held to maturity investment, such as: loans
under agreements, cash in bank, bonds, commercial papers, treasury bills,
exchange bills,…held to maturity date.
b)
Trading securities must be recorded in the ledger according to original prices:
buying prices plus (+) buying costs (if any) (brokerage, transactions,
information provision, taxes, bank's fees and charges. The basis price of
trading securities shall be determined according to fair value of payments at
the time in which the transaction takes place the trading securities shall be
recorded when the investors acquire ownership, in particular:
-
Listed securities are recorded at the time of matching (T+0);
-
Unlisted securities are recorded at the time in which the ownership is acquired
as prescribed in regulations of law.
c) At the
end of the fiscal year, if the market prices of trading securities devalue
against their original prices, the provisions for devaluation shall be made.
d) The
enterprise must record incomes from investment in trading securities
sufficiently and promptly. The dividends paid in the period before investment
date shall be recorded as a decrease in value of investment. When the investor
receives additional shares without paying money to joint-stock companies using
share premium, the funds belong to owners’ equity and unallocated post-tax
profits (dividends are allocated by shares) to issue additional shares, the
investor only observes the quantity of additional shares according to the
presentation of financial statement, not records the received share value, not
records financial income and not records the investment value in joint-stock
companies.
With
regard to enterprises whose charter capital is wholly held by the state, the
accounting for dividends allocated by shares shall comply with regulations on
wholly-state-owned enterprises.
dd)
Before any share is exchanged, its value must be determined according to fair
value on the exchanging date. The determination of fair value of shares shall
comply with regulations below:
-
Regarding shares of listed companies, fair value of their shares are closing
prices listed on the securities market on the exchange date. In case the
securities market closes transaction on the exchange date, the fair value of
shares is closing prices of the session preceding the exchange date.
-
Regarding unlisted shares permitted to transact on the UPCOM, the fair value of
shares are closing prices of UPCOM on the exchange date. In case the UPCOM
closes transactions on the exchange date, the fair value of shares is closing
prices of the session preceding the exchange date.
- With
regard to other unlisted shares, the fair value of shares is prices dealt by
contracting parties or book value at the exchange date.
e)
The accountant must keep records of every type of trading securities holding by
the enterprise in details (according to every security; every entity, face
value, actual buying price or every type of currency used for investment, etc).
g) When
liquidating or transferring trading securities (according to every type of
security), the cost price shall be determined according to mobile weighted
average method (weighted average for every purchase).
2.
Structure and contents of account 121 – Trading securities
Debit:
Trading security buying-value.
Credit:
trading security selling-value.
Debit
balance: Trading security value at the reporting time.
Account
121 - Trading securities, comprises 3 sub-accounts:
-
Account 1211 – Shares: recording the purchases or sales of shares for
profits.
-
Account 1212 – Bonds: recording the purchases, sales and payments of bonds
for profits.
-
Account 1218 – Securities and other financial instruments: recording the
purchases or sales of securities and other financial instruments as prescribed
for profits, such as fund certificates, stock options, warrants, call options,
put options, futures contracts, commercial papers, etc. This account also
records the purchases or sales of other valuable papers including commercial
papers or bill of exchange for profits.
3.
Accounting methods for several major transactions:
a) When
buying trading securities, according to buying costs (buying prices plus (+)
costs of brokerage, transaction, information, bank fees or charges, etc), the
following accounts shall be recorded:
Dr 121 –
Trading securities
Cr 111,
112, 331
Cr 141 -
Advance
Cr 244 -
Pledge, mortgage, deposits.
b) When
collecting interests of bonds and other securities periodically:
- If the
received interests are used for purchases of additional bonds or treasury
bills, the following accounts shall be recorded:
Dr 121 –
Trading securities
Cr 515 –
Financial income.
- When
receiving interests in cash, the following accounts shall be recorded:
Dr 111,
112, 138, etc.
Cr 515 –
Financial income.
- When
receive investment interests including the investment interests accrued before
re-buy that investment, that interests must be allocated. Only the interests of
periods in which the enterprise buys that investment shall be recorded to
financial income; the interests accrued before the enterprise re-buys that
investments shall be recorded to as a decrease in value of such investment as
follows:
Dr 111,
112, 138, etc (total collected interests)
Cr 121 –
Trading securities (interests accrued before the enterprise re-buys the
investment)
Cr 515 –
Financial income (interests after the enterprise buys the investment).
c)
Accounting for dividends or divided profits:
- If the
dividends are received after the investment date, the following accounts shall
be recorded:
Dr 111,
112, etc.
Dr 138 –
Others receivable (deferred payments)
Cr 515 –
Financial income.
- If the
dividends are received before the investment date, the following accounts shall
be recorded:
Dr 111,
112, 138, etc (total collected interests)
Cr 121 –
Trading securities (interests accrued before the enterprise re-buys the investment)
- When
receiving dividends or profits used for recording of increase in state capital,
they shall not be recorded to financial income, but they shall be recorded to
devaluation of financial investment, the following accounts shall be recorded:
Dr 112,
138
Cr 121 –
Trading securities.
d) When
transferring trading securities, according to securities sale prices:
- If the
profits generate, the following accounts shall be recorded:
Dr 111,
112, 131, etc (total payment price)
Cr 121 -
Trading securities (weight average cost price)
Cr 515 –
Financial income. (Positive difference between the buying price and the cost
price).
- If the
losses generate, the following accounts shall be recorded:
Dr 111,
112, 131, (total payment prices)
Dr 635 –
Financial income. (negative difference between the buying price and the cost
price).
Cr 121 -
Trading securities (weight average cost price)
-
Expenditures on security sales, the following accounts shall be recorded:
Dr 635 -
Financial expenses
Cr 111,
112, 331, etc.
dd) When
withdrawing or paying matured trading securities, the following accounts shall
be recorded:
Dr 111,
112, 131
Cr 121 –
Trading securities.
Cr 515 –
Financial income.
e) If
the enterprise transfers the trading securities in the form of share exchange,
the enterprise must determine the fair value of shares received at the exchange
time. The difference (if any) between fair value of shares received and book
value of shares used for exchange shall be recorded to financial income (in
case of profits) or financial expenses (in case of losses).
- If the
share exchange generates profits, the following accounts shall be recorded:
Dr 121 –
Trading securities (fair value of shares received)
Cr 121 -
Trading securities (book value of shares used for exchange according to weight
average method)
Cr 515 -
Financial income (positive difference between the fair value of shares received
and the book value of shares used for exchange)
- If the
share exchange generates losses, the following accounts shall be recorded:
Dr 121 –
Trading securities (fair value of shares received)
Dr 635 -
Financial income (negative difference between the fair value of shares received
and the book value of shares used for exchange)
Cr 121 -
Trading securities (book value of shares used for exchange according to weight
average method)
g) When
re-evaluating balance of securities in conformity with definition of accounts
derived from foreign currencies (bonds, commercial papers in foreign
currencies, etc).
- If the
profits generate, the following accounts shall be recorded:
Dr 121 –
Trading securities (1212, 1218)
Cr 413 -
Exchange rate differences.
- If the
losses generate, the following accounts shall be recorded:
Dr 413 -
Exchange rate differences.
Cr 121 –
Trading securities (1212, 1218).
Article
16. Account 128 – Held to maturity investments
1.
Rules for accounting
a) This
account is used to record current amounts and increases and decreases in held
to maturity investments (other than trading securities), such as: term deposits
(including treasury bills, promissory notes), bonds, preference shares which
the issuer is required to re-buy them in a certain time in the future and held
to maturity loans to earn profits periodically and other held to maturity
investments.
This
account shall not record bonds and debt securities held for sales (recorded to
account 121 – Trading securities)
b) The
accountant must keep records of every held to maturity investment in details
according to every term, entity, type of currency or quantity, etc. When
preparing financial statements, the accountant shall base on remaining term
(under 12 months or 12 months and longer from the reporting time) to record
those to short-term accounts or long-term accounts.
c) The
enterprise must record deposit interests, loan interests, profits or losses on
liquidation or transfer of held to maturity investments to financial income
sufficiently and promptly.
d) With
regard to held to maturity investments, if it fails to make provisions for
doubtful debts as prescribed, the accountant must evaluate the recovery. If it
is evident that a part or all of investment is unable to recover, the
accountant shall record the losses to financial expenses within the fiscal
year. In case it is unreliable to determine the losses, the accountant is entitled
not to record them to revaluation of investment, but the recovery of investment
must be reported on the financial statements.
dd) When
the financial statement is prepared, the accountant must re-evaluate investment
classified as accounts derived from foreign currencies according to actual
exchange rates at the end of the accounting period:
-
Exchange rates applying to deposits in foreign currencies are buying-exchange
rates of the bank where the enterprise opens its deposit account;
-
Exchange rates applying to other held to maturity investments are
buying-exchange rates of the bank where the enterprise regularly enters into
transactions (chosen by the enterprise).
2.
Structure and contents of account 128 – Held to maturity investments
Debit:
Value of
held to maturity investments increases.
Credit:
Value of
held to maturity investments decreases.
Debit
balance:
Value of
current held to maturity investments at the reporting time.
Account
128 – Held to maturity investments comprises 3 sub-accounts:
- Account
1281 - Term deposits: recording the increases, decreases and balance of
term deposits.
-
Account 1282 - Bonds: recording the increases, decreases and balance of
bonds which it intends to hold till maturity.
- Account
1283 – Loans: recording the increases, decreases and balance of loans under
agreements which are not transacted on the market similarly to securities.
According to every contract, loans under agreements may be recovered fully on
the maturity date or recovered periodically.
-
Account 1288 – Other held to maturity investments: recording the increases,
decreases and balance of other held to maturity investments (other than bank
deposits, bonds and loans), such as preference shares which the issuer is
required to re-buy them in a certain time in the future, commercial papers.
3.
Accounting methods for several major transactions:
3.1.
When making term deposits, granting loans, buying held to maturity investments,
the following accounts shall be recorded:
Dr 128 –
Held to maturity investments
Cr 111,
112.
3.2.
When collecting deposit interests, bond interests or loan interests
periodically, the following accounts shall be recorded:
Dr 138 -
Other receivables (1388)
Cr 128 –
Held to maturity investments (interest included in principal)
Cr 515 -
Financial income.
3.3.
When recovering held to maturity investments, the following accounts shall be
recorded:
Dr 111,
112, 131, 152, 156, 211, etc (according to fair value)
Dr 635 -
Financial expenses (in case of losses)
Cr 128 –
Held to maturity investments (book value)
Cr 515 -
Financial income (in case of profits).
3.4.
When investing held to maturity investments in subsidiary companies,
joint-venture companies, the following accounts shall be recorded:
Dr 221,
222 (according to fair value)
Dr 635 -
Financial expenses (in case of losses)
Cr 128 –
Held to maturity investments (book value)
Cr
relevant accounts (if the additional investment is required)
Cr 515 -
Financial income (in case of profits).
3.5.
Accounting for transactions of held to maturity bonds:
a)
Buying bonds and receiving interests in advance:
- When
buying bonds and receiving interests in advance, the following accounts shall
be recorded:
Dr 128 –
Held to maturity investments (1282)
Cr 111,
112, etc (actual amounts of money)
Cr 3387
– Unearned revenues (interests received in advance).
- When
calculating and transferring interests of tax period according to interests
receivable periodically, the following accounts shall be recorded:
Dr 3387
- Unearned revenues
Cr 515 -
Financial income.
- When
recovering original prices of bonds on the maturity date, the following
accounts shall be recorded:
Cr 111,
112, etc.
Cr 128 –
Held to maturity investments (1282).
b)
Buying bonds and receiving interests periodically:
- When
buying bonds, the following accounts shall be recorded:
Dr 128 –
Held to maturity investments (1282)
Cr 111,
112, etc.
- When
receiving bond interests periodically, the following accounts shall be
recorded:
Dr 111,
112, 138, etc.
Cr 515 -
Financial income.
- When
recovering original prices of bonds on the maturity date, the following
accounts shall be recorded:
Cr 111,
112, etc.
Cr 128 –
Held to maturity investments (1282).
c)
Buying bonds and receiving deferred interests:
- When
buying bonds, the following accounts shall be recorded:
Dr 128 –
Held to maturity investments (1282)
Cr 111,
112, etc.
- When
calculating interests and recording revenues according to the interests
receivable periodically, the following accounts shall be recorded:
Dr 138 -
Other receivables (1388)
Cr 515 -
Financial income.
- When
recovering principal and interests of bonds on the maturity date, the following
accounts shall be recorded:
Cr 111,
112, etc.
Cr 128 –
Held to maturity investments (1282).
Cr 138 -
Other receivables (1388) (interests of previous tax period)
Cr 515 -
Financial income (regarding interests on maturity date).
3.6.
Accounting for losses due to failure of recovery of held to maturity
investments which are not made provisions for doubtful debts;
If it is
evident that a part or all of investment are unable to recover (the issuer is
insolvent or goes into bankruptcy. If the losses are determined reliably, the
negative difference between recoverable value and book value shall be recorded
to financial expenses as follows:
Dr 635 -
Financial expenses
Cr 128 –
Held to maturity investments (1281, 1282, and 1288).
- After
recording the losses, if it is evident that the losses are recoverable, the
positive difference between recoverable value and book value shall be recorded
to financial expenses as follows:
Dr 128 –
Held to maturity investments (1281, 1282, and 1288).
Cr 635 -
Financial expenses
3.7.
When re-evaluating balance of held to maturity investments which are classified
accounts derived from foreign currencies, the following accounts shall be
recorded:
- In
case of profits, the following accounts shall be recorded:
Dr 128 –
Held to maturity investments
Cr 413 –
Exchange rate differences.
- In
case of losses, the following accounts shall be recorded:
Dr 413 –
Exchange rate differences.
Cr 128 –
Held to maturity investments.
Article
17. Rules for accounting for receivables
1. The
receivables shall be kept records in details according to period receivables,
entities receivables, types of currency receivable and other factors according
to requirements for management.
2. The
amounts receivable shall be classified into trade receivables, intra-company
receivables, and other receivables following rules below:
a) Trade
receivables include commercial receivables generating from purchase-sale
related transactions, such as: receivables from sales, services, liquidation or
transfer of assets (fixed assets, investment property, and financial
investments) between enterprises and buyers (independent unit against buyers,
including receivables between parent companies and subsidiary companies or
joint-venture companies). Those receivables include receivables from sale of
exported goods given by the trustor through the trustee;
b)
Intra-company receivables include receivables between superior organizations
and affiliated organizations having no legal status and dependent
cost-accounting.
c) Other
receivables include non-commercial or non-trading receivables, such as:
-
Receivables generating financial income, such as: receivables from loan
interests, deposit interests, dividends and divided profits;
-
Payment on behalf of a third party eligible for recovery; receivables on behalf
of the trustor which are collected by the trustee
-
Non-commercial receivables include borrowed assets, fine receivables,
compensation, assets in shortage awaiting resolution, etc.
3. When
preparing financial statements, the receivables shall be classified into
short-term receivables or long-term receivables according to their remaining
terms. Receivables items of balance sheet may include amounts recorded to other
than receivables, such as: loans recorded to account 1283; deposits recorded to
account 244, advance recorded to account 141, etc. The provisions for doubtful
debts shall be determined according to the items which are classified into
short-term receivables and long-term receivables of the balance sheet.
4. The
receivables conformable to definition of accounts derived from foreign
currencies (refer to account 413 – Exchange rate differences) must be
re-evaluated at the closing tax period when preparing financial statements.
Article
18. Account 131 – Trade receivables
1.
Rules for accounting
a) This
account is used to record receivables and payments of receivables of customers
from goods, investment properties, fixed assets, financial investment or
services. This account is also used to record receivables from contractors and
contract awarder related to finished infrastructure development. This account
is not used to record immediate cash.
b) The
customer receivables must be recorded specifically to every entity, every
receivables item and monitor the recovery terms (above 12 months or not
exceeding 12 months from the reporting time) and keep record for every payment.
Receivable entities are customers entering into transactions in purchase of
goods, provisions of services, including fixed assets, investment property or
other financial investments with the enterprise.
c) The
export trustor shall record receivables for sale of exported goods from export
trustee to above account similarly to normal transactions in sales or services.
d) When
recording this account, the debts shall be classified into coverable debts,
doubtful debts or bad debts to determine provisions for doubtful debts or
solutions for bad debts.
dd) If
the goods, investment property or services are provided unconformity with
agreements between the enterprise and customers, the customers may request the
enterprise to discount the goods or they may return the received goods.
e) The
enterprise must monitor debts receivable of customers according to every
currency. Receivables in foreign currencies shall follow rules below:
- When
trade receivables generate (Dr 131), those receivables shall be converted into
VND according to actual exchange rates at the generating time (buying rates of
the commercial bank where the customers repays the debts). With regard to the
advance received from the buyers, when criteria for recognition of revenues are
met, the Dr 131 shall apply the specific identification bookkeeping rate.
- When
recover trade receivables (Cr 131), the accountant must convert them into VND
according to actual bookkeeping rate for every type of debtors (if the debtors
enter into multiple transactions, the actual bookkeeping rate shall equal
weight average rate applying to those transactions). With regard to advance
received from buyers, the Cr 131 shall apply actual exchange rates (the rate
recorded to the Debit account - Cash) at the receiving time;
- The
enterprise must re-evaluate trade receivables derived from foreign currencies
at the times in which the financial statements are prepared as
prescribed. The actual exchange rates applying to revaluation of trade
receivables are foreign currency-buying rates of the commercial bank where the
customers make payment, which is appointed by the enterprise when preparing
financial statements. In case the enterprise has multiple receivables and
enters into transactions in the multiple banks, they may choose the buying rate
of any bank of those commercial banks. Units in a group shall apply a common
rate defined by the parent company (provided that it closes to the actual
exchange rates) to re-evaluate trade receivables derived from foreign
currencies arising from transactions of internal group.
2.
Structure and contents of account 131 – Trade receivables
Debit:
- Trade
receivables generating within a tax period from sale of goods, investment
property, fixed assets, services or financial investments;
- Extra
cash payable to customers.
-
Revaluation of receivables in foreign currencies (if the foreign currency rates
rise against VND).
Credit:
-
Customers' repayment;
-
Advances received from customers.
-
Discounts offered to customers after customers receive goods and lodge
complaints;
- Sales
of returned goods (with or without VAT).
- Amount
of payment discounts and trade discounts offered to buyers.
-
Revaluation of receivables in foreign currencies (if the foreign currency rates
fall against VND).
Debit
balance:
Remaining
trade receivables.
This
account may have credit balance Credit balance records amounts of advance or
collected amounts which are larger than trade receivables according to every
specific entity. When preparing balance sheet, it is required to record
specific balance according to every receivable of this account to items
"Asset" and "Equity".
3.
Accounting methods for several major transactions:
3.1.
When selling goods or providing services without collecting immediate cash
(including receivables from sales of exported goods of trustors), the following
accounts shall be recorded:
a)
Regarding goods, services, investment property subject to VAT, Special excise
duty, import tax or environment protection tax, the revenues from goods and
services without taxes shall be recorded as follows (above indirect taxes must
be separated when recording, including VAT payable using subtraction method):
Dr 131 –
Trade receivables (total payment)
Cr 511 - Revenues (tax-exclusive prices)
Cr 333 –
Taxes and other payables to the State.
b) In
case it fails to separate the taxes payable, the taxes payable must be included
in the revenues. Tax liabilities and the decrease in revenues shall be recorded
as follows:
Dr 511 –
Revenues
Cr 333 –
Taxes and other payables to the State.
3.2.
Accounting for returned goods.
Dr 5213
– Returned goods (prices without taxes)
Dr 333 –
Taxes and other payables to the State (VAT of returned goods, clarifying each
type of taxes)
Cr 131 –
Trade receivables.
3.3.
Accounting for trade discounts and sales rebates
a) In
case the amounts of trade discounts or sales rebates are stated in the
invoices, the prices excluding above discounts (recording according to net
revenues) and amounts of trade discounts or sales rebates shall not be
separately recorded;
b) In
case the amounts of trade discounts or sales rebates are not stated in the
invoices because the customers are not eligible for those discounts, the
revenues shall be recorded the prices including discounts (gross revenues)
After recording revenues, if the customers are eligible for above discounts,
these discounts shall be recorded separately so that a decrease in revenue
shall be recorded periodically as follows:
Dr 521 –
Revenue deductions (5211, 5212) (tax-exclusive prices)
Dr 333 –
Taxes and other payables to the State (VAT of trade discounts or sales rebates)
Cr 131 –
Trade receivables (total amounts of discounts).
3.4.
The payment discounts payable to the buyers, excluding debts receivables, the
following accounts shall be recorded:
Dr 111 -
Cash
Dr 112 –
Cash in bank
Dr 635 -
Financial expenses (amounts of payment discounts)
Cr 131 –
Trade receivables.
3.5.
When receiving payment of customers (including interests of debts – if any) or
receiving advance of customers according to agreements on sale of goods or
provision of services, the following
accounts shall be recorded:
Dr 111,
112, etc.
Cr 131 –
Trade receivables.
Cr 515 -
Financial income (profits).
When
receiving advance in foreign currencies, the Cr 131 shall apply actual exchange
rates at the receiving time (buying rates of the bank)
3.6.
Method of accounting for contractor’s receivables from customers related to
construction contract:
a) In
case the contractor may make payment following the schedule under the
construction contract:
- If the
result of performance of construction contract is estimated reliably, the
following accounts shall be recorded according to documents on revenues
in proportion to finished work (other than invoices) determined by the
contractor:
Dr 337 –
Payment under schedule of construction contract
Cr 511 –
Revenues.
-
According to the invoices issued following the schedule, the amounts which are
paid by customers shall be recorded as follows:
Cr 131 –
Trade receivables.
Dr 337 –
Payment under schedule of construction contract
Cr 3331
– VAT payable (33311).
b)
In case the construction contract regulates that the contractor shall be paid
according to their workload, when the result of performance of construction
contract is determined reliably and certified by customers, the finished work
must be stated in the invoices and certified, the following accounts shall be
recorded:
Cr 131 –
Trade receivables.
Cr 511 –
Revenues.
Cr 3331
– VAT payable (33311).
c) When
collecting the bonus paid to the contractor by customer because the performance
of construction contract reaches or overshoots the specific targets mentioned
in the contract, the following accounts shall be recorded:
Dr 131-
– Trade receivables.
Cr 511 –
Revenues.
Cr 3331
– VAT payable (33311).
d) When
collecting the compensation paid by customers or other contracting parties to
cover the costs not including in the value of contract (the delay or mistakes
of customers and disputes about changes in contract performance), the following
accounts shall be recorded:
Cr 131 –
Trade receivables.
Cr 511 –
Revenues.
Cr 3331
– VAT payable (33311).
dd) When
collecting payment for finished works or advance from customers, the following
accounts shall be recorded:
Cr 111,
112, etc.
Cr 131 –
Trade receivables.
3.7. In
case the customer makes payment in goods instead of cash (in the form of
barter), according to the value of materials or exchanged goods (according to
fair value stated in the VAT invoice or sales invoice of customers) which is
deducted from customers' debt receivables, and the following accounts shall be
recorded:
Dr 152 -
Materials
Dr 153 -
Tools
Dr 156 -
Goods
Dr 611 –
Good purchases (inventory accounted by periodical verification method)
Dr 133 –
Deductible VAT (if any)
Cr 131 –
Trade receivables.
3.8.
When eliminating doubtful debts unable to recover according to the report on
debt relief, the following accounts shall be recorded:
Dr 229 –
Provision for asset losses (2293) (amounts of provision)
Dr 642 –
Enterprise administrative expenses (amounts of non-provision)
Cr 131 –
Trade receivables.
3.9.
When collecting entrustment fees from the export/import trustees, the following
accounts shall be recorded:
Cr 131 –
Trade receivables.
Cr 511 –
Revenues (5113)
Cr 3331
– VAT payable (33311).
3.10.
When preparing financial statements, the outstanding debt in foreign currencies
of customers shall be evaluated according to actual exchange rates at the time
in which the financial statements are prepared:
- If the
foreign currency rates rise against VND rates, the following accounts shall be
recorded:
Cr 131 –
Trade receivables.
Cr 413 –
Exchange rate differences (4131).
- If the
foreign currency rates fall against VND rates, the following accounts shall be
recorded:
Dr 413 –
Exchange rate differences (4131).
Cr 131 –
Trade receivables.
Article
19. Account 133 – Deductible VAT
1.
Rules for accounting
a) This
account is used to record input VAT which are deductible, deducted and shall be
deducted of the enterprise.
b) The
deductible input VAT and non-deductible input VAT must be recorded separately.
In case they fail to be recorded separately, the input VAT shall be recorded to
account 133. At the end of the tax period, the deductible input VAT and
non-deductible input VAT shall be determined in accordance with regulations of
law on VAT.
c) The
non-deductible input VAT shall be recorded to value of assets, costs of goods
sold or production or operation costs according to specific cases.
d) The
input VAT eligible for deduction, declaration or tax payment shall be
determined in accordance with regulations of law on VAT.
2.
Structure and contents of account 133 – Deductible VAT
Debit:
Deductible
VAT.
Credit:
-
Deducted VAT.
-
Transfer of non-deductible input VAT.
- Input
VAT of goods which are returned or offered discounts;
-
Refunded input VAT.
Debit
balance:
Remaining
deductible input VAT, refundable input VAT which has not been refunded by
government budget.
Account
133 – Deductible VAT, comprises 2 sub-accounts:
-
Account 1331 – Deductible VAT of goods or services: recording deductible input
VAT of materials, goods or services bought to used in production of goods or
provision of services subject to VAT using credit-invoice method.
-
Account 1332 – Deductible VAT of fixed assets: recording deductible input VAT
of fixed assets bought to use in production of goods or provision of services
subject to VAT using credit-invoice method, or of the purchase of investment
property.
3.
Accounting methods for several major transactions:
3.1.
When buying inventory, fixed assets, investment property, if the input VAT is
deductible, the following accounts shall be recorded:
Dr 152,
153, 156, 211, 213, 217, 611 (prices excluding VAT)
Dr 133 –
Deductible VAT (1331, 1332)
Cr 111,
112, 331, etc. (total payment).
3.2.
When buying materials, goods or tools, if the input VAT is deductible, the
following accounts shall be recorded:
Dr 621,
623, 627, 641, 642, 241, 241, etc. (VAT-exclusive prices)
Dr 133 –
Deductible VAT (1331)
Cr 111,
112, 331, etc. (total payment).
3.3.
When buying goods and buying them to customers immediately (without inventory),
if the input VAT is deductible, the following accounts shall be recorded:
Dr 632 –
Costs of goods sold (prices not excluding VAT)
Dr 133 –
Deductible VAT (1331)
Cr 111,
112, 331, etc. (total payment).
3.4.
When importing materials, goods, fixed assets:
-
Accounting for value of import materials, goods or fixed assets including total
amount payable to sellers (according to actual exchange rates), import tax,
special excise duty, environment protection tax payable (if any), transport
expenses, the following accounts shall be recorded:
Dr 152,
153, 156, 211, etc.
Cr 331 –
Trade payables
Cr 3331
– VAT payable (33312) (if the input VAT of imported goods are not deductible)
Cr 3332
- Special excise duty.
Cr 3333
– Export or import tax (specific import tax)
Cr 33381
- Environment protection tax
Cr 111,
112, etc.
- If the
input VAT of imported goods is not deductible, the following accounts shall be
recorded:
Dr 133 –
Deductible VAT (1331, 1332)
Cr 333 –
Taxes and other payables to the State (33312).
3.5.
With regard to returned goods or goods offering discounts due to their
degradation: According to documents on sales returns and relevant documents,
the value of returned goods or purchased goods eligible for sales rebate and
the non-deductible input VAT) shall be recorded as follows:
Dr 111,
112, 331 (total payment).
Cr 133 –
Deductible VAT (input VAT of returned goods or discounted goods)
Cr 152,
153, 156, 211, etc. (prices not excluding VAT).
3.6.
With regard to deductible input VAT unable to record separately:
a) When
buying materials, goods or fixed assets, the following accounts shall be
recorded:
Dr 152,
153, 156, 211, 213 (prices excluding VAT)
Dr 133 –
Deductible VAT (input VAT)
Cr 111,
112, 331, etc.
b) At
the end of the tax period, the deductible input VAT and non-deductible input
VAT shall be determined in accordance with regulations of law on VAT. The
non-deductible input VAT shall be recorded to costs of goods sold in the
accounting period, the following accounts shall be recorded:
Dr 632 –
Costs of goods sold
Cr 133 –
Deductible VAT (1331)
3.7. With regard to input materials, goods or
fixed assets which are damaged by natural disasters, conflagration, lost and
covered by an organization or individual, if the input VAT of those goods are
not deductible:
- If it fails to uncover the reason for damages, the
following accounts shall be recorded:
Dr 138 - Other receivables (1381)
Cr 133 –
Deductible VAT (1331, 1332)
- If
there is decision on compensation issued by the competent agency, the following
accounts shall be recorded:
Cr 111,
334, etc. (amounts of compensation)
Dr 632 –
Costs of goods sold (if they are recorded to costs)
Cr 138 -
Other receivables (1381)
Cr 133 –
Deductible VAT (if the reasons are uncovered and there is a resolution
decision)
3.8. At
the end of the month, when determining the VAT payable in the tax period by
deducting the deductible input VAT from output VAT, the following accounts
shall be recorded:
Dr 3331
– VAT payable (33311).
Cr 133 –
Deductible VAT.
3.9.
When the input VAT of goods or services are refunded, the following accounts
shall be recorded:
Dr 111,
112, etc.
Cr 133 –
Deductible VAT (1331)
Article
20. Account 136 – Intra-company receivables
1.
Rules for accounting
a) This
account is used to record receivables and payments of receivables between the
parent company and affiliated units or between affiliated units. The affiliated
units are dependent accounting units which have no legal status, but they have
accounting divisions, such as branches, plants, or project management board,
etc.
b) The
transactions between the enterprise and dependent accounting units (members,
plants) which have legal status shall not be recorded in this account, but they
shall be recorded similarly to subsidiaries.
c)
Content of intra-company receivables recorded to account 136:
- In the
superior enterprise:
+
Capital, funds or funding allocated to affiliated units;
+
Amounts payable to superior enterprise by affiliated units as prescribed;
+
Amounts collected by affiliated units;
+
Amounts of expenses paid on behalf of affiliated units;
+
Amounts allocated to affiliated units to perform internal fixed works and
receive value of fixed works
+ Other
current receivables.
-
In the dependent accounting units:
+
Amounts allocated by the superior enterprise which have not been received;
+ Value
of goods or services transferred to superior enterprise or other affiliated
units for sale; revenues from goods or services provided for the affiliated
units;
+
Amounts collected by superior enterprise or other affiliated units;
+
Amounts paid for superior enterprise or other affiliated units;
+ Other
current receivables.
d)
Account 136 must be kept records of every inferior unit in details and every
intra-company receivables must be separately monitored. The enterprise must
take measure for intra-company receivables within the tax period.
dd) At
the end of tax period, it is required to collate and certify incurred amounts
or balance of account 136 “Intra-company receivables”, account 336
“Intra-company receivables” with affiliated units in the payment relationship
must be verified, collated and certified. Offsetting for every account of each
subsidiary in relationship, and offsetting account 136 "Intra-company
receivables" against 336 "Internal payable" (for every entity).
When comparing, if there is any difference, it is required to uncover reasons
and adjust promptly.
2.
Structure and contents of account 136 – Intra-company receivables
Debit:
-
Operating capital provided for affiliated units;
-
Funding allocated to project management board by investor; other amounts shall
be recorded as increases in receivables of investor from project management
board;
-
Amounts paid on behalf of superior enterprise or other affiliated units;
-
Amounts receivables collected by superior enterprise or amounts payable made by
affiliated units;
-
Amounts receivables collected by affiliated units, amounts payable provided by
superior enterprise;
-
Amounts receivables of goods or services between affiliated units.
- Other
intra-company receivables.
Credit:
- Capital
or fund recovery of affiliated units;
-
Settlement of public funding allocated and used by affiliated units;
- Value
of finished fixed assets transferred from project management board; other
amounts shall be recorded as decreases in receivables of investor from project
management board;
-
Collected amounts of intra-company receivables.
-
Offsetting intra-company receivables against intra-company payables of an
entity.
Debit
balance: Outstanding receivables from subsidiaries.
Account
136 – Intra-company receivables, comprises 4 sub-accounts:
- Account
1361 – Operating capital provided for affiliated units: This account is
only opened by the superior enterprise to record current business capital of
dependent accounting units allocated by the superior enterprise.
This
account does not record capital which a parent company invests in their
subsidiaries or capital which the enterprise invests in dependent accounting
units having legal status. Above investment shall be recorded to account 221
“Investment in subsidiaries”.
-
Account 1362 – Intra-company receivables for exchange differences: This
account is only opened in enterprises which are investors establishing project
management boards, used to record exchange differences transferred by the
project management board.
-
Account 1363 – Intra-company receivables for cost of loans eligible for
capitalization: This account is only opened in enterprises which are
investors establishing project management board, used to record capitalized
borrowing costs incurring in project management board.
- Account
1368 – Other intra-company receivables: recording other receivables between
affiliated units.
3.
Accounting methods for several major transactions:
3.1.
In dependent accounting units:
a) When
paying on behalf of the superior enterprise and other affiliated units, the
following accounts shall be recorded:
Dr 136 -
Other receivables (1368)
Cr 111,
112.
b)
According to notification of welfare fund allocated by superior enterprise, the
following accounts shall be recorded:
Dr 136 -
Other receivables (1368)
Cr 353 -
Welfare fund.
c) When
selling goods or providing services for subsidiaries in the enterprise,
according to operation and task delegation in every unit:
- In
case the dependent accounting unit is in charge of recording revenues, the
following accounts shall be recorded:
Dr 136 -
Other receivables (1368)
Cr 511 –
Revenues (specific internal sale)
Cr 333 –
Taxes and other payables to the State.
Concurrently,
the cost prices shall be recorded as follow:
Dr 632 –
Costs of goods sold
Cr 154,
155, 156, etc.
- In
case the dependent accounting unit is not in charge of recording revenues,
value of goods or services provided for subsidiaries shall be recorded to
internal receivables:
Dr 136 -
Other receivables (1368)
Cr 154,
155, 156
Cr 333 –
Taxes and other payables to the State.
dd) When
receiving money, materials or assets from superior enterprise or other internal
enterprises for amounts receivables, the following accounts shall be recorded:
Dr 111,
112, 152, 153, etc.
Cr 136 -
Other receivables (1368).
e) When
offsetting intra-company receivables against internal payables of the same
entity, the following accounts shall be recorded:
Dr 336 -
Other receivables (3368)
Cr 136 -
Other receivables (1368).
3.2.
In superior enterprise
a) When
a superior enterprise provides operating capital for inferior dependent
accounting units having no legal status:
- If the
business capital is in money, the following accounts shall be recorded:
Dr 1361
– Operating capital in affiliated units
Cr 111,
112.
- If
the business capital is fixed assets, the following accounts shall be recorded:
Dr 136 -
Other receivables (residual value of fixed assets) (1361)
Dr 214 -
Depreciation of fixed assets (value of depreciation of fixed assets)
Cr 211 –
Tangible fixed assets (cost prices).
b) In
case the dependent accounting units receive operating capital directly from
government budget according to the authorization of superior enterprise, when
the affiliated units receive capital, the superior enterprise shall record as
follow:
Dr 136 -
Other receivables (1361)
Cr 411 -
Owner’s invested equity.
c) When
the superior enterprise provides public funding or projects to affiliated
units, the following accounts shall be recorded:
Dr 136 -
Other receivables (1368)
Cr 111,
112, 461, etc.
d) In
case the dependent accounting unit is required to refund the business capital
to the superior enterprise, when the superior enterprise receives the refund,
the following accounts shall be recorded:
Dr 111,
112, etc.
Cr 136 -
Other receivables (1361).
dd)
According to report on operating capital paid to government budget by the
dependent accounting unit under authorization of superior enterprise, the
following accounts shall be recorded:
Dr 411 -
Owner’s invested equity.
Cr 136 -
Other receivables (1361).
e) When
selling goods or providing services for affiliated units in the enterprise,
according to operation and gradation in every unit, the revenue may be recorded
either at the time in which the goods or services are transferred to dependent
accounting units or at the time in which the dependent accounting units sell
goods or services:
- If the
revenue is recorded when the goods or services are transferred to dependent
accounting units, the following accounts shall be recorded:
Dr 136 -
Other receivables (1368)
Cr 511 –
Revenues (specific internal sale)
Cr 333 –
Taxes and other payables to the State.
- If the
revenue is not recorded when the goods or services are transferred to dependent
accounting units, the following accounts shall be recorded:
+ When
transferring goods or services:
Dr 136 -
Other receivables (1368)
Cr 154,
155, 156
Cr 333 –
Taxes and other payables to the State (if any).
+ When
the dependent accounting unit notifies that it has sold their goods or services
to a third party outside the enterprise, the following accounts shall be
recorded:
Dr 136 -
Other receivables (1368)
Cr 511 –
Revenues.
Concurrently,
the cost prices shall be recorded as follow:
Dr 632 –
Costs of goods sold
Cr 136 -
Other receivables (1368).
g) When
collecting interest receivables arising from business or other operation of
subsidiaries, the following accounts shall be recorded:
Dr 136 -
Other receivables (1368)
Cr 421 –
Unallocated profits.
h) When
paying for dependent accounting units, the following accounts shall be
recorded:
Dr 136 -
Other receivables (1368)
Cr 111,
112, etc.
I) When
receiving the business interests from affiliated units or repayment of amounts
paid on behalf of the affiliated units, the following accounts shall be recorded:
Cr 111,
112, etc.
Cr 136 -
Other receivables (1368).
k) When
offsetting intra-company receivables against internal payable of the same
entity, the following accounts shall be recorded:
Dr 336 -
Other receivables (3368)
Cr 136 -
Other receivables (1368).
3.3.
Accounting pertaining to investors establishing project management board
a) When
an investor issues a decision on allocation of investment capital in money,
materials or fixed assets to project management board, the following accounts
shall be recorded:
Dr 136 -
Other receivables (1361)
Dr 214 -
Depreciation of fixed assets
Cr 111,
112, 152
Cr 211 -
Tangible fixed assets
b) When
project management boards transfer deposit interests from temporarily unused
capital, the following accounts shall be recorded:
Dr 136 -
Other receivables (1368)
Cr 515 -
Financial income.
c) When
the investor transfers the capitalized borrowings costs to project management
board to the construction costs, the following accounts shall be recorded:
Dr 136 -
Other receivables (1363)
Cr 111,
112, 242, 335.
d) When
revenues, financial income or other incomes submitted by project management
boards are received, the following accounts shall be recorded:
Dr 136 -
Other receivables (1361, 1368)
Cr 515,
711.
dd) When
project management boards transfer input VAT on purchases of materials, tools,
fixed assets or services for project of investment to the investor for
deduction, the following accounts shall be recorded:
Dr 133 –
Deductible VAT
Cr 136 -
Other receivables (1368).
e) When
receiving cost prices for services, financial expenses or other expenses
transferred by project management boards, the following accounts shall be
recorded:
Dr 632,
635, 811, etc.
Cr 136 -
Other receivables (1362, 1368).
g) When
the project is finished and received, the following accounts shall be recorded:
- When
receiving the building work which is settled, the investor shall record the
value of the building work to settled price as follows:
Dr 111,
112, 152, 153, 211, 213, 217, 1557
Dr 133 –
Deductible VAT (if any)
Cr 136 -
Intra-company receivables (1361)
Cr 331,
333, etc. (debts payable, if any).
-
When receiving building work which is not settled, the investor shall record
the value of the building work to estimated price. When the building work is
settled, the value of the building work shall be adjusted to the settled price.
+ If the
settled price is greater than the estimated price, the following accounts shall
be recorded:
Dr 211,
213, 217, 1557
Cr,
relevant accounts.
+ If the
settled price is smaller than the estimated price, the following accounts shall
be recorded:
Dr,
relevant accounts.
Cr 211,
213, 217, 1557.
Article
21. Account 138 – Other receivables
1.
Rules for accounting
This
account is used to record debt receivables other than account 131, 136 and
payment of debts, containing:
- Value
of shortage of assets detected, but the reasons are not uncovered awaiting
resolution;
-
Material compensation for losses or damage to materials, goods or capital, etc
caused by individuals or groups (inside or outside enterprise);
-
Non-monetary assets borrowed by other entities (if lending in money, the loan
shall be recorded to account 1283);
-
Expenditures on public activities, projects, investment in capital investment,
production or business shall be recovered because they are not approved by
competent agency;
-
Expenditures on behalf of a third party required recovery, such as banking
fees, customs inspection fees, delivery expenses, material handling expenses,
taxes, etc
-
Receivables arising from equitization of state-owned enterprises, such as:
equitization costs, allowance for unemployed, support for re-training provided
for employees in the equalized enterprises, etc.
- Loan
interests, dividends, profits receivables from financial investment;
- Other
receivables.
2.
Structure and contents of account 138 – Other receivables
Debit:
- Value
of assets in shortage awaiting resolution;
-
Receivables from individuals or groups (inside or outside enterprise) for
assets in shortage whose reasons are uncovered and there is a resolution
report,
-
Receivables from equitization of state-owned enterprises;
- Loan
interests, deposit interests, dividends or profits receivables from financial
investment;
-
Expenditures on behalf of a third party subject to recovery, debts receivables;
-
Revaluation of receivables in foreign currencies (if the foreign currency rates
rise against VND).
Credit:
-
Transfer value of assets in shortage to relevant accounts according to
resolution decision;
-
Transfer receivables to equitization of state-owned enterprises;
-
Collected amounts of other debts receivables.
-
Revaluation of receivables in foreign currencies (if the foreign currency rates
fall against VND).
Debit
balance:
Non-collected
amounts of other debts receivables.
This account
may have balance in Credit side. The balance of Credit side records the
positive difference between collected amounts and amounts receivables (in
details).
Account
138 – Other receivables, comprises 3 sub-accounts:
-
Account 1381 – Assets in shortage awaiting resolution: recording value of
assets in shortage awaiting resolution.
In
principle, whenever asset deficiency is detected, the reasons and the person in
charge must be uncovered. The asset deficiency is only recorded to account 1381
if reasons for deficiency, losses or damage of assets in shortage awaiting
resolution are not uncovered. In case the reasons for asset deficiency are
uncovered and they are settled within a tax period, they shall be recorded to
equivalent accounts, not recorded to account 1381.
-
Account 1385 – Equitization receivables: recording equitization receivables
which the enterprise spends, such as: equitization costs, unemployment
allowances, support for re-training of employees in the equitized enterprises,
etc.
-
Account 1388 – Other receivables: recording receivables of the enterprise
other than amounts receivables recorded to accounts 131, 133, 136 and 1381,
1385, such as: dividends, profits or interests receivables; compensation
receivables due to losses of money or assets; etc.
3.
Accounting methods for several major transactions:
3.1. If
the deficiency of tangible fixed assets for business are detected without
reasons and pending settlement, the following accounts shall be recorded:
Dr 138 -
Other receivables (1381) (residual value of fixed assets)
Dr 214 -
Depreciation of fixed assets (depreciation value)
Cr 211 -
Tangible fixed assets (cost prices).
3.2. If
the deficiency of tangible fixed assets for public, projects or welfare are
detected without reasons and pending settlement, the decrease in fixed assets
shall be recorded as follows:
Dr 214 -
Depreciation of fixed assets (depreciation value)
Dr 466 –
Funding sources forming fixed assets (residual value) (fixed assets used for
public or projects)
Dr 3533
– Welfare funds forming fixed assets (residual value) (fixed assets used for
welfare)
Cr 211 –
Tangible fixed assets (cost prices).
And the
residual value of assets in shortage awaiting resolution shall be recorded as
follows:
Dr 138 -
Other receivables (1381)
Cr 353 -
Welfare fund (3532)
Cr 338 –
Others payable (fixed assets for public or projects).
3.3.
When the deficiency of cash balance, materials, goods, etc is detected:
a) If
the reasons for deficiency are not uncovered and pending settlement, the
following accounts shall be recorded:
Dr 138 -
Other receivables (1381)
Cr 111,
152, 153, 155, 156.
b) If
there is a written settlement of asset deficiency issued by the competent
agency, the following accounts shall be recorded:
Dr 111 –
Cash (individual or organization paying compensation)
Dr 1388
– Others receivables (individual or organization paying compensation)
Dr 334 –
Amounts payable to employees (compensation offsetting against salaries)
Dr 632 –
Costs of goods sold (value of depreciation of inventory after offsetting
against compensation according to the written settlement)
Dr 811 -
Other receivables (residual value of deficient fixed assets shall be accounted
for losses of the enterprise)
Cr 1381
– Assets in shortage awaiting resolution.
c) If
the reasons and persons in charge of asset deficiency are uncovered, the
following accounts shall be recorded according to the reasons or persons in
charge:
Dr 1388
– Others receivables (1388 – Others receivables) (amounts of compensation)
Dr 334 –
Amounts payable to employees (compensation offsetting against salaries)
Dr 632 –
Costs of goods sold (value of depreciation of inventory after offsetting
against compensation according to the written settlement)
Cr 621 –
Direct material costs
Cr 627 -
Factory overhead
Cr 152,
153, 155, 156.
Cr 111,
112.
3.4.
Temporary asset borrowings shall be recorded as follows:
Dr 138 -
Other receivables (1388)
Cr 152,
153, 155, 156, etc.
3.5.
Expenditures on behalf of a third party subject to recovery, other receivables,
and the following accounts shall be recorded as follows:
Dr 138 -
Other receivables (1388)
Cr,
relevant accounts.
3.6.
Accounting for trust transactions in import-export carried out by the trustee:
a) When
the trustee pays for the trustor, the following accounts shall be recorded:
Dr 138 -
Other receivables (1388) (if the trustor has not paid advance)
Dr 3388
- Other receivables (offsetting against payment of trustor)
Cr 111,
112, etc.
b) When
the export trustor offsets against expenses paid on behalf of a third party, the
export trustee shall record as follows:
Dr 338 -
Other receivables (3388)
Cr 138 -
Other receivables (1388)
c)
Transactions in export-import entrustment shall be accounted similarly to
account 138 – Others receivables; VAT on imported goods, special excise duty,
import duty carried out by the trustee and the trustor shall be accounted
similarly to account 333 – Taxes and other payables to the State.
3.7.
When determining loan interests, deposit interests, dividends or profits
receivables, the following accounts shall be recorded:
Dr 111,
112, etc. (collected amounts)
Dr 138 -
Other receivables (1388)
Cr 515 -
Financial income.
3.8.
When collecting other debt receivables, the following accounts shall be
recorded:
Dr 111 -
Cash
Dr 112 –
Cash in bank
Cr 138 -
Other receivables (1388)
3.9.
When receiving decision on solutions for other debt receivables unable to
recover:
Dr 111 –
Cash (compensation paid by individuals or groups)
Dr 334 –
Amounts payable to employees (compensation offsetting against salaries)
Dr 229 –
Provision for asset losses (2293) (using provision for doubtful debts, if
applicable)
Dr 642 -
Administrative expenses (recording to costs)
Cr 138 -
Other receivables (1388 – Other receivables).
3.10.
When enterprises have sold other receivables (recording in balance sheet) to
debt trading company, the following accounts shall be recorded:
Dr 111,
112, etc. (Collected amounts of sale of debts receivables)
Dr 229 –
Provision for asset losses (2293) (using provision for bad debts for the
differences)
Debit of
relevant accounts (difference between original price of doubtful debt and
collected amounts of sale of doubtful debt shall be covered by provision for
doubtful debt)
Cr 138 -
Other receivables (1388)
3.11.
When incurring costs of equitization of state-owned enterprises, the following
accounts shall be recorded:
Dr 1385-
Equitization receivables (detail costs of equitization)
Cr 111,
112, 152, 331, etc.
3.12.
When finishing equitization, the enterprise must send reports and make
declaration of expenditures on equitization to agency deciding the
equitization. Total costs of equitization, allowances for unemployment,
re-training of employees, etc shall be deducted (-) from collected amounts of
sale of state-owned stocks collected from equitization of state-owned
enterprises, the following accounts shall be recorded:
Dr 3385
– Equitization payable (collected amounts of sale of state-owned stocks)
Cr 1385
– Equitization receivables.
3.13.
With regard to expenditures on public activities, projects, investment in
capital investment or business which is not approved by competent agency and
subject to recovery, the following accounts shall be recorded:
Dr 138 -
Other receivables
Cr 161,
241, 641, 642, etc.
3.14.
When preparing financial statements, other outstanding debts receivables
derived from foreign currencies shall apply actual exchange rates:
- If
foreign currency rates rise against VND rates, the following accounts shall be
recorded:
Dr 138 -
Other receivables
Cr 413 –
Exchange rate differences (4131).
- If
foreign currency rates fall against VND rates, the following accounts shall be
recorded:
Dr 413 –
Exchange rate differences (4131)
Cr 138 -
Other receivables
Article
22. Account 141 – Advances
1.
Rules for accounting
a) This
account is used to record advances of an enterprise paid to employees in the
enterprise and payment of those advances.
b)
Advance is an amount or material given to receivers to do business or deal with
any approved tasks. The receivers must be employees working at the enterprise.
The regular receivers (working in department of material provision,
administration) must be appointed by Director in writing.
c) The
receiver (individual or group) must take responsibility for received advance
and use the advance for proper purposes and approved tasks. If the received
advance is unused or remained, it is required to repay to the fund. The
receiver shall not transfer the advance to others.
When
finishing the tasks, the receiver must make an advance payment sheet (enclose
with original documents) to pay fully received advance, used advance or
difference between received advance and used advance (if any). If the unused
advance is not repaid to the fund, the receiver's salary shall be deducted. If
the expenditure is greater than the received advance, the enterprise shall give
additional expenditure on the deficiency.
d) The
advance of this tax period is only received if the advance of previous tax
period is settled. The accountant must keep records of receivers,
receiving and payment of advances.
2.
Structure and contents of account 141 – Advances
Debit:
Amounts
of money or materials advanced to employees of the enterprise.
Credit:
- Paid
advances;
- Unused
advances which are required to repay to the fund or deducted from salaries;
- Unused
materials which are re-stored.
Debit
balance:
Unpaid
advances;
3.
Accounting methods for several major transactions:
a) When
advancing amounts of money or materials to employees of the enterprise, the
following accounts shall be recorded:
Dr 141 -
Advances
Cr 111,
112, 152, etc.
b) When
finishing assignment, the receiver shall make the advance payment sheet
enclosed with approved original documents for settlement of the advance; the
following accounts shall be recorded:
Dr 152,
153, 156, 241, 331, 621, 623, 627, 642, etc.
Cr 141 –
Advances.
c)
Unused advances which are repaid to the fund, re-stored or deducted from the
receiver’s salary, the following accounts shall be recorded:
Dr 111 -
Cash
Dr 152 –
Raw materials, materials
Dr 334 –
Amounts payable to employees
Cr 141 –
Advances.
d) If
the approved actual expenditure is greater than received advance, the
accountant shall make additional payment to the receiver; the following
accounts shall be recorded:
Dr 152,
153, 156, 241, 621, 622, 627, etc.
Cr 111 –
Cash.
Article
23. Rules for accounting for inventory
1. Group
of inventory accounts is used to record existing value and changes in inventory
of the enterprise (if the enterprise accounts for inventory using regular
declaration method) or record value of inventory in the opening or closing tax
period (if the enterprise accounts for inventory using periodical declaration
method).
2.
Inventory of the enterprise is assets bought for production or sale in an
ordinary course of business, including:
- Goods
in transit;
- Raw
materials, materials; tools;
-
Unfinished goods;
-
Commercial products, goods; consignments;
- Goods
stored in tax-suspension warehouse of the enterprise.
With
regard to unfinished goods, if their period of production or circulation
exceeding a normal business cycle, they shall not be recorded to inventory in
the balance sheet, but shall be recorded to long-term assets.
With
regard to equipment and spare parts for replacement whose preserve period is
more than 12 months or more than an ordinary course of business, they shall not
be recorded to inventory in the balance sheet, but shall be recorded to
long-term assets.
3. The
goods, materials, assets under agreement on keeping, deposit, import-export
trust, processing,...which are not under ownership and control of the
enterprise shall not be recorded to inventory.
4.
Accounting for inventory must comply with regulations on Vietnamese accounting
standard (VAS) “Inventory” when determining original prices of inventory,
method for calculation of value of inventory, determination of net realizable
value, making provision against devaluation of goods in stock and recording
costs.
5. Rules
for determination of original prices of inventory are applied specifically to
every type of materials, goods, according to sources and time in which the
prices are determined
6.
Non-refundable taxes which are recorded to value of inventory include:
non-deductible input VAT on inventory, Special excise duty, import tax,
environmental protection tax payable when buying inventory.
7. When
buying inventory, if goods, equipment or spare parts for replacement are
attached (provision for breakdown), the changeable goods, equipment or
accessories shall be recorded according to fair value. The value of purchased
goods shall equal total value of purchases goods minus (-) value of changeable
goods, equipment or spare parts for replacement.
8. When
selling inventory, the original prices of sold inventory shall be recorded to
production cost within a tax period in conformity with relevant revenues which
are recorded and in conformity with their nature of transactions. When
releasing inventory for promotion or advertisement, the rules below shall be
followed:
a) If
the inventory are released for promotion or advertisement without collecting
money, providing additional conditions (compulsory purchase of goods, etc), the
value of inventory shall be recorded to selling expenses (goods for promotion
or advertisement for detail);
b) If
the inventory are released for promotion or advertisement with additional
conditions that the customers are required to buy goods (e.g. buy two, get one
free, etc) The collected amounts shall be allocated to revenues from
complimentary products, the value of complimentary products shall be included
in their cost (nature of transaction is sale rebates).
9. When
determining value of closing inventory, the enterprise applies one of following
methods:
a)
Specific identification method: Specific identification method shall be applied
according to actual value of every purchased good or every sold good, so that
it is only applied to enterprises having a few items of products or stable and
identifiable goods.
b)
Weighted average method: value of every inventory item shall equal mean value
of each opening inventory item and value of each inventory item sold or
produced in current period. Mean value may be calculated in every period or
after import consignment, depending on specific conditions of every enterprise.
c) First
in, first out method (FIFO): This method assumes that inventory purchased or
manufactured first is sold first and newer inventory purchased or manufactured
near the end of the accounting period remains unsold. According to this method,
value of inventory sold shall apply prices of purchased inventory at or near
the beginning of the accounting period; value of closing inventory shall apply
prices of purchased inventory at or near the end of accounting period.
Every
inventory costing method has their certain advantages and disadvantages. The
accuracy and reliability of every method bases on management requirements,
standards, professional competence and calculating equipment or means of
information processing of the enterprise. And bases on preservation
requirements, complexity of types, specifications and fluctuation of materials
or goods of the enterprise.
10.
Regarding inventory purchased in foreign currencies, value of received
inventory shall base on actual exchange rates at the arising time (if the
seller is received an advance, the value of received inventory shall be
equivalent to the advance exchange rates. Import duty payable shall be
determined according to exchange rates for calculation of import duty provided
by customs authority as prescribed. Accounting for exchange differences shall
comply with regulations of Article 69 – Guidelines for accounting method for
exchange rate differences.
11. At
the end of the accounting period, if the inventory value is not recovered
enough due to damage or out of fashion, decrease in selling prices or increase
in cost of improvement or selling expenses, a decrease in original prices of
inventory shall be recorded leading the equal between the original cost and net
realizable value of inventory. Net realizable value is selling price of
inventory estimated in an ordinary course of business minus (-) estimated cost
of product improvement or cost of consumption.
The
decrease in original prices of inventory leading the equal between the original
cost and net realizable value shall be covered by provision against devaluation
of inventory. The provision against devaluation of inventory is the
positive difference between original cost and net realizable value of
inventory.
All
differences between provision against devaluation of inventory made at the end
of this accounting period must be greater than provision made at the end of
previous accounting period, the deficiency or losses of inventory shall be
recorded to production cost in the period after minus (-) compensation of
individual or unallocated factory overhead. All differences between provision
against devaluation of inventory made at the end of this accounting period must
be greater than provision made at the end of previous accounting period, the
deficiency or losses of inventory shall be recorded to production cost in the
period after minus (-) compensation of individual or unallocated factory
overhead.
12.
Inventory value and inventory in kind must be specifically accounted for every
kind, specification of goods or materials, management and use place, ensure the
conformity between actual materials or goods and general ledger and ledger.
13. An
enterprise (an accounting unit) may only apply one of two accounting methods
for inventory: perpetual inventory system, periodic inventory system. The
accounting method for inventory shall be selected at the enterprise according
to characteristics, quantity, types of materials or goods and management
requirements and in the accounting period.
Accounting
methods for inventory.
a)
Perpetual inventory system: Periodic inventory system is a method monitoring
and keeps up-to-date inventory records to account for additions to,
subtractions from or balance of inventory on the accounting records. When
applying perpetual inventory system, inventory accounts shall be used to record
current amounts, increase or decrease in materials or goods. Therefore, value
of inventory on accounting record may be determined at any time in the
accounting period.
At the
end of accounting period, the physical inventory count shall be compared with
inventory data in ledger. In principle, the actual inventory data must conform
to inventory data in ledger. If there is any difference, it is required to
uncover reasons and provide solutions. The perpetual inventory system is
usually applied to manufacturing enterprise (industry, construction, etc) And
commercial enterprises dealing in high value items such as machinery,
equipment, engineering goods, high quality , etc.
b)
Periodic inventory system:
- The
periodic inventory system shall be used to update the ending inventory balance
in the general ledger according to the physical inventory count and calculate
cost of goods or materials sold following the formulary below:
Cost
of goods sold
|
=
|
Beginning
inventory
|
+
|
Purchases
|
-
|
Ending
inventory
|
-
According to periodic inventory system, any changes in materials or goods
(additions to or subtractions from inventory) shall not be recorded to
inventory accounts. Value of materials or goods purchased and added to
inventory in the period shall be recorded to a separate account (account 611
“Purchases”).
- The
physical inventory count and determination of cost of goods or materials sold
(for production or for sale) shall be conducted at the end of accounting period
and used as the basis for accounting of account 611 “Purchases”. When applying
periodic inventory system, inventory accounts shall only used at the beginning
of the accounting period (for transfer of opening balance) and at the ending of
the accounting period (for recording actual ending inventory).
- This
method is usually applied to enterprises trading in multiple types of goods or
materials with different specification or models, low value, and those goods or
materials are regularly sold for use or sale (retail outlets, etc). This method
is simple and easy for accounting. But the accuracy of materials or goods sold
is affected by the management of warehouses, depot.
Article
24. Account 151 – Goods in transit
1.
Rules for accounting
a) This
account is used to record value of goods, materials (raw materials, materials,
tools; goods) purchased under ownership of the enterprise which are on the way
of delivery, in ports, depot, bonded warehouses or have arrived at the
enterprise but they are pending storing
b) Goods
or materials under ownership of the enterprise, but not been stocked,
including:
- Goods
or materials purchased payment or acceptance of payment, but still in
warehouses of seller, in ports, depot or on the way of delivery;
- Goods
or materials arrived at the enterprise but still are verification for stock.
c) Goods
in transit shall be recorded to account 151 according to original prices as
prescribed in VAS “Inventory"
d) Every
day, when receiving purchase invoices, but the goods are not stocked, the
accountant shall not keep records but compare them with economic contract and
store invoices in a separate dossier “Goods in transit”.
Within a
month, if the goods are stocked, they shall be recorded to account 152 “Raw
materials, materials”, account 153 “Tools", account 156 “Goods” or account
158 “tax-suspension warehouse goods” according to warehouse receipt and
purchase invoices.
dd) If
the goods are not arrived at the end of the month, they shall be recorded to
account 152 "Goods purchased in transit” according to purchase invoices.
The accountant must keep specific records of goods in transit according to
every type of goods, materials, consignment or economic contracts.
2.
Structure and contents of account 151 – Goods in transit
Debit:
- Value
of goods or materials purchased in transit;
-
Transfer of actual value of goods or materials purchased in transit at the end
of the accounting period (if the enterprise accounts for inventories using
periodic inventory system)
Credit:
- Value
of goods or materials purchased in transit which are stored or delivered to
customers;
-
Transfer of actual value of goods or materials purchased in transit at the
begin of the accounting period (if the enterprise accounts for inventories
using periodic inventory system)
Debit
balance: Value of goods or materials purchased in transit (not stored in the
enterprise's warehouse).
3.
Accounting methods for several major transactions:
a) The
enterprise accounts for inventories using perpetual inventory system.
- At the
end of accounting period, according to purchase invoices of goods purchased
which are not stored in warehouse, if the input VAT is deductible, the
following accounts shall be recorded:
Dr 151 -
Goods in transit (prices without VAT)
Dr 133 –
Deductible VAT
Cr 331 –
Trade payables; or
Cr 111,
112, 141, etc.
- If the
input VAT is not deductible, value of goods purchased shall include VAT
- Next
month, when goods are stored in warehouse, according to invoices and warehouse
receipts, the following accounts shall be recorded:
Dr 152 –
Raw materials, materials
Dr 153 -
Tools
Dr 156 -
Goods
Cr 151 -
Goods in transit.
- Next
month, if the goods or materials purchased in transit which are not stored in
warehouses but delivered to customers under economic contract at the seller's
vehicle or warehouses, at ports, depot or delivered directly to customers,
deposited at the agencies, the following accounts shall be recorded:
Dr 632 –
Costs of goods sold; or
Dr 157 –
Goods dispatched for sale
Cr 151 -
Goods in transit.
- In
case the goods purchased in transit are in shortage detected immediately or at
the ending inventory, according to report on shortage, the value of deficiency
or losses of inventories shall be recorded as follows:
Cr 1381
– Assets in shortage awaiting resolution.
Cr 151 -
Goods in transit.
b) If
the enterprise accounts for inventories using periodic inventory system.
- At the
ending inventory, according to actual value of goods or material in transit
which is transferred at the ending inventory before transferred actual value of
goods or materials in transit at the beginning inventory, the following
accounts shall be recorded:
Dr 611 –
Purchase of goods
Cr 151 -
Goods in transit.
- At the
beginning inventory, according to result of inventory to determine actual value
of goods or materials purchased but have not stored in warehouses (ending goods
in transit), the following accounts shall be recorded:
Dr 151 -
Goods in transit.
Cr 611 –
Purchase of goods.
Article
25. Account 152 – Raw materials inventory
1.
Rules for accounting
a) This
account is used to record current cost or increase or decrease in cost of all
component parts currently in enterprise’s stock. Raw materials of the
enterprise are labor materials purchased outside or home-made processed for
business. Raw materials or materials recorded to this account shall be classified
as follows:
-
Direct materials: These are materials incorporated into the final products.
Hence, direct materials term shall accompany with a specific manufacturer.
There is not direct or indirect materials term in the enterprises engaged in
commerce or services. Direct materials also include semi-finished goods
purchased for incorporation into the finished goods.
-
Indirect materials: These are materials not incorporated into the final
product, but which are combined with direct materials during the production
process to change colors, tastes, shapes or increase in quality of the final
product or facilitate production process, technology, packaging or
preservation; or serve the operation.
-
Fuels: These are any materials providing heat energy during the production
process and facilitate the process of making usual product. Fuels can exist
in liquid, solid and gas.
-
Replaced supplies: These are any materials used for replacement or repair
of machinery, equipment, vehicle, manufacturing tools or supplies, etc.
-
Materials and equipment for capital investment: These are materials and
equipment used for capital investment. The construction equipment items for
capital investment include equipment required installation, equipment required
non-installation, tools, instruments and materials used to install in the
capital investment projects.
b) The
received, dispatched or inventoried raw materials recorded to account 152 shall
be accounted according to historical costs as prescribed accounting standard
“Inventory”. Historical costs of raw materials shall be determined according to
every source.
-
Historical costs of raw materials include: Buying costs stated in invoices,
import duty, Special excise duty, import VAT, environmental protection tax
payable (if any), cost of delivery, material handling, preservation,
classification, insurance, etc; of raw materials from the supplier to the
enterprise’s stock, expenses incurred from employees in charge of purchase,
expenses incurred from independent department of purchase, other costs directly
related to purchase of raw materials and natural deficiency within the quotas
(if any):
+ If the
VAT on imported goods is deductible, cost of raw materials purchased shall not
include VAT. If the input VAT is not deductible, cost of raw materials
purchased shall include VAT.
+
Accounting for raw materials purchased in foreign currencies shall comply with
regulations of Article 69 – Guidelines for accounting method for exchange rate
differences.
-
Historical cost of raw materials home-made processed includes: actual cost
of materials for processing and cost of processing.
-
Historical cost of raw materials processed under outsourcing agreement
includes: actual cost of materials for outsourcing processing, cost of
delivery from the enterprise to processing facility and vice versa, cost of
outsourcing processing.
-
Historical cost of raw materials contributed to joint venture or joint-stock
companies is the cost which all parties involved in joint venture approve.
c) The
cost of raw materials inventory shall be calculated according to one of
following methods:
-
Specific costing method;
-
Weighted average method after receiving raw materials or at ending inventory;
- First
in, first out method.
The
enterprise must apply the chosen method throughout the accounting period.
d) The
raw materials shall be specifically accounted according to every inventory,
type, group, materials item. In case the enterprise uses the accounting cost in
the recording of received or dispatched raw materials, at the end of the
period, the difference coefficient between actual cost and accounting cost of
the raw materials shall be determined according to following formula:
Difference
coefficient between actual cost and accounting cost of raw materials
|
=
|
Beginning
inventory cost
|
+
|
Cost
of raw materials purchased
|
Beginning
inventory accounting cost
|
+
|
Accounting
cost of raw materials purchased
|
Cost
of raw materials sold
|
=
|
Accounting
cost of raw materials sold
|
x
|
Difference
coefficient between actual cost and accounting cost of raw materials
|
dd) Raw
materials not under ownership of the enterprise (raw materials kept or
materials received for processing or materials received from the export-import
trustor, etc) shall not be recorded to this account.
2.
Structure and contents of account 152 – Raw materials
Debit:
- Actual
cost of raw materials purchased, hand-made processed, outsourced, processed,
received as contribution or received from other sources;
- Cost
of raw materials excess detected when conducting physical inventory count;
-
Transfer of actual cost of ending raw materials inventory (if the enterprise
uses periodic inventory system)
Credit:
- Actual
cost of raw materials sold for production, business, sale, outsourcing, or
contribution as capital;
- Cost
of raw materials returned to sellers or sales rebates
- Trade
discount on raw materials purchased;
- Cost
of raw materials detected lost when conducting physical inventory count;
-
Transfer of actual cost of beginning raw materials inventory (if the enterprise
uses periodic inventory system)
Debit
balance:
Actual
cost of ending raw materials inventory.
3.
Accounting methods for several major transactions:
3.1.
Enterprise using perpetual inventory system.
a) When
buying raw materials to add to inventory, according to invoices, warehouse
receipt and relevant documents recording received raw materials cost:
- If
input VAT is deductible, the following accounts shall be recorded:
Dr 152 –
Raw materials (cost without VAT)
Dr 133 –
Deductible VAT (1331)
Cr 111,
112, 141, 331, etc. (total payment)
- If the
input VAT is not deductible, cost of raw materials shall include VAT.
b) Raw
materials returned to sellers, trade discount or sales discount received when
buying raw materials shall be accounted as follows:
- When
returning raw materials to sellers, the following accounts shall be recorded:
Cr 331 –
Trade payables
Cr 152 –
Raw materials
Cr 133 –
Deductible VAT
- In
case the trade discount or sales discount is discounted after buying raw
materials (including fines for violations against economic contracts leading a
decrease in payment made by the purchaser), the trade discount or sales
discount shall be allocated according to the increase or decrease in raw
materials, inventoried raw materials, dispatched raw materials for production
or construction investment or consumed during a period:
Dr 111,
112, 331, etc.
Cr 152 –
Raw materials (if raw materials are still inventoried)
Cr 621,
623, 627, 154 (if raw materials are dispatched for production)
Cr 241 –
Works-in-progress (if raw materials are dispatched for construction investment)
Cr 632 –
Cost price of goods (if the product in which those raw materials are
incorporated is determined as consumed during a period)
Cr 641,
642 (raw materials used for sale or management)
Cr 133 –
Deductible VAT (1331) (if any).
c) In
case the enterprise has received sales invoices but raw materials have not
received in the enterprise’s stock, the sales invoices shall be archived in a
separate dossier “Goods in transit”.
- Within
a month, if the raw materials have been received in the enterprise’s stock,
they shall be recorded to account 152 “Raw materials” according to sales
invoices and warehouse receipt.
- At the
end of the month, if the raw materials have not been received, they shall be accounted
for temporary cost according to sales invoices:
Dr 151 –
Goods in transit
Dr 133 –
Deductible VAT (1331)
Cr 331 –
Trade payables; or
Cr 111,
112, 141, etc.
- Next
month, if the raw materials have been received in the enterprise’s stock, the
following accounts shall be recorded according to sales invoices and warehouse
receipt:
Dr 152 –
Raw materials
Cr 151 –
Goods in transit
d) When
make payments to sellers, if the enterprise qualifies for payment discounts,
those payment discounts shall be recorded to financial income as follows:
Cr 331 –
Trade payables
Cr 515 –
Financial income (payment discounts).
dd)
Imported raw materials:
- When
importing raw materials, the following accounts shall be recorded:
Dr 152 –
Raw materials
Cr 331 –
Trade payables
Cr 3331
– Deductible VAT (33312) (if input VAT on imported goods are not deductible)
Cr 3332
– Special excise duty (if any).
Cr 3333
– Import/export duty (detail).
Cr 33381
– Environmental protection tax.
- If
input VAT on imported goods is deductible, the following accounts shall be
recorded:
Dr 133 –
Deductible VAT
Cr 3331
– Deductible VAT (33312).
- When
buying raw materials, if the seller is receive an advance in foreign
currencies, the cost of raw materials equivalent to the advance shall be
recorded according to actual exchange rates at the time in which the advance is
paid. The cost of raw materials not yet paid in foreign currencies shall be
recorded according to actual exchange rates at the time in which the raw
materials are purchased.
e) The
expenditures on purchase, material handling, and transport of raw materials to
the enterprise’s stock shall be recorded as follows:
Dr 152 –
Raw materials
Dr 133 –
Deductible VAT (1331)
Cr 111,
112, 141, 331, etc.
g)
Regarding raw materials processed under outsourcing agreement which is received
in the enterprise’s stock:
- When
dispatching raw materials to process, the following accounts shall be recorded:
Dr 154 -
Work in progress
Cr 152 –
Raw materials.
- When
incurring cost of outsourcing, the following accounts shall be recorded:
Dr 154 -
Work in progress
Dr 133 –
Deductible VAT (1331) (if any).
Cr 111,
112, 131, 141, etc.
- When
re-receiving the out-sourced raw materials, the following accounts shall be
recorded:
Dr 152 –
Raw materials
Cr 154 -
Work in progress
h)
Hand-made raw materials which are received in stock:
- When
dispatching raw materials for self-processing, the following accounts shall be
recorded:
Dr 154 -
Work in progress
Cr 152 –
Raw materials.
- When
receiving handmade raw materials, the following accounts shall be recorded:
Dr 152 –
Raw materials
Cr 154 -
Work in progress.
i) With
regard to excess of raw materials detected under physical inventory count, if
the reasons for excess are uncovered, it shall be the basis for accounting, if
not, the cost of raw materials in excess shall be the basis for accounting:
Dr 152 –
Raw materials
Cr 338 –
Other payable or receivables (3381).
- When
there is a decision on settlement of raw materials in excess detected under
physical inventory count, the following accounts shall be recorded:
Dr 338 –
Other payable or receivables (3381)
Cr,
relevant accounts.
- If the
raw materials in surplus belong to other enterprises and an increase in account
152 is not recorded, they shall not be recorded to account 338 (3381) but the
enterprise shall actively keep records and state in the presentation of
financial statements.
k) When
dispatching raw materials for business, the following accounts shall be
recorded:
Dr 621,
623, 627, 641, 642, etc.
Cr 152 –
Raw materials.
l) When
dispatching raw materials for capital investment or major repair of fixed
assets, the following accounts shall be recorded:
Dr 241 –
Construction in progress
Cr 152 –
Raw materials.
m) When
contributing raw materials to subsidiaries, joint-venture companies, the
following accounts shall be recorded:
Dr 221,
22 (according to re-evaluated value)
Dr 811 –
Other costs (re-evaluated value is smaller than book value)
Cr 152 –
Raw materials (according to book value)
Cr 711 –
Other costs (re-evaluated value is greater than book value)
n) When
dispatching raw materials to sell capital holding in subsidiaries,
joint-venture companies, the following accounts shall be recorded:
- The
revenues from sale of raw materials and investment in subsidiaries,
joint-venture companies, and the following accounts shall be recorded:
Dr 221,
222 (according to fair value)
Cr 511 –
Revenues from sale of merchandises and services rendered
Cr 3331
– Output VAT payable.
- Cost
prices of raw materials used for purchase of capital contribution in
subsidiaries, joint-venture companies shall be recorded as follows:
Dr 632 –
Costs of goods sold
Cr 152 –
Raw materials.
o) Raw
materials in excess detected when conducting physical inventory count:
Every
case in which the shortage of raw materials in stock or preservation is
detected when conducting physical inventory count must be make reports and
uncover the reasons and offenders. According to reports on physical inventory
count and decision of competent agency, the accounting shall be recorded as
follow:
- If
figures on ledger are error or are not updated, they are required to be
additionally provided or adjusted;
- If the
cost of raw materials in deficiency is under deficiency quotas, the following
accounts shall be recorded:
Dr 632 –
Costs of goods sold
Cr 152 –
Raw materials.
- If the
reasons for the deficiency or losses are uncovered pending settlement, the
following accounts shall be recorded:
Dr 138 –
Other payable (1381—Assets in shortage awaiting resolution)
Cr 152 –
Raw materials.
- When
there is a decision on settlement, the following accounts shall be recorded:
Dr 111 –
Cash (compensation of offenders)
Dr 138 –
Other receivables (1388) (compensation of offenders)
Dr 334 –
Payables to employees (deducting salaries of offenders)
Dr 632 –
Costs of goods sold (remaining value of shortage of raw materials which is
included in the costs of goods sold)
Cr 138 –
Other payable (1381—Assets in shortage awaiting resolution)
p)
Unused raw materials or waste:
- When
liquidating or selling raw materials or waste, cost prices shall be recorded as
follows:
Dr 632 –
Costs of goods sold
Cr 152 –
Raw materials.
-
Revenues from sale of raw materials or waste shall be recorded as follows:
Dr 111,
112, 131.
Cr 511 –
Revenues from sale of merchandises and services rendered (5118)
Cr 333 –
Taxes and other payables to the State.
3.2.
Enterprises using periodic inventory system.
a) At
the beginning of accounting period, when transferring cost of beginning raw
materials inventory, the following accounts shall be recorded:
Dr 611 –
Purchases
Cr 152 –
Raw materials.
b) At
the ending of accounting period, according to physical inventory count for
ending raw materials inventory, the following accounts shall be recorded:
Dr 152 –
Raw materials
Dr 611 –
Purchases
Article
26. Account 153 – Tools and supplies
1.
Rules for accounting
a) This
account is used to record current value and fluctuation of tools and supplies
of the enterprise. Tools and supplies are labor materials not satisfying
requirements pertaining to value and use time prescribed in regulations of
fixed assets. Thus, tools and supplies shall be managed and recorded similarly
to raw materials or materials. According to regulations in force, the following
labor materials shall be recorded tools and supplies if they fail to satisfy
requirements for fixed assets:
- The
scaffolding, formwork, tools, jigs used for construction manufacturing;
- Types
of packaging enclosed with goods charged separately, but their value is
depreciated during preservation of goods in transit and storage in the
warehouses;
- Tools
or supplies made of glass, porcelain, ceramic;
-
Management facilities, office supplies;
-
Clothing, footwear designed exclusively for work, etc.
b)
Received dispatched or inventoried tools or supplies recorded to account 153
shall apply original prices. Rules for determination of original prices of
received tools or supplies shall comply with regulations on raw materials or
materials (refer to account 152).
c) The
value of inventoried tools or supplies shall be calculated according to one of
following three methods:
- First
in – First out;
-
Specific identification;
- Weight
average.
d) Tools
or supplies shall be accounted for according to every inventory, type, and
group, type of tools or supplies. Dispatched tools or supplies for business or
lease must be kept records of items and value according to using place, lease
entities and persons in charge of compensation. The precious and worth tools or
supplies must be preserved specially.
dd) With
regard to tools and supplies holding low value used for business, they shall be
recorded once to production cost.
e) In
case the tools and supplies, reusable packaging materials or instruments for
renting related to business in several accounting periods, they shall be
recorded to account 242 “Prepaid expenses" and allocated to production
cost.
g)
Accounting for tools and supplies related to transactions in foreign currencies
shall comply with regulations of Article 69 – Guidelines for accounting method
for exchange rate differences.
2.
Structure and contents of account 153 – Tools and supplies
Debit:
- Actual
cost of received tools and supplies purchase, handmade, outsourced, or
contributed as capital;
- Cost
of received tools and supplies for lease;
- Actual
cost of tools and supplies in excess detected when conducting physical
inventory count;
-
Transfer of actual cost of ending tools and supplies inventory (if the
enterprise uses periodic inventory system)
Credit:
- Actual
cost of dispatched tools and supplies for business, lease or contribution as
capital;
- Trade
discounts on tools and supplies purchased;
- Cost
of tools and supplies returned to sellers or tools and supplies eligible for
discounts;
- Cost
of tools and supplies in deficiency detected when conducting physical inventory
count;
-
Transfer of actual cost of beginning tools and supplies inventory (if the
enterprise uses periodic inventory system)
Debit
balance: Actual cost of tools and supplies inventory.
Account
153 – Tools and supplies, comprises 4 sub-accounts:
-
Account 1531 – Tools and supplies: recording current cost and decrease or
increase in tools and supplies.
-
Account 1532 – Reusable packaging materials: recording current cost and
decrease or increase in circulated packages used for business Reusable
packaging materials is packaging designed for multiple reusability in business
cycle. The cost of dispatched reusable packaging materials shall be allocated
to production cost of multiple accounting periods.
-
Account 1533 – Instruments for renting: recording current cost and decrease
or increase in tools and supplies for renting. Only tools and supplies
purchased for renting are recorded to this account, if not, they shall be
recorded to account 1531. If those are used for enterprise’ operation, they
shall be both recorded to an account and a sub-account.
-
Account 1534 – Equipment and spare parts for replacement: recording current
cost and decrease and increase in equipment and spare parts for replacement not
meeting requirements pertaining to fixed assets for enterprise’s operation.
Costs of equipment and spare parts for replacement dispatched entirely shall be
recorded to operating costs or wholly allocated to operating costs if they are
used as tools and supplies.
3.
Accounting methods for several major transactions:
3.1.
Enterprise using perpetual inventory system.
a) When
buying tools and supplies to add to stock, if the input VAT is deductible, the
cost of tools and supplies shall be recorded according to the VAT-exclusive
prices, the following accounts shall be recorded according to invoices,
warehouse receipts and relevant documents:
Dr 153 –
Tools and supplies (VAT-exclusive prices)
Dr 133 –
Deductible VAT (input VAT) (1331)
Cr 111,
112, 141, 331, etc. (total payment).
If the
input VAT is not deductible, cost of input tools and supplies shall include
VAT.
b) In
case the trade discounts or sales rebates are received after buying tools and
supplies (including fines for violations against economic contracts leading
decrease in payment made by the purchaser), those discounts shall be allocated
according to decrease or increase in tools and supplies (inventoried or
dispatched tools and supplies for operation):
Dr 111,
112, 331, etc.
Cr 153 –
Tools and supplies (if those tools and supplies are still inventoried)
Cr 154 -
Work in progress (if those tools and supplies are dispatched for operation)
Cr 641,
642 (if those tools and supplies are dispatched for sale or enterprise
management)
Cr 242 –
Prepaid expenses (if they are gradually allocated)
Cr 632 –
Costs of goods sold (if the product in which those raw materials are
incorporated is determined in an accounting period)
Cr 133 –
Deductible VAT (1331) (if any).
c) When
returning tools and supplies sold to sellers, the following accounts shall be
recorded:
Cr 331 –
Trade payables
Cr 153 –
Tools and supplies (cost of returned tools and supplies)
Cr 133 –
Deductible VAT (if any) (input VAT on tools and supplies returned to sellers).
d) When
accounting for payment discounts (if any), the following accounts shall be
recorded:
Cr 331 –
Trade payables
Cr 515 -
Financial income.
dd) When
dispatching tools and supplies for operation:
- If
costs of tools and supplies, reusable packaging materials, instruments for
renting relate to an accounting period, they shall be wholly recorded to
operating expenses as follows:
Dr 623,
627, 641, 642
Cr 153 -
Tools and supplies (1531, 1532).
- If
costs of tools and supplies, reusable packaging materials, instruments for
renting relate to more than one accounting period, they shall be gradually
recorded to operating expenses as follows:
When
dispatching tools and supplies, reusable packaging materials or instruments for
renting, the following accounts shall be recorded:
Dr 242 –
Prepaid expenses
Cr 153 -
Tools and supplies.
+ When
distributing to costs of operation for every accounting period, the following
accounts shall be recorded:
Dr 623,
627, 641,642, etc.
Cr 242 –
Prepaid expenses.
-
Revenues from tools and supplies for renting shall be recorded as follows:
Dr 111,
112, 131, etc.
Cr 511 –
Revenues from sale of merchandises and services rendered (5113)
Cr 3331
– Deductible VAT (33311).
- When
receiving tools and supplies for renting, the following accounts shall be
recorded:
Dr 153 -
Tools and supplies (1533)
Cr 242 –
Prepaid expenses (residual value not recorded to expenses)
g)
Imported tools and supplies:
- When
importing tools and supplies, the following accounts shall be recorded:
Dr 153 -
Tools and supplies
Cr 331 –
Trade payables
Cr 3331
– Deductible VAT (33312) (if input VAT on imported goods are not deductible)
Cr 3332
– Special excise duty (if any).
Cr 3333
– Import/export duty (detail on import duty).
Cr 33381
– Environmental protection tax.
- If
input VAT on imported goods is deductible, the following accounts shall be
recorded:
Dr 133 –
Deductible VAT
Cr 3331
– Deductible VAT (33312).
- When
buying tools and supplies, if the seller is received an advance in foreign
currencies, the cost of tools and supplies equivalent to the advance shall be
recorded according to actual exchange rates at the time in which the advance is
paid. The remaining cost of tools and supplies shall be recorded according to
actual exchange rates at the time in which the tools and supplies are
purchased.
h) When
conducting physical inventory count, if it is detected that the tools and
supplies are excess, deficient, lost or damaged, they shall be settled
similarly to raw materials (refer to account 152).
i)
Unused tools and supplies:
- When
liquidating or selling tools and supplies, their costs shall be recorded as
follows:
Dr 632 –
Costs of goods sold
Cr 153 -
Tools and supplies.
-
Revenues from sale of tools and supplies shall be recorded as follows:
Dr 111,
112, 131.
Cr 511 –
Revenues from sale of merchandises and services rendered (5118)
Cr 333 –
Taxes and other payables to the State.
3.2.
Enterprises using periodic inventory system.
a) At
the beginning of accounting period, when transferring actual costs of beginning
tools and supplies inventory, the following accounts shall be recorded:
Dr 611 –
Purchases
Cr 153 -
Tools and supplies.
b) At
the ending of accounting period, according to physical inventory count for
ending tools and supplies inventory, the following accounts shall be recorded:
Dr 153 -
Tools and supplies
Cr 611 –
Purchases.
Article
27. Account 154 - Work in progress
1.
Rules for accounting
a) This
account is used to record general operating costs to calculate prime costs of
products or services in enterprises applying perpetual inventory system. In the enterprises applying perpetual inventory
system, the account 154 is used to record actual costs of ending work in
progress.
b)
Account 154 “Work in progress” records operating costs incurred in an
accounting period; operating costs of finished goods in an accounting period;
beginning or ending work in progress of the main or secondary operation and
outsourcing processing provided by manufacturers or service providers. This
account also records operating costs of processing operation, or services
rendered by commercial enterprises (if any).
c) The
operating costs recorded to 154 shall be clarified according to places in which
the costs incurred (workshops, production divisions, production groups,
construction sites, etc); types, groups of products, or product parts; types of
services or service stages.
d)
Operating costs recorded to account 154 shall include following costs:
- Direct
raw materials cost;
- Direct
labor cost;
- Costs
of construction machinery (construction contracts);
-
Factory overhead.
dd) The
raw materials or labor costs exceed the normal rate and non-allocated fixed
operating cost shall not be recorded to inventory cost but recorded to costs of
goods sold of an accounting period.
e) At
the end of the accounting period, it is required to distribute and transfer
fixed factory overhead to processing cost for each product unit under common
capacity (Cr 627, Dr 154). If actual capacity is smaller than common capacity,
the fixed factory overhead shall be allocated to processing costs for each product
unit under common capacity. The non-allocated fixed factory overhead (not
included in prime cost) shall be recorded to costs of goods sold in an
accounting period (Cr 627, Dr 632). All variable factories overhead shall be
allocated to processing costs for each product unit according to actual costs
incurred.
g) The
following costs shall not be recorded to account 154:
-
Selling expenses;
-
General administration expenses;
-
Financial expenses;
- Other
expenses;
-
Corporate income tax;
-
Non-business expenses, project expenses;
-
Capital expenditure;
- Other
expenses covered by other sources
2.
Method for applying account 154 in industry
a)
Account 154 - “Work in progress” applying to industry is used to collect
production costs and calculate prime cost of workshops, production
divisions. Regarding manufacturers using outsourcing for processing,
labor, services or manufacturing, those costs are also recorded to account 154.
b) Only
following costs shall be recorded to account 154:
- Direct
raw materials cost for manufacture of products;
- Direct
labor cost for manufacture of products;
-
Factory overhead for direct manufacture of products.
c) In
industrial enterprises, the account 154 shall be specifically recorded
according to places in which the costs incurred (workshops, the production
divisions), types or groups of products, products, or product parts.
d)
Regarding manufacturers using outsourcing for processing, labor, services or
manufacturing, those costs shall be recorded to account 154.
3.
Method for applying account 154 in agriculture
a)
Account 154 - “Work in progress” applying to industry is used to collect total
production costs and calculate prime cost of cultivation, processing of
agricultural products or services. This account shall be specifically recorded
according to agricultural lines of business (cultivation, animal husbandry,
processing, etc), places in which costs incurred (workshops, production
divisions, etc), kinds of sapling and products or services.
b)
Actual prime cost of agricultural products shall be determined at the end of
the crop year or at the end of the year. The prime cost shall be calculated in
the year when the products are harvested. Hence, if the costs incur in this
year, but products are harvested in the succeeding year, the prime cost shall
be calculated in the latter year.
c) In
cultivation, the costs shall be recorded according to 3 following plants:
-
Short-day crops (rice, potatoes, cassava, etc);
-
Multi-harvesting single plant (pineapples, bananas, etc);
- Perennial
plants (teas, coffees, rubbers, peppers, fruit plants, etc).
For
crops harvested two or three times in a year, or harvested one time in two
years, or crops having both new planting and plant care in the same year,...the
costs between two continuous crops, two areas, two continuous years,…shall be
recorded according to actual condition,...
d) The
expenses incurred from land reclamation, planting and caring of perennial
plants under capital investment, selling expenses, administrative expenses, financial
activities or other expenses.
dd) In
principle, production costs of agriculture shall be recorded to Dr 154 “Work in
progress” according to every expense object. Regarding the costs related to
multiple recording entities, multiple crops or multiple periods, it shall be
recorded to separate accounts, then recorded to prime cost of relevant
products: cost of irrigation water, the cost of land preparation and planting
of crops harvested several times (this cost does not belong to capital
expenditure), etc.
e) On the same acreage, if two or more short-term
crops are intercropped, the costs incurred directly related to (such as seeds,
cost of planting, harvesting, ...), costs incurred for several crops (cost
plowing, irrigation, ...) shall be separately collected and allocated to every
kind of plant according to their planting area or appropriate criteria.
d) Regarding perennial plants, the progress from
tillage, sowing, plant care to the onset of production (harvesting or bearing)
shall be recorded to account 241 “Construction in progress” similarly to
capital investment in requisition of fixed asset. Expenses incurred from
perennial gardens during the operation shall include expenses incurred from
plant care or harvesting process.
h) When
recording expenses of animal husbandry on the account 154, the following notes
must be taken:
- The
expenses incurred from animal husbandry must be kept records in details for
every type of husbandry (cattle farming, pig farming, etc), for every group or
every type of livestock and poultry;
- Young
animals of basic livestock herd after maternal separation shall be kept records
in details according to actual price; - Basic animals which are eliminated to
be converted into large livestock, fattening animal shall be recorded to
account 154 according to the remaining value of basic livestock;
- Cost
prices in the animal husbandry are: 1 kg of milk, 1 standard calf, 1 kg of meat
prices, the price of 1 kg of meat, the price of 1 day/ animal husbandry, etc.
i) The
direct material costs, labor costs in excess of normal rate, and fixed factory
overheads which are unallocated, shall not be charged to product cost, but be
charged to cost of goods sold of the accounting period.
4.
Method for applying account 154 in services
a) Account 154 “Work in progress” shall apply to
service providers, such as: transport, post office, tourism, services,
etc. This account is used to record total cost (direct raw
materials, direct labor, and factory overheads) and prime cost of the service
rendered.
b)
Regarding transport industry, this account is used to record cost related to
road transport (motorcars, trams, other non-motorized vehicle, etc. rail
transport, waterway, aerial transport, pipeline transport, etc. Account
154 applying to transport sector must be kept records in details for every
operation (passenger transport, freight transport, etc) Regarding every
enterprise or service division.
c)
During transport progress, the tires shall be replaced several times because
they are worn out more quickly than the depreciation of the car, however, the
value of the tires shall be depreciated steadily in every month instead of
including in the cost of transport at once. Therefore, the vehicular
transport enterprise may appropriate cost of tires to transport cost (payables)
as prescribed in financial regime in force every month.
d) The
direct material costs, labor costs in excess of normal rate, and fixed factory
overheads which are unallocated, shall not be charged to product cost, but be
charged to cost of goods sold of the accounting period.
dd)
Regarding tourism industry, this account is used to record every activity, such
as: guided tours, hotel, tourism transport, etc.
e) In
the hotel business, the account 154 is used to record every type of service,
such as: eating, drinking, accommodation, entertainment, other services
(laundry, haircuts, telegram, sports, etc).
5.
Method for applying account 154 in construction industry
a)
Because the construction business only applies perpetual inventory system, not
periodic inventory system, so that the account 154 is only used to record
operating expenses used for determination of products or services of the
construction enterprise.
b) The
direct material costs, labor costs in excess of normal rate, and fixed factory
overheads which are unallocated, shall not be charged to cost of building work,
but be charged to cost of goods sold of the accounting period.
c) This
account (in the construction industry) comprises 4 sub-accounts:
-
Account 1541 – Construction: records costs, prime cost of construction
products and value of construction in progress at the end of the period;
-
Account 1542 – Other products: records costs, prime cost of other products
and record value of other products in progress at the end of the period
(finished goods, structural elements, etc);
-
Account 1543 – Services: records costs, prime cost of services and
record cost of service in progress at the end of the period;
-
Account 1544 – Construction warranty costs: records expenses incurred from
construction warranty and actual installation arising in the period and the
value of construction in progress under warranty at the end of the period.
d) The
production cost, prime cost of the installation product must be recorded
according to every building work, work item and cost item specified in the
estimated construction price, including:
-
Materials cost;
- Labor
cost;
- Costs
of construction machinery;
-
Overheads.
The
factory overheads shall be recorded to Dr 1541 “Construction”: only include
general costs incurred from the construction contractor or construction site.
And the general administration cost of construction enterprise (as a part of
overheads) shall be recorded to Dr 642 "General administration expenses
". Those expenses shall be transferred to Dr 911 “Income statement” and
included in the prime cost of the construction product and sold during a
period.
dd) The
investor of the property construction shall use this account to record expenses
incurred from construction of finished property. If the property is constructed
for multiple purposes (office, lease or sale, for example mix-used buildings),
it is required to follow rules below:
- If
there are sufficient evidence for separate accounting or the portion of
expenses incurred from property construction for sale (finished property) and
expenses incurred from property construction for lease or office (fixed assets
or investment property), the expenses incurred from construction of finished
property shall be separately recorded to the account 154. The expenses incurred
from construction of fixed assets or investment property shall be separately
recorded to account 241 – Construction in progress.
- If the
account is not recorded separately or the proportion of construction costs for
components of finished property, fixed assets or property investments are
determined, the costs incurred directly related to the investment construction
shall be recorded to account 241. When the project is completed and put into
use, the costs of construction investment shall be transferred in conformity
with the nature of each asset according to the method of use of the asset.
6.
Structure and contents of account 154 - Work in progress
Debit:
- Direct
raw materials costs, direct labor costs, costs of construction machinery,
factory overheads incurred in an accounting period which is related to
manufacture of products and costs of services rendered;
- Direct
raw materials costs, direct labor costs, costs of construction machinery,
factory overheads incurred in an accounting period which is related to prime
cost of internal fixed price;
-
Transfer of ending work in progress (if the enterprise uses periodic inventory
system).
Credit:
- Actual
costs of manufactured products which are stocked transferred for sale, internal
use or immediate use in capital investment;
- Cost
prices of construction products finished and partially or completely
transferred which are consumed during a period, or transferred to main
construction contract unit (superior or internal contract unit), or cost price
of finished construction products to be consumed.
- Actual
expenses of services finished and provided for customers;
- Value
of returned scraps, value of damaged products which are not repairable;
- Value
of raw materials, materials, goods which are completely processed and returned
to warehouse;
-
Recording direct material costs, labor costs in excess of normal rate, and
fixed factory overheads which are unallocated, will not be charged to inventory
value, but must be charged to cost of goods sold of the accounting period. For
enterprises manufacturing according to orders, or enterprises having long
production cycle, fixed factory overheads are transferred to account 154 every
accounting period. When products are finished then fixed factory overheads will
be identified and not charged to value of inventory, but to costs of goods sold
(Cr 154, Dr 632);
-
Transferring work in process at beginning of period (in case business applies
periodical inventory).
Debit
balance: Ending work in progress.
7.
Method of accounting for several major transactions in Industry sector
7.1. Accounting for inventory using perpetual
inventory system
a) At
the end of period, when transferring direct raw material expenses according to
every expense object, the following accounts shall be recorded:
Dr 154 –
Work in progress
Dr 632 -
Costs of goods sold (portion of direct material costs in excess of normal rate)
Cr 621 –
Direct raw materials.
b) At
the end of period, when transferring direct labor costs according to every
expense object, the following accounts shall be recorded:
Dr 154 –
Work in progress
Dr 632 -
Costs of goods sold (portion of direct labor costs in excess of normal rate)
Cr 622 –
Direct labor costs.
c) In
case actual product capacity is higher than or equal to normal capacity, at end
of accounting period, computed, total factory overheads (including variable
factory overheads and fixed factory overheads) shall be calculated, allocated
and transferred according to every expense object, and the following accounts
shall be recorded:
Dr 154 –
Work in progress
Cr 627 –
Factory overheads.
d) In
case actual product capacity is lower than normal capacity, fixed factory
overheads shall be calculated and allocated to processing cost per unit of
product at the normal capacity. Unallocated factory overheads (positive
deference between actual fixed factory overheads and fixed factory overheads
charged to prime cost of product shall not be charged to prime cost of product)
shall be recorded to costs of goods sold during a period as follows:
Dr 154 –
Work in progress
Dr 632 –
Costs of goods sold (portion of fixed factory overheads unallocated to prime
cost of product)
Cr 627-
– Factory overheads.
dd)
Value of raw materials, materials outsourced for processing and returned to
warehouse, the following accounts shall be recorded:
Dr 152 –
Raw materials
Cr 154 –
Work in progress
e) Value
of unrepairable damaged products which was compensated by offender, the
following accounts shall be recorded:
Dr 138 –
Other receivables (1388)
Dr 334 –
Payables to employees.
Cr 154 –
Work in progress
g) In an
enterprise having long production and trade cycle, and direct material costs,
direct labor costs, and factory overheads were transferred to Account 154
during an accounting period, then, the portion of direct material costs of
direct labor costs in excess of normal rates, and portion of fixed factory
overheads not charged to prime cost of product (not charged to value of
inventory) shall be determined and recorded to costs of goods sold in the
accounting period as follows:
Dr 632 -
Costs of goods sold
Cr 154 –
Work in progress (when expenses are transferred from accounts 621, 622, 627 to
account 154).
h) When
delivering goods to inventory during a period, the prime costs of goods shall
be recorded as follows:
Dr 155 –
Finished goods
Cr 154 –
Work in progress
i) In
case finished goods are not stored but delivered for internal use or capital
investment, the following accounts shall be recorded:
Dr 641,
642, 241
Cr 154 –
Work in progress
k) After
dispatching raw materials to production, if any trade discount or sales rebate
(including fines for violations against business contracts leading a decrease
in payment of the purchaser) on such raw materials is received, a decrease in
work in progress pertaining to trade discount or sales rebate corresponding to
dispatched raw materials shall be recorded as follows:
Dr 111,
112, 331, etc.
Cr 154 –
Work in progress (trade discounts or sales obtained equivalently to dispatched
raw materials)
Cr 133 –
Deductible VAT (1331) (if any).
l)
Accounting for experimental products:
-
Production cost of experimental products shall be recorded to account 154
similarly to other products. When recovering (sale or liquidation) experimental
products, the following accounts shall be recorded:
Dr 111,
112, 131
Cr 154 –
Work in progress
Cr 3331
– VAT payables (if any).
-
Transferring difference between experimental production cost and amounts
collected from sale or liquidation of experimental products:
+ If the
experimental production cost is greater than the amounts collected from sale or
liquidation of experimental products, an increase in value of construction
asset shall be recorded as follows:
Dr 241 –
Construction in progress
Cr 154 –
Work in progress
+ If the
experimental production cost is smaller than the amounts collected from sale or
liquidation of experimental products, a decrease in value of construction asset
shall be recorded as follows:
Dr 154 –
Work in progress
Cr 241 –
Construction in progress
m) In
case finished goods are not stored but delivered directly to purchaser (water,
electricity products), the following accounts shall be recorded:
Dr 632 -
Costs of goods sold
Cr 154 –
Work in progress
7.2. Accounting for inventory using periodic
inventory system:
a) At the end of the accounting period, according
to the actual physical inventory count, the actual value of work in progress
shall be determined and transferred as follows:
Dr 154 –
Work in progress
Cr 631 –
Production costs
b) At the beginning of accounting period, when
transferring actual work in progress, the following accounts shall be recorded:
Dr 631 –
Production costs
Cr 154 –
Work in progress
8.
Method of accounting for several major transactions in Agriculture sector
8.1. Accounting for inventory using perpetual
inventory system
a) At
the end of accounting period, direct material costs shall be calculated and
transferred according to operating expense object as follows:
Dr 154 –
Work in progress
Dr 632 -
Costs of goods sold (portion of direct material costs in excess of normal rate)
Cr 621 –
Direct raw materials.
b) At
the end of accounting period, direct labor costs shall be calculated and
transferred according to expense object as follows:
Dr 154 –
Work in progress
Dr 632 -
Costs of goods sold (portion of direct labor costs in excess of normal rate)
Cr 622 –
Direct labor costs.
c) At
the end of accounting period, factory overheads shall be calculated and
transferred according to expense object as follows:
Dr 154 –
Work in progress
Dr 632 –
Costs of goods sold (portion of fixed factory overheads unallocated to prime
cost of product)
Cr 627 –
Factory overheads.
d) Value
of returned subsidiary products shall be recorded as follows:
Dr 152 –
Raw materials
Cr 154 –
Work in progress
dd)
Value of returned scraps, of raw materials and trade expenses outsourcing, and
have been completely processed, returned to storehouse shall be recorded as
follows:
Dr 152 –
Raw materials
Cr 154 –
Work in progress
e) Value
of young domestic animals and raised domestic animals transferred to working
animals or reproductive animals shall be recorded as follows:
Dr 211 –
Tangible fixed asset (2116)
Cr 154 –
Work in progress
g)
Actual production cost of output products, stored or immediately consumed shall
be recorded as follows:
Dr 155 –
Finished goods
Dr 632 -
Costs of goods sold
Cr 154 –
Work in progress
h) Output products which are internally consumed
without inventory shall be recorded as follows:
Dr 641,
642, 241
Cr 154 –
Work in progress
8.2. Accounting for inventory using periodic
inventory system:
Accounting
method for severed major trade activities at Account 154 in Agriculture is
similar to that of Industry.
9.
Method of accounting for several major transactions in Services sector
Accounting
method for severed major trade activities at Account 154 in Services is similar
to that of Industry. Notes:
a)
Actual cost of service which is completed, transferred to purchased and
determined as sale during a period shall be transferred as follows:
Dr 632 -
Costs of goods sold
Cr 154 –
Work in progress
b) When
using internal consumes service, the following accounts shall be recorded:
Dr 641,
642.
Cr 154 –
Work in progress
10.
Method of accounting for several major transactions in Construction sector
10.1.
Accounting method for collecting construction expenses (Dr 1541
“Construction”):
a)
Accounting for items of direct raw materials:
- Items
of direct raw materials consist of: Actual value of main materials, subsidiary
materials, component parts on dismantled parts, circulating materials
participating in formation of construction product substances, or support for
implementation and performance of construction volume (not including subsidiary
materials for machinery and operation facilities, and main materials expenses
included in factory overheads).
-
Accounting rules for items of direct raw materials: Raw materials or materials
used for some work items must be charged directly to those work items according
to original documents with actual volume of used materials, and with actual
delivery price (weighted average price, FIFO price, and specific
identification).
- At the
end of accounting period or when construction is completed, residual materials
inventory at production site (if any) shall be undergone physical inventory
count to record as a decrease in costs of direct materials delivered for use in
construction.
- If
direct material costs for each building work or work item is not feasible to
calculate in actual conditions, then the enterprise may apply material
allocation method for consumed objects with reasonable criteria for (in
proportion to consume quota on raw materials, etc).
-
According to Table of materials allocated for each building work or work item,
the following accounts shall be recorded:
Dr 154 –
Work in progress (material costs)
Dr 632 -
Costs of goods sold (direct material costs in excess of normal rate)
Cr 621 –
Direct raw materials.
b)
Accounting for direct labor costs: similar to Industry sector
c)
Accounting for costs of construction machinery
- Costs
of construction machinery shall include: Expenses incurred from machinery
operation to perform construction volume by machine. Operating machinery is a
kind of machine served directly for construction. Such as, machinery operated
by hydro steam engine, diesel, and petrol and by electricity, etc.
(including kinds of machine served for construction and assembly).
-
Expenses of machinery operation consist of permanent expenses and temporary
expenses. Permanent expenses for operation of machinery consist of: Expenses of
labor handling machine, serving machine, etc; expenses of materials, of
instruments and tools; depreciation expenses of fixed assets, expenses of
outsourced services (small repairs, electricity and water expenses, trucks and
machine expenses, etc); other expenses in cash.
-
Temporary expenses for operation of machinery consist of: Expenses for great
repairs of operating machine (maintenance overhaul, repairs of medium
importance, etc) which are not eligible for recording as an increase in
historical cost of operating machine; expenses for temporary works for
operating machine (huts, sheds, platform, railway for machines). Temporary
expenses of machine may incur in advance (debited Account 142 or Account 242),
and they will be deferred to Account 623 “Operating machine expenses”, or
incurred later, but they must be charged in advance to construction expenses
during a period (because they relate to actual use of operating machines during
the period). In this case it is necessary to accrue expenses, Cr 332
“Provisions”, Dr 623 “Costs of construction machinery”.
-
Expenses summary and calculation of costs of construction machinery must be
separately recorded for each operating machine (see guidance on Account 623
“Costs of construction machinery”).
-
According to Table of costs of construction machinery (actual expenses of
machine shift) for every building work or work item, the following accounts
shall be recorded:
Dr 154 –
Work in progress
Dr 632 -
Costs of goods sold (costs in excess of normal rate)
Cr 623 –
Costs of construction machinery.
d)
Accounting for factory overheads:
-
Factory overheads record production costs of construction team or work sites,
including: salaries of factory management staff, of construction teams and
groups, social insurance and health insurance appropriation and trade union
fees appropriation will be computed with regulated proportion on salaries
payables for construction direct workers, operating machine operators, and
management staffs of factories, teams and groups; fixed assets depreciation
used for total activities of teams, and other related expenses of team
activities, etc.
When
these expenses incur during a period, the following accounts shall be recorded:
Dr 627 –
Factory overheads.
Dr 133 –
Deductible VAT (if any).
Cr 111,
112, 152, 153, 214, 242, 334, 338, etc.
- When
determining provisions for construction warranty, the following accounts shall
be recorded:
Dr 627 –
Factory overheads.
Cr 352 –
Provisions.
- When
incurring expenses incurred from repair and warranty of the construction, such
as expenses incurred from direct raw materials, direct labor costs, costs of
construction machinery, factory overheads, these expenses shall be recorded to
relevant accounts, the following accounts shall be recorded:
Dr 621 –
Direct raw materials.
Dr 622 –
Direct labor costs.
Dr 623 –
Costs of construction machinery.
Dr 627 –
Factory overheads.
Dr 133 –
Deductible VAT (if any).
Cr 111,
112, 152, 153, 214, 242, 334, 338, etc.
- At the
end of the period, actual expenses incurred from direct raw materials, direct
labor costs, costs of construction machinery, factory overheads related to
repair and warranty of construction to record expenses incurred from repair and
warranty and calculate prime cost of warranty, the following accounts shall be
recorded:
Dr 154 –
Work in progress
Cr 621 –
Direct raw materials.
Cr 622 –
Direct labor costs.
Cr 623 –
Costs of construction machinery.
Cr 627 –
Factory overheads.
- When
finishing repair or warranty of the construction and transferring them to
customers, the following accounts shall be recorded:
Dr 352 –
Provisions.
Cr 154 –
Work in progress
- When
warranty on construction works expires, if the works are not warranted or the
provisions for construction work warranty are greater than the actual costs
incurred, the difference must be reverted, and then the following accounts
shall be recorded:
Dr 352 –
Provisions.
Cr 711 –
Other income.
- At the
end of the accounting period, according to the Table of factory overheads
allocation, the factory overheads shall be allocated and transferred to
relevant building works or work items (equivalent to labor costs); the
following accounts shall be recorded:
Dr 154 –
Work in progress
Dr 632 –
Costs of goods sold (portion of fixed factory overheads unallocated to prime
cost of construction)
Cr 627 –
Factory overheads.
10.2.
Method of accounting for and transferring construction expenses (Cr 1541
“Construction”):
a)
Unrecoverable cost of the contract cannot be recovered (e.g., not enough legal
enforcement such as there is doubts about its validity, or the contract that
the customers cannot fulfill their obligations ...) must be recorded to
expenses during the period as follows:
Dr 632 -
Costs of goods sold
Cr 154 –
Work in progress
b)
Expenses directly related to every contract may be eligible for deduction if
other receipts not including in the revenue of the contract. For example:
receipts from sale of raw materials in surplus and disposal of machinery or
equipment when terminating the construction contract:
- When
delivering raw materials in surplus to inventory at the expiration of the
construction contract, the following accounts shall be recorded:
Dr 152 –
Direct raw materials (according to original cost)
Cr 154 –
Work in progress.
- When
recovering scrap then delivering them to inventory, the following accounts
shall be recorded:
Dr 152 –
Direct raw materials (according to recoverable cost)
Cr 154 –
Work in progress.
- If the
materials in surplus and recovered scrap which are sold without delivered to
inventory, receipts from materials in surplus and scrap and a decrease in
expenses shall be recorded as follows:
Dr 111,
112, 131, etc. (total payment)
Cr 3331
– VAT payable (33311)
Cr 154 –
Work in progress.
-
Accounting for disposal of machinery or equipment specially used for
construction contract and these fixed assets are depreciated fully on the
expiry date of the construction contract:
+ The
receipts from disposal of machinery or equipment shall be recorded as follows:
Dr 111,
112, 131, etc.
Cr 3331
– VAT payable (33311)
Cr 154 –
Work in progress.
+ The
expenses incurred from disposal of machinery or equipment (if any) shall be
recorded as follows:
Dr 154 –
Work in progress
Dr 133 –
Deductible VAT (1331).
Cr 111,
112, etc.
+ A
decrease in fully depreciated fixed assets which are special machinery or
equipment shall be recorded as follows:
Dr 214 –
Depreciation of fixed assets
Cr 211 –
Tangible fixed asset.
c) At
the end of the accounting period, according to cost price of construction
product actually finished and identified to be sold (partly transfer or
completely transfer to project management board - Party A), or transferred to
internal main contract business:
- In
case transferring to Party A (including transfer of finished construction
volume according to internal contract, if contract unit has separate account
division), the following accounts shall be recorded:
Dr 632 -
Costs of goods sold
Cr 154 –
Work in progress (1541).
- In
case construction product is finished to be sold (constructing houses for
sales,...), or construction products finished but are not yet transferred,
according to cost price of finished construction product to be sold, the
following accounts shall be recorded:
Dr 155 –
Finished goods
Cr 154 –
Work in progress (1541).
- In
case transferring finished construction product to main construction contract
unit (superior, or internal unit - when implementing internal construction
contract, contract unit has separate account division but only adjust account
up to costs of construction production), the following accounts shall be
recorded:
Dr 352 –
Intra-company receivables (3368)
Cr 154 –
Work in progress (1541).
Article
28. Account 155 – Finished goods inventory
1.
Rules for accounting
a) This
account is used to record current cost and decrease or increase in finished
goods of the enterprise. Finished goods inventory are products which have been
completely processed through manufacturing process of manufactured business, or
products completely outsourced and verified as compliance with technical
standards and stored.
In the
transactions in export entrustment, this account is only used by trustor, not
by trustee
b) The
finished goods manufactured by direct production divisions and indirect
production divisions of the enterprise must be evaluated according to prime
cost, including: direct raw materials cost, direct labor cost, factory overhead
and direct relevant costs related to manufacture of products.
-
Variable factory overhead shall be wholly allocated to processing cost of each
product unit according to actual cost incurred within an accounting period.
- Fixed
factory overhead shall be allocated to processing cost of each product unit
according to common capacity of manufacturing machinery and equipment. Common
capacity means common volume of products manufactured in the normal
manufacturing condition.
- If the
actual capacity is greater than common capacity, the fixed factory overhead
shall be allocated to each unit according to actual costs incurred.
- If the
actual capacity is lower than common capacity, the fixed factory overhead shall
only be allocated to processing cost for each unit according to the common
capacity. The non-allocated factory overhead shall be recorded to the cost for
income output (recorded to costs of goods sold) within an accounting period.
c) The
following costs shall not be recorded to prime costs of finished goods:
- Costs
of raw materials, labor and other operating costs incurred exceeding normal
rates;
- Cost
of preservation of inventory deducted from cost of preservation of inventory
for next manufacturing process and preservation cost as prescribed in
Accounting standard “Inventory”;
-
Selling expenses;
-
General administration expenses;
d)
Finished goods processed under outsourcing agreement shall be evaluated
according to actual prime cost of processing, including: direct raw materials
cost, outsourcing cost and other costs related to outsourcing process.
dd) The
cost of finished goods inventory shall be calculated according to one of
following method: specific identification; weight average; or first in – first
out.
e) In
case the enterprise uses the periodic inventory system, the finished goods
which are received and dispatched inventory shall be recorded daily according
to accounting cost (may be planned prime cost or regulated inventory cost). At
the end of the month, the actual prime cost of inventoried finished goods must
be calculated and difference between actual prime cost and accounting cost of finished
goods (including the difference of beginning finished goods) which is the basis
for calculation of actual prime cost of received or dispatched finished goods
within an accounting period (using the formula prescribed in account 152 “Raw
materials”).
g) The
finished goods shall be specifically accounted according to every inventory,
type, group, finished good items.
2.
Structure and contents of account 155 – Finished goods
Debit:
- Cost
of inventoried finished goods;
- Cost
of finished goods in surplus under physical inventory count;
-
Transfer of cost of ending finished goods inventory (if the enterprise uses
periodic inventory system)
Credit:
- Actual
cost of dispatched finished goods;
- Cost
of finished goods in shortage under physical inventory count;
-
Transfer of actual cost of beginning finished goods inventory (if the
enterprise uses periodic inventory system)
Debit
balance: Actual cost of ending finished goods inventory.
Account
155 – Finished products, comprises 2 sub-accounts:
-
Account 1551 – Inventoried finished goods: recording current cost and decrease
or increase in inventoried finished goods (other than finished goods which are
real estate);
-
Account 1557 – Finished goods – property: recording current cost and decrease
or increase in Finished goods – property of the enterprise. Finished goods
– property include: land use rights; housing; or housing and land use rights;
infrastructure invested for the ordinary course of business
3.
Accounting methods for several major transactions:
3.1.
Enterprise using perpetual inventory system.
3.1.1.
When receiving finished goods manufactured by the enterprise or under
outsourcing agreement, the following accounts shall be recorded:
Dr 155 –
Finished goods
Cr 154 -
Work in progress.
3.1.2.
When dispatching finished goods for sale to customers, the costs of finished
goods sold shall be recorded as follows:
a)
Finished goods – non-real estate
Dr 632 –
Costs of goods sold
Cr 155 –
Finished goods
b)
Finished goods – property (for building work invested by the enterprise)
b1)
Original prices of Finished goods – property shall include total costs directly
related to investment in construction of real estate (including costs of
construction of infrastructure associated with the real estate) making the real
estate available for sale.
b2)
Costs related to investment in construction of real estate must be incurred
costs which obtain acceptance report.
b3) In
case the enterprise has not compiled documents on costs related to investment
of construction of real estate, but the revenues from sale of the real estate
generated, the enterprise may extract a portion of the cost to provisionally
calculate costs of goods sold. When the documents are sufficiently compiled or
the real estate is constructed wholly, the enterprise must settle total costs
which are accrued from costs of goods sold The positive difference between
accrued cost in advance and actually incurred cost shall be recorded as a
decrease in costs of goods sold during the accounting period subject to settlement.
b4) The
advanced costs deducted for provisional costs of Finished goods – property must
follow the rules below:
- The
enterprise may only accrue an advance of costs stated in the estimates for
investment in construction, but there are not enough documents for acceptance
and specific presentation of reasons, accrued expenses incurred from every work
item within an accounting period.
-The
enterprise may only accrue costs to calculate provisionally costs of goods sold
for finished real estate, which is sold within an accounting period and qualify
for recording revenues as prescribed in this Circular.
-
Provisional accrued expenses and actual cost incurred shall be recorded to
costs of goods sold provided that they are equivalent to quota of cost according
to total estimate cost of the portion of real estate which is sold (defined by
area).
b5)
Accounting method for costs of Finished goods – property sold.
- When
selling the portion of finished goods, the following accounts shall be
recorded:
Dr 632 –
Costs of goods sold
Cr 155 –
Finished goods
- When
extracting costs to provisionally calculate costs of Finished goods – property
sold within an accounting period, the following accounts shall be recorded:
Dr 632 –
Costs of goods sold
Cr 335 –
Expenses payable.
- The
actual cost of investment in construction incurred which have sufficient and
accepted documents shall be compiled to calculate cost of investment in
construction of real estate, the following accounts shall be recorded:
Dr 154 -
Work in progress
Dr 133 –
Deductible VAT
Cr,
relevant accounts.
- When
there are sufficient documents proved prepaid expenses incurred actually,
decreases in prepaid expenses and work in progress shall be recorded as
follows:
Dr 335 –
Expenses payable.
Cr 154 -
Work in progress.
- When
the whole project for real estate finishes, the final settlement must be made
and a decrease in remaining prepaid expenses (if any) shall be recorded as
follows:
Dr 335 –
Expenses payable.
Cr 154 -
Work in progress.
Cr 632 –
Costs of goods sold (the remaining prepaid expenses must be greater than actual
expenses incurred).
3.1.3.
When dispatching finished goods for sale or agencies, the following accounts
shall be recorded:
Dr 157 –
Consignment goods (through agencies)
Cr 155 –
Finished goods
3.1.4.
When a buyer returns finished goods sold: If the returned goods subject to VAT
using credit-invoice method, revenues from goods returned (VAT-exclusive
prices), and the following accounts shall be recorded:
Dr 521 –
Revenue deductions (5213)
Dr 3331
– VAT payable (33311).
Cr 111,
112, 131, etc. (total cost of goods returned).
And the
costs of finished goods sold which are delivered to inventory shall be recorded
as follows:
Dr 155 –
Finished goods
Cr 632 –
Costs of goods sold.
3.1.5.
Internal consumer goods shall be recorded as follows:
Dr 641,
642, 241, 211
Cr 155 –
Finished goods
3.1.6.
Dispatching finished goods and transferring to dependent accounting units of
the enterprise:
- In
case the dependent accounting units are in charge of recording revenues, costs
of goods, the costs of finished goods sold shall be recorded as follows:
Dr 632 –
Costs of goods sold
Cr 155 –
Finished goods
- In
case the dependent accounting unit is not in charge of recording revenues,
costs of goods, the costs of products circulated intra-company shall be
intra-company receivables and be recorded as follows:
Dr 136 -
Intra-company receivables
Cr 155 –
Finished goods
Cr 333 –
Taxes and other payables to the State (in detail).
3.1.7
When contributing finished goods to subsidiaries, joint-venture companies as
capital, the following accounts shall be recorded:
Dr 221,
22 (according to re-evaluated value)
Dr 811 –
Other expenses (re-evaluated value is smaller than book value of finished
goods)
Cr 155 –
Finished goods
Cr 711 –
Other incomes (re-evaluated value is greater than book value of finished goods)
3.1.8
When dispatching finished goods to sell capital holding in subsidiaries,
joint-venture companies, the following accounts shall be recorded:
- The
revenues from sale of raw materials and investment in subsidiaries,
joint-venture companies, and the following accounts shall be recorded:
Dr 221,
222 (according to fair value)
Cr 511-
– Revenues
Cr 3331
– Output VAT payable.
- The
costs of finished goods to sell capital holding in subsidiaries, joint-venture
companies shall be recorded as follows:
Dr 632 –
Costs of goods sold
Cr 155-
– Finished goods
3.1.9
Whenever the surplus or shortage of finished goods is detected under physical
inventory count, it is required to make report and uncover reasons and look for
offender(s). According to reports on physical inventory count and decision of
competent agency, the accounting shall be recorded as follow:
- If the
surplus or shortage of finished goods caused by errors or are not updated, they
are required to be additionally provided or adjusted on the accounting records;
- In
case it fails to uncover reasons for surplus or shortage, it shall be pending
for settlement:
+ If the
finished goods are surplus, the following accounts shall be recorded:
Dr 155 –
Finished goods (according to fair value)
Cr 338 –
Other payables or receivables (3381).
When
there is a decision of settlement made by the competent agency, the following
accounts shall be recorded:
Dr 338 –
Other payables or receivables.
Cr,
relevant accounts.
+ If the
finished goods are deficient, the following accounts shall be recorded:
Dr 138 –
Other payables (1381 – Assets in shortage awaiting resolution)
Cr 155 –
Finished goods
- When
there is a decision on settlement made by the competent agency, the following
accounts shall be recorded:
Dr 111,
112, etc. (if the offender pays compensation in cash)
Dr 334 –
Payables to employees (deducting salaries of offenders)
Dr 138 –
Other receivables (1388) (compensation of offenders)
Dr 632 –
Costs of goods sold (remaining shortage after offsetting against compensation)
Cr 138 -
Other receivables (1381).
3.1.10
When the enterprise uses products for giving, promotion or advertisement (under
law on commerce):
a) If
the products are manufactured for giving, promotion or advertisement without
collecting money or any additional conditions (compulsory purchase of goods,
etc), the costs of products shall be recorded to selling expenses as follows
(goods for promotion or advertisement for detail):
Dr 641 –
Selling expenses
Cr 155 –
Finished goods (production cost of products).
b) If
the products are manufactured for promotion or advertisement with additional
conditions that the customers are required to buy goods (e.g. buy two, get one
free, etc) The collected amounts of moneys shall be recorded to revenues
(including promotion goods), costs of promotion goods shall be recorded to
costs of goods sold (nature of transaction is a decrease in good costs).
- When
dispatching promotion goods, the costs of promotion goods shall be recorded to
costs of goods sold as follows:
Dr 632 –
Cost prices of goods sold (prime cost)
Cr 155 –
Finished goods
- When
receiving revenues from promotion goods shall be recorded to goods sold and
promotion goods as follows:
Dr 111,
112, 131, etc.
Cr 511 –
Revenues
Cr 3331
– Deductible VAT (33311) (if any).
c) If
products manufactured for giving staff using welfare fund, the revenues and
costs of goods shall be recorded similarly to ordinary selling transactions as
follows:
- The
products for giving to staff and employees shall be recorded to costs of goods
sold:
Dr 632 –
Costs of goods sold
Cr 155 –
Finished goods
-
Products for giving using welfare fund shall be recorded to revenues as
follows:
Cr 353 -
Welfare fund (total payment)
Cr 511 –
Revenues
Cr 3331
– Deductible VAT (33311) (if any).
3.1.11.
Paying salaries to employees by products
- The
revenues from products for paying salaries to employees shall be recorded as
follows:
Dr 334 –
Payables to employees (total costs)
Cr 511 –
Revenues
Cr 3331
– VAT payable (33311).
Cr 3335
– Deductible VAT (if any).
- The
cost of products for paying salaries to employees shall be recorded to costs of
goods sold as follows:
Dr 632 –
Costs of goods sold
Cr 155 –
Finished goods
3.1.12.
When liquidating or selling unused finished goods, their costs shall be
recorded as follows:
Dr 632 –
Costs of goods sold
Cr 155 –
Finished goods
3.2.
Enterprises using periodic inventory system.
a) At
the beginning inventory, according to the physical inventory count of finished
goods which are transferred from previous ending inventory, the beginning
finished goods inventory shall be recorded to account 632 “Costs of goods sold”
as follows:
Dr 632 –
Costs of goods sold
Cr 155 –
Finished goods
b) At
the ending of accounting period, according to physical inventory count for
finished goods inventory, the ending finished goods inventory shall be
transferred as follows:
Dr 155 –
Finished goods
Cr 632 –
Costs of goods sold.
Article
29. Account 156 – Goods
1.
Rules for accounting
a) This
account is used to record current value and increase or decrease in merchandise
inventory of an enterprise, including merchandise in inventories, properties
held for sale. Merchandise inventory is goods that have been purchased by
an enterprise, with the intent of selling the goods to third parties (wholesale
or retail). If the merchandise purchased for both sale and operation, it shall
still be recorded to account 156 “Merchandise inventory”
In the
import-export entrustment transaction, this account is only used by the trustor
not by the trustee. Trading in merchandise inventory related to transactions in
foreign currencies shall comply with regulations of Article 69 – Guidelines for
accounting method for exchange rate differences.
b) The
following merchandise shall not be recorded to account 156 “Merchandise
inventory”:
-
Consignment goods sold or kept on behalf of other enterprises;
-
Merchandise purchased for operation (recorded to account 152 “Raw materials",
or account 153 “Tools and supplies", etc).
c) The
received, dispatched or inventoried merchandise inventory recorded to account
156 shall be accounted according to original prices as prescribed accounting
standard “Inventory”. Historical cost of merchandise inventory purchased
includes: Purchasing prices or incidental purchase costs (transport, material
handling, preservation of merchandise from suppliers to the enterprise’s
warehouse, insurance cost, etc), import duty, special excise tax, environmental
protection tax (if any), VAT on imported goods (if they are not deductible). If
the enterprise purchases merchandise for resale, but they must be processed,
semi-processed, refurbished, classified for additional value and quick sale of
merchandise, the merchandise cost shall include processing or semi-processing
cost.
- The
historical cost of merchandise purchased shall be calculated according to every
input source and the purchasing price and incidental purchase cost shall be
recorded separately.
- When
determining cost of merchandise inventory, the enterprise may apply one of
following methods:
+ First
in - first out;
+
Specific identification;
+ Weight
average;
- Some
particular units (supermarkets or similar) may determine cost of ending
inventory balances using retail inventory method. This method may be used in
the retail to calculate cost of inventory in bulk of merchandise which vary
promptly and have similar margin unable to use other method calculating
original prices. The original cost of merchandise inventory shall equal
selling price of merchandise inventory minus (-) margin (reasonable rate). That
is used with due account taken of merchandise pieces which has fallen to less
than its original price Each retailer usually uses separate average rate of
percent.
- The
incidental purchase cost in an accounting period shall be charged to consume
merchandise during the period and ending merchandise inventory. The incidental
purchase cost shall be allocated according to specific condition of every
enterprise, but it is required to be consistent.
d) When
buying merchandise, if goods, equipment or accessories for replacement are
attached (provision for breakdown), the goods, equipment or accessories for
replacement shall be recorded with proper cost. Cost of imported goods is the
price subtracted from cost of goods, equipment or accessories for replacement.
dd) The
merchandise inventory shall be specifically accounted according to every
inventory, type, group of merchandise items.
2.
Structure and contents of account 156 – Merchandise inventory
Debit:
- Cost
of merchandise purchased stated in the sale invoice (including non-refundable
taxes);
-
Incidental purchase cost;
- Cost
of merchandise under outsourcing agreement (including input prices and processing
cost);
- Cost
of goods returned;
- Cost
of merchandise inventory in surplus detected under physical inventory count;
-
Transfer of ending merchandise inventory balances (if the enterprises use
periodic inventory system);
- Cost
of properties held to sale purchased or converted from investment property.
Credit:
- Cost
of dispatched merchandise for sale or sending to agents, affiliated
enterprises; performance of outsourcing agreement, or for operation;
-
Incidental purchase cost allocated to merchandise sold during the period;
- Trade
discount on merchandise purchased;
- Sale
discount on merchandise purchased;
- Cost
of goods returned;
- Cost
of merchandise inventory in shortage detected under physical inventory count;
-
Transfer of beginning merchandise inventory balances (if the enterprises use
periodic inventory system);
- Cost
of properties held to sale sold or converted into investment property, property
used by the owner or fixed assets.
Debit
balance:
- Cost
of merchandise inventory purchases;
-
Incidental purchase cost of merchandise inventory.
Account
156 – Merchandise inventory, comprises 2 sub-accounts:
-
Account 1561 – Purchase costs: recording current cost and decrease or increase
in merchandise purchased and inventoried (according to purchase costs);
-
Account 1562 – Incidental purchase costs: recording incidental purchase
costs incurred relating to amounts of received merchandise during a period and
the distribution of current incidental purchase costs in the period to amounts
of merchandise purchased during a period and ending merchandise inventory
balances (including inventoried merchandise and merchandise on consignment,
unsold goods on consignment). The incidental purchase costs recorded in this
account only include the costs directly related to the processing of purchasing
merchandise, such as: insurance cost of merchandise, depot rents, etc, costs of
transport, material handling, preservation of merchandise from supplier to the
enterprise’s stock; normal losses incurred during processing of purchasing
merchandise.
-
Account 1567 – Properties held for sale: recording current cost and decrease or
increase in properties held for sale of the enterprise. Properties held for
sale include: land use rights; housing; or housing and land use rights;
infrastructure purchased for sale in the ordinary course of business;
investment properties shall be recorded to inventory when the owner put them
for sale.
a)
Structure and contents of account 1561 – Purchase costs
Debit:
-
Purchased merchandise cost according to sales invoice (inventoried);
- Import
duty or special excise tax on imported goods or VAT on imported goods, input
VAT – if they are not deductible, imposed on inventoried merchandise purchased;
- Cost
of inventoried merchandise subject to processing agreement, including: purchase
costs and costs of processing;
- Cost
of merchandise allocated as capital;
- Cost
of inventoried goods returned;
- Cost
of merchandise inventory in surplus detected under physical inventory count;
-
Transfer of cost of ending merchandise inventory (if the enterprise uses
periodic inventory system)
Credit:
- Actual
cost of merchandise dispatched during a period (dispatch for sale, exchange,
giving to agencies or dependent accounting units, internal use, capital contribution
in joint-venture);
- Trade
discount on merchandise purchased;
- Sale
discount on merchandise purchased;
- Cost
of goods returned;
- Costs
of merchandise in shortage or losses;
-
Transfer of beginning merchandise inventory balances (if the enterprises use
periodic inventory system);
Debit
balance: Actual cost of ending merchandise inventory.
b)
Structure and contents of account 1562 – Incidental purchase costs
Debit:
Actual incidental purchase costs incurred relating to amounts of
merchandise purchased and received in a period.
Credit:
Incidental purchase costs of amounts of merchandise consumed during a
period.
Debit
balance: Ending incidental purchase cost balances.
c)
Structure and contents of account 1567 – Properties held for sale
Debit:
- Actual
cost of properties held to sale;
-
Residual value of investment properties converted into property inventory;
- Cost
of repair, renovation, upgrade of property for sale which is recorded as an
increase in original cost of properties held for sale
Credit:
- Actual
cost of properties held to sale during a period;
- Cost
of properties held to sale converted into investment properties or fixed
assets.
Debit
balance: Actual cost of ending properties held for sale balances.
3.
Accounting methods for several major transactions:
3.1.
Enterprise using perpetual inventory system.
3.1.1.
Merchandise purchased and delivered to the enterprise’s warehouse, according to
sales invoices, warehouse receipts and relevant documentary evidence:
a) When
purchasing merchandise, if input VAT on merchandise is deductible, the
following accounts shall be recorded:
Dr 156 –
Merchandise inventory (1561) (detail in merchandise purchased and merchandise
used as substitute provisional for damage)
Dr 1534
– Equipment and spare parts for replacement (fair value)
Dr 133 –
Deductible VAT (1331) (input VAT)
Cr 111,
112, 141, 331, etc. (total payment).
If the
input VAT is not deductible, value of merchandise purchased shall include VAT
b)
Importing merchandise:
- When
importing merchandise, the following accounts shall be recorded:
Dr 156 –
Merchandise inventory
Cr 331 –
Trade payables
Cr 3331
– Deductible VAT (33312) (if input VAT on imported goods are not deductible)
Cr 3332
– Special excise duty (if any).
Cr 3333
– Import/export duty (detail on import duty).
Cr 33381
– Environmental protection tax.
- If
input VAT on imported goods is deductible, the following accounts shall be
recorded:
Dr 133 –
Deductible VAT
Cr 3331
– Deductible VAT (33312).
- When
buying merchandise and prepaying the seller an advance in foreign currency, the
cost of merchandise equivalent to the advance shall be recorded according to
actual exchange rates at the time in which the prepayment is made The remaining
cost of merchandise purchased in foreign currency shall be recorded according
to actual exchange rates at the purchasing time.
- The
merchandise purchase under import entrustment shall comply with regulations on
account 331 – Trade payables
3.1.2.
At the end of the accounting period, if the sales invoice sent by the seller is
received but the merchandise has not been received, the following accounts
shall be recorded:
Cr 151 –
Goods in transit
Dr 133 –
Deductible VAT (if any)
Cr 111,
112, 331, etc.
- Next
accounting period, when the merchandise purchase in transit, the following
accounts shall be recorded:
Dr 156 –
Merchandise inventory (1561)
Cr 151 –
Goods in transit
3.1.3 In
case the trade discounts or sales rebates are received after buying merchandise
(including fines for violations against economic contracts leading decrease in
payment made by the purchaser), those discounts shall be allocated according to
decrease or increase in tools and supplies (inventoried or dispatched
merchandise during a period):
Dr 111,
112, 331, etc.
Cr 156 –
Merchandise inventory (if merchandise are still inventoried)
Cr 632 –
Costs of goods sold (if they are consumed during a period)
Cr 133 –
Deductible VAT (1331) (if any).
3.1.4
Cost of merchandise purchased which is returned to sellers due to failure of
specifications under economic contract, the following accounts shall be
recorded:
Cr 111,
112, etc.
Cr 331 –
Trade payables
Cr 156 –
Merchandise inventory (1561)
Cr 133 –
Deductible VAT (1331) (if any).
3.1.5
Purchase costs of merchandise inventory shall be recorded as follows:
Dr 156 –
Merchandise inventory (1562)
Dr 133 –
Deductible VAT (if any)
Cr 111,
112, 141, 331, etc.
3.1.6
When purchasing merchandise making deferred payment, the following accounts
shall be recorded:
Dr 156 –
Merchandise inventory (cash prices)
Dr 133 –
Deductible VAT (if any)
Dr 242 –
Prepaid expenses {interest on deferred payment is difference between total
payment minus (-) cash prices deducted from VAT (if it is deductible)}
Cr 331 –
Trade payables (total costs)
The interests on deferred payment shall be
periodically recorded to financial expenses as follows:
Dr 635 -
Financial expenses
Cr 242 –
Prepaid expenses.
3.1.7.
When purchasing properties held for sale, the purchase costs and incidental
purchase costs of properties held for sale shall be recorded as follows:
Dr 1567
– Properties held for sale (VAT-exclusive prices)
Dr 133 –
Deductible VAT (1332)
Cr 111,
112, 331, etc.
3.1.8.
If the investment properties convert into inventory when the owner repairs,
innovates or upgrades them for sale:
- When
the owner repairs, innovates or upgrades investment properties for sale, the
following accounts shall be recorded:
Dr 156 –
Merchandise inventory (1567) (residual value of investment properties)
Dr 214 -
Depreciation of fixed assets (2147 – accrued depreciation)
Cr 217 –
Investment properties (cost prices).
- When
incurring costs of repair, renovation, upgrade of investment properties for
sale, the following accounts shall be recorded:
Dr 154 -
Work in progress
Dr 133 –
Deductible VAT
Cr 111,
112, 152, 334, 331, etc.
- When
finishing the repair, innovation or upgrade of investment properties for sale,
total cost shall be transferred and an increase in properties held for sale
shall be recorded:
Dr 156 –
Merchandise inventory (1567)
Cr 154 -
Work in progress.
3.1.9
Value of goods for sale which are consumed shall be recorded as follows:
Dr 632 –
Costs of goods sold
Cr 156 –
Merchandise inventory (1561)
Concurrently,
sales revenues shall be recorded as follows:
- If
indirect taxes are separable, the revenues shall be recorded follows:
Dr 111,
112, 131, etc. (total payment).
Cr 511 –
Revenues
Cr 333 –
Taxes and other payables to the State.
- If
indirect taxes are not separable, the revenues including taxes shall be
recorded. Tax liabilities and the decrease in revenues shall be periodically
recorded as follows:
Dr 511 –
Revenues (total payment)
Cr 333 –
Taxes and other payables to the State.
3.1.10.
Outsourcing agreement
- When
dispatching merchandise inventory to process, the following accounts shall be
recorded:
Dr 154 -
Work in progress
Cr 156 –
Merchandise inventory (1561)
- When
costs of processing incurred, the following accounts shall be recorded:
Dr 154 -
Work in progress
Dr 133 –
Deductible VAT (if any)
Cr 111,
112, 331, etc.
- When
the processing is finished, the merchandise shall be received in inventory and
the following accounts shall be recorded:
Dr 156 –
Merchandise inventory (1561)
Cr 154 -
Work in progress.
3.1.11.
When dispatching merchandise to customers or agencies consigning companies,
etc, the following accounts shall be recorded:
Dr 157 –
Goods on consignment
Cr 156 –
Merchandise inventory (1561)
3.1.12.
Dispatching merchandise inventory to dependent accounting units of the
enterprise for sale:
- In
case the dependent accounting units are in charge of recording revenues, costs
of goods, the costs of merchandise sold shall be recorded as follows:
Dr 632 –
Costs of goods sold
Cr 156 –
Merchandise inventory.
Concurrently,
sales revenues shall be recorded as follows:
Dr 111,
112, 131, etc. (total payment).
Cr 511 –
Revenues
Cr 333 –
Taxes and other payables to the State.
- In
case the dependent accounting unit is not in charge of recording revenues,
costs of goods, the costs of products circulated intra-company shall be intra-company
receivables, the following accounts shall be recorded:
Dr 136 -
Intra-company receivables
Cr 156 –
Merchandise inventory.
Cr 333 –
Taxes and other payables to the State.
3.1.13.
When dispatching merchandise for internal use, the following accounts shall be
recorded:
Dr 641,
642, 241, 211
Cr 156 –
Merchandise inventory.
3.1.14.
When the enterprise uses products for giving, promotion or advertisement (under
law on commerce):
a) If
the merchandise inventory is released for promotion or advertisement without
collecting money, not providing additional conditions (compulsory purchase of
goods, etc), the cost of merchandise inventory shall be recorded to selling
expenses (detail in promotion or advertisement);
Dr 641-
– Selling expenses
Cr 156 –
Merchandise inventory (cost prices).
b) If
the merchandise is released for promotion or advertisement with additional
conditions that the customers are required to buy goods (e.g. buy two, get one
free, etc) The collected amounts of moneys shall be recorded to revenues
(including promotion goods), costs of promotion goods shall be recorded to
costs of goods sold (nature of transaction is a decrease in good costs).
- When
dispatching merchandise for promotion, the costs of promotion merchandise shall
be recorded to costs of goods sold as follows:
Dr 632 –
Cost prices of goods sold (prime cost)
Cr 156 –
Merchandise inventory.
- When
receiving revenues from promotion merchandise, the collected amounts shall be
recorded to goods sold and promotion goods as follows:
Dr 111,
112, 131, etc.
Cr 511 –
Revenues
Cr 3331
– Deductible VAT (33311) (if any).
c) If
merchandise purchased for giving staff using welfare fund, the revenues and
costs of goods shall be recorded similarly to ordinary selling transactions as
follows:
- The
cost of merchandise for giving to staff and employees shall be recorded to
costs of goods sold:
Dr 632 –
Costs of goods sold
Cr 156 –
Merchandise inventory.
-
Merchandise for giving using welfare fund shall be recorded to revenues as
follows:
Cr 353 -
Welfare fund (total payment)
Cr 511 –
Revenues
Cr 3331
– Deductible VAT (33311) (if any).
d) In
case the enterprise is a commercial distributor receiving merchandise
(non-payment) from manufacturers for promotion or advertisement given to
customers of the manufacturer or distributor
- When
receiving merchandise from manufacturer (non-payment) for promotion or
advertisement given to customers, the distributor must keep track of amounts of
merchandise items in their internal management system and present received
merchandise items and merchandise items used for promotion on financial
statement.
- When
the promotion program closes, if the amounts of unused merchandise items for
promotion are not returned to the manufacturer, the non-returned remaining
unused merchandise items shall be recorded to other incomes as follows:
Dr 156 –
Merchandise inventory (according to fair value)
Cr 711 -
Other income.
3.1.15.
Paying salaries to employees by merchandise
-
Revenues shall be recorded as follows:
Dr 334 –
Payables to employees (total costs)
Cr 511 –
Revenues
Cr 333 –
Taxes and other payables to the State.
Cr 3335
– Personal income tax.
- The
cost of merchandise for paying salaries to employees shall be recorded to costs
of goods sold as follows:
Dr 632 –
Costs of goods sold
Cr 156 –
Merchandise inventory.
3.1.16
When contributing merchandise to subsidiaries, joint-venture companies as
capital, and the following accounts shall be recorded:
Dr 221,
22 (according to re-evaluated value)
Dr 811 –
Other expenses (re-evaluated value is smaller than book value of merchandise)
Cr 156 –
Merchandise inventory.
Cr 711 –
Other incomes (re-evaluated value is greater than book value of merchandise).
3.1.17.
At the end of accounting period, when distributing incidental purchase costs of
merchandise sold during a period, the following accounts shall be recorded:
Dr 632 –
Costs of goods sold
Cr 156 –
Merchandise inventory (1562)
3.1.18.
When the surplus of merchandise is detected in any process of business, it is
required to make a report and uncover reasons. According to the reasons
uncovered, the surplus of merchandise shall be settled and accounted for as
follows:
- If the
reasons are mistakes in measuring or counting, failure to keep records, etc,
the accounting record shall be adjusted.
- If the
merchandise in surplus belong to other enterprises, the value of merchandise in
surplus in the presentation of financial statements.
- In
case it fails to uncover reasons for surplus, it shall be pending for
settlement:
Dr 156 –
Merchandise inventory
Cr 338 –
Other payables or receivables (3381).
- When
there is a decision of settlement made by the competent agency, the following
accounts shall be recorded:
Dr 338 –
Other payable or receivables (3381)
Cr,
relevant accounts.
3.1.19.
When the shortage of merchandise is detected in any process of business, it is
required to make a report and uncover reasons. According to decision of
competent agency, the shortage of merchandise shall be settled and accounted
for as follows:
- In
case it fails to uncover reasons for surplus, it shall be pending for
settlement:
Dr 138 –
Other payables (1381- – Assets in shortage awaiting resolution)
Cr 156 –
Merchandise inventory.
- When
there is a decision of settlement made by the competent agency, the following
accounts shall be recorded:
Cr 111,
112, etc. (the compensation is required if the offender is an individual)
Dr 334 –
Payables to employees (the deducting in salaries is required if the offender is
an individual)
Dr 138 –
Other receivables (1388) (compensation of offenders)
Dr 632 –
Costs of goods sold (residual value)
Cr 138 -
Other receivables (1381).
3.1.20.
If the properties held for sale are sold in a period, according to VAT invoice
or sales invoice, transfer note of properties held for sale, the following
accounts shall be recorded:
Dr 632 –
Costs of goods sold
Cr 156 –
Merchandise inventory (1567 – Properties held for sale)
Concurrently,
revenues from sale of properties held for sale shall be recorded as follows:
Dr 111,
112, 131, etc.
Cr 511 –
Revenues from sale of merchandises and services rendered (5117)
Cr 3331
– Deductible VAT (33311) (if any).
3.1.21.
When liquidating or selling unused merchandise, their costs shall be recorded
as follows:
Dr 632 –
Costs of goods sold
Cr 156 –
Merchandise inventory.
3.2.
Enterprises using periodic inventory system.
a) At
the beginning of accounting period, according to the value of ending inventory
of previous accounting period which is transferred to value of beginning
inventory of current accounting period, the following accounts shall be
recorded:
Dr 611 –
Purchases
Cr 156 –
Merchandise inventory.
b) At
the ending of accounting period:
-
Conducting physical inventory count on quantity and cost of ending merchandise
inventory. According to total cost of ending merchandise inventory, the
following accounts shall be recorded:
Dr 156 –
Merchandise inventory
Cr 611 –
Purchases.
-
According to total cost of merchandise sold, the following accounts shall be
recorded:
Dr 632 –
Costs of goods sold
Cr 611 –
Purchases.
Article
30. Account 157 – Goods on consignment
1.
Rules for accounting
a) Goods
on consignment which are recorded to account 157 shall be accounted according
to original prices as prescribed accounting standard “Inventory”. The account
157 “Goods on consignment” only records costs of goods or finished goods sent
to customers or agents (consignees), services rendered transferred to customers
under business contracts or orders by the enterprise (consignor), those goods
are not determined as 'sold' (the goods or services on consignment are not
recorded to sales revenues during a period).
b) The
goods or finished goods recorded to this account are still under ownership of
the consignor, they must be recorded in the accounting record in every
consignment until they are sold.
c) The
cost of transport, material handling, payment on behalf of customers, etc shall
not be recorded to this account. The account 157 may record every type of
goods, finished goods or services rendered on consignment to every customer or
consignee.
2.
Structure and contents of account 157 – Goods on consignment
Debit:
- Cost
of goods or finished goods on consignment sent to customers, consignees; or
dependent accounting units;
- Cost
of services rendered to customers, but they are not sold;
- Ending
cost of goods or finished goods on consignment but they are not sold (if the
consignor uses periodic inventory system).
Credit:
- Cost
of goods, finished goods, services rendered on consignment which are sold;
- Cost
of goods, finished goods or services on consignment which are returned;
- At the
beginning of accounting period, cost of goods, finished goods, services
rendered which are not sold and transferred (if the consignor uses periodic
inventory system).
Debit
balance:
Cost of
goods, finished goods, services rendered on consignment which are sold during a
period;
3.
Accounting methods for several major transactions:
3.1.
Enterprise using perpetual inventory system.
a) When
consigning goods or finished goods to customers, consignees under economic
contracts, according to delivery order, the following accounts shall be
recorded:
Dr 157 –
Goods on consignment
Cr 156 –
Merchandise inventory.
Cr 155 –
Finished goods
b) Cost
of services rendered to customers, but they are not sold during a period, the
following accounts shall be recorded:
Dr 157 –
Goods on consignment
Cr 154 -
Work in progress.
c) When
consigning goods or services to customers and they are sold during a period:
- If the
indirect taxes are not separable at the time in which the revenues are
recorded, the revenues from sale of goods, finished goods or services
(tax-exclusive prices) shall be recorded:
Cr 131 –
Trade receivables
Cr 511 –
Revenues
Cr 333 –
Taxes and other payables to the State.
- If
indirect taxes are not separable, the revenues including taxes shall be
recorded. When paying indirect taxes, a decrease in revenues shall be
periodically recorded as follows:
Dr 511 –
Revenues
Cr 333 –
Taxes and other payables to the State.
- And
the costs of finished goods sold which are delivered to inventory shall be
recorded as follows:
Dr 632 –
Costs of goods sold
Cr 157 –
Goods on consignment.
d) If
goods or finished goods are consigned for sale but they are returned;
- If
those goods or finished goods are still merchantable or repairable, the
following accounts shall be recorded:
Dr 156 –
Merchandise inventory; or
Dr 155 –
Finished goods
Cr 157 –
Goods on consignment.
- If
those goods or finished goods are not merchantable or repairable, the following
accounts shall be recorded:
Dr 632 –
Costs of goods sold
Cr 157 –
Goods on consignment.
3.2.
Enterprises using periodic inventory system.
a) At
the beginning of accounting period, if cost of goods or finished goods sent to
customers are transferred but they are not sold during a period, or cost of
goods or services consigned to customer but they are not sold during a period,
the following accounts shall be recorded:
Dr 611 –
Purchases (for goods)
Dr 632 –
Costs of goods sold (for finished goods or services)
Cr 157 –
Goods on consignment.
b) At
the end of accounting period, according to the physical inventory count, the
cost of goods, products (finished goods or semi-finished goods) or services
rendered to customers; or consigned to consignees which are not sold at the
ending accounting period:
- Cost
of goods sent to customers but the payment is not accepted; goods consigned to
consignees; or dependent accounting units shall not determined as sale at
ending accounting period shall be recorded as follows:
Dr 157 –
Goods on consignment
Cr 611 –
Purchases.
- At the
end of accounting period, cost of finished goods provided for customers or
goods on consignment; cost of services rendered to customers who are not sold
shall be transferred as follows:
Dr 157 –
Goods on consignment
Cr 632 –
Costs of goods sold.
Article
31. Account 158 – Goods in bonded warehouse
1.
Rules for accounting
a) This account is used to record current value
and increase or decrease in goods delivered to bonded warehouse. Bonded
warehouses are only applied to foreign-invested companies to serve the
production of imported goods, subject to special customs supervision, in which
the raw materials imported to serve the production shall be stored in the
bonded warehouses and released from assessment and payment of import duties and
other taxes.
b)
Imported raw materials stored in bonded warehouse include raw materials
provided for production and products of that enterprise.
c) The enterprise must keep records of quantity
and value of every raw material and good whenever they are received or
dispatched.
2.
Structure and contents of account 158 – Goods in bonded warehouses
Debit:
Costs of raw materials, finished goods or goods delivered to bonded
warehouse during a period.
Credit:
Costs of raw materials, finished goods or goods dispatched from bonded
warehouse during a period.
Debit
balance: Costs of ending raw materials, finished goods or goods inventory
balances in the bonded warehouse.
3.
Accounting methods for several major transactions:
a) When
importing raw materials for production of exported products, or processing of
exported goods, if they are stored in a bonded warehouse, they shall be
released from payment of import duty and VAT on imported goods and the
following accounts shall be recorded:
Dr 158 –
Goods in bonded warehouses
Cr 331 –
Trade payables.
b) When
dispatching raw materials in bonded warehouse for production or processing of
exported goods, the following accounts shall be recorded:
Dr 621 –
Direct material costs
Cr 158 –
Goods in bonded warehouses.
c) When
delivering finished goods, exported goods or outward processing goods into
bonded warehouse (if any), the following accounts shall be recorded:
Dr 158 –
Goods in bonded warehouses
Cr 156,
155, etc.
d) When
exporting goods in bonded warehouses (if any):
- The
costs of exported goods in bonded warehouse shall be recorded as follows:
Dr 632 –
Costs of goods sold
Cr 158 –
Goods in bonded warehouses.
- The
revenues from sale of exported goods in bonded warehouse shall be recorded as
follows:
Dr 111,
112, 131, etc.
Cr 511 –
Revenues.
dd) If
export rate is lower than deferred tax rate of the enterprise subject to
import duty and VAT on imported goods (if any) pertaining to difference between
amounts of to-be-exported products and amounts of actually-exported products,
the enterprise must pay import duty and VAT on imported goods (if any):
- When
determining import duty payables (if any), the following accounts shall be
recorded:
Dr 632 –
Costs of goods sold
Cr 333 –
Taxes and amounts payable to the State (3333).
- When
determining VAT on imported goods payables (if any), the following accounts
shall be recorded:
Dr 133 –
Deductible VAT (1331)
Cr 333 –
Taxes and amounts payable to the State (33312).
- When
paying import duty and VAT on imported goods payables (if any), the following
accounts shall be recorded:
Dr 333 –
Taxes and amounts payable to the State (3333, 33312).
Cr 111,
112, etc.
e) In
case the enterprise is permitted to sell goods in bonded warehouses on Vietnam
market by the competent agency, the enterprise must pay import duty and other
taxes as prescribed.
- When
the enterprise is permitted to use goods in bonded warehouses, it is required
to follow procedures for dispatch of goods from bonded warehouse, receipt of
goods or products to the enterprise's warehouse and pay taxes on those goods,
and then the following accounts shall be recorded:
Dr 155,
156
Cr 158 –
Goods in bonded warehouses.
- When
determining import duty payables (if any), the following accounts shall be
recorded:
Dr 155,
156
Cr 333 –
Taxes and amounts payable to the State (3333).
- When
determining VAT on imported goods payables (if any), the following accounts
shall be recorded:
Dr 155,
156 (if they are not deductible)
Dr 133 –
Deductible VAT (1331)
Cr 333 –
Taxes and amounts payable to the State (33312).
- When
paying import duty and VAT on imported goods, the following accounts shall be
recorded:
Dr 333 – Taxes and amounts payable to the State
(33312, 3333).
Cr 111,
112, etc.
g) When
selling goods in bonded warehouses on domestic market:
- The costs of goods in bonded warehouse sold
shall be recorded as follows:
Dr 632 –
Costs of goods sold
Cr 158 –
Goods in bonded warehouses.
Concurrently,
the import duty and VAT on imported goods pertaining to those products, goods
or raw materials must be recorded.
- The
revenues from sale of exported goods in bonded warehouse on domestic market
shall be recorded as follows:
Dr 111,
112, 131, etc.
Cr 511 –
Revenues from sale of goods and services
Cr 333 –
Taxes and amounts payable to the State (33311).
h) In
case the raw materials or goods delivered to bonded warehouse are damaged or
degraded and failed to meet export requirements, they must be re-imported or
destroyed:
- In
case of re-import, the following accounts shall be recorded:
Dr 155,
156, etc.
Cr 158 –
Goods in bonded warehouses.
-
Concurrently, paying the import duty and VAT on imported goods payables
pertaining to those products, goods or raw materials, the taxes payable shall
be recorded in entry (e); when paying taxes, the following accounts shall be
recorded:
Dr 333 – Taxes and amounts payable to the State
(33312, 3333).
Cr 111,
112, etc.
- In
case of re-export (returns to sellers), the following accounts shall be
recorded:
Dr 331 –
Trade payables
Cr 158 –
Goods in bonded warehouses
- In
case of destruction of goods or raw materials in bonded warehouses, the
following accounts shall be recorded:
Dr 632 -
Costs of goods sold (destroyed goods or raw materials)
Cr 158 –
Goods in bonded warehouses
Article
32. Account 161 – Non-business expenditures
1.
Rules for accounting
a) This
account is recorded to expenditures for non-business activities or projects
(hereinafter referred to as non-business expenditures to perform economical,
political or social tasks assigned by the State or superior enterprise other
than business activities and for non-profit purposes. The non-business
expenditures shall be covered by non-business or project funding granted by
government budget or superior enterprise, or non-refundable grants. This
account is used in enterprises having non-business activities or project
activities (hereinafter referred to as non-business activities) which are
covered by government budget or superior enterprises or received non-refundable
grants, or the enterprises are permitted to collect non-business receipts to
cover those expenses.
b) It is
required to keep records of non-business expenditures according to every source
of funding, fiscal year and governmental budgetary classification.
c) The
non-business expenditures must be recorded in conformity with budget estimates
and between accounting records and documents and financial statements.
d) This
account shall record annual non-business expenditures of the enterprise,
including both regular and irregular non-business expenditures as prescribed in
financial regime in force.
dd) At the end of fiscal year, if the balance sheet
is not approved, total non-business expenditures within the year shall be
transferred from Cr 1612 "Current non-business expenditures” to Dr 1611
“Brought forward non-business expenditures” for observation until the balance
sheet is approved.
2. Structure and contents of account 161 –
Non-business expenditures
Debit:
Actual non-business expenditures incurred.
Credit:
-
Non-business expenditures which are not recorded and required to be recovered;
-
Non-business expenditures which are recorded and covered by non-business funds.
Debit
balance: Non-business expenditures which are not recorded.
Account
161 – Non-business expenditures comprise 2 sub-accounts:
-
Account 1611 – Brought forward non-business expenditures: recording
non-business expenditures which are covered by non-business funds of the
preceding year and not recorded.
-
Account 1612 – Current non-business expenditures: recording non-business
expenditures of current year.
3.
Method of accounting for several major transactions:
a) When
providing non-business expenditures uncovered by non-business funds, the
following accounts shall be recorded:
Dr 161 –
Non-business expenditures (1612)
Cr 111,
112, etc.
b)
Salaries and other payables to employees of the enterprise, sellers or service
providers shall be recorded as follows:
Dr 161 –
Non-business expenditures (1612)
Cr 334 –
Payables to employees
Cr 331 –
Trade payables.
c) When
dispatching raw materials, tools or supplies inventory for non-business
activities, the following accounts shall be recorded:
Dr 161 –
Non-business expenditures (1612)
Cr 152 –
Raw materials
Cr 153 –
Tools and supplies
d) When
receiving funding from superior enterprises or withdrawing non-business
expenditure estimates to pay for non-business activities, the following
accounts shall be recorded:
Dr 161 –
Non-business expenditures (1612)
Cr 461 –
Non-business funds source.
If the
non-business expenditure estimates are withdrawn, the enterprise must keep
track of those expenditures in conformity with characteristics of the
enterprise, etc.
dd) When
transferring major repairs of fixed assets for non-business activities, the
following accounts shall be recorded:
Dr 161 –
Non-business expenditures (1612)
Cr 241 –
Construction in progress (2413 – Major repairs of fixed assets).
e) When
purchasing fixed assets or investing in capital investment for non-business
activities covered by non-business funds:
- In
case of purchasing fixed assets or finishing construction put into operation,
the following accounts shall be recorded:
Dr 211 –
Tangible fixed assets
Cr 111,
112, 331, 241, 461, etc.
- And
the following accounts shall be recorded:
Dr 161 –
Non-business expenditures (1612)
Cr 466 –
Non-business funds used for fixed assets acquisitions.
When
withdrawing non-business expenditure estimates for purchases of fixed assets,
the enterprise must keep appropriate records.
g) When
deducting social insurance, health insurance, unemployment insurance or union
funds for non-business activities of the enterprise, the following accounts
shall be recorded:
Dr 161 –
Non-business expenditures (1612)
Cr 338 –
Other payables or receivables (3382, 3383, 3384, 3386).
h) At
the end of fiscal year, if the financial report is not approved, the debit
balances 1612 "Current non-business expenditures” shall be transferred to
“Brought forward non-business expenditures”; the following accounts shall be
recorded:
Dr 1611
– Brought forward non-business expenditures
Cr 1612
– Current non-business expenditures.
i) When
the financial report is approved, non-business expenditures covered by
non-business funds shall be recorded as follows:
Dr 461 –
Non-business funds source (4611 – Brought forward non-business funds source)
Cr 161 –
Non-business expenditures (1611 – Brought forward non-business expenditures).
k)
Non-business expenditures paid in contrary to regulations which are not
approved by the competent agency and required to be recovered shall be recorded
as follows:
Dr 138 –
Other receivables (1388)
Cr 161 –
Non-business expenditures (1611 – Brought forward non-business expenditures).
Article
33. Account 171 – Government bonds purchased for resale
1.
Rules for accounting
a) This
account is used to record transactions in government bonds purchased for resale
incurred during a period. This account only records value of agreement on
resale of Government bonds, not records coupons received by buyer on the behalf
or seller in conformity with times specified in the agreement.
b) The
enterprise must comply with regulations on types of transactions, deadlines for
transactions and revenues from Government bonds in the resale transactions
prescribed in financial regime in force on resale of Government bonds.
c) The
buyer of bonds under resale agreement shall not record ‘coupon payment’
received from the seller to revenues account at the times during the term of
repurchase agreement but record to other payables or receivables account.
2.
Structure and contents of account 171 – Government bond repos (Repurchase
agreements on Government bonds)
Debit:
- Value
of government bonds repurchased by seller at the maturity date of the
agreement;
- Value
of government bonds purchased by the purchaser when the government bond repo
takes effect;
-
Difference between the resale price and the original purchase price of
Government bonds under the government bonds received by purchaser.
Credit:
- Value
of Government bonds resold by the purchaser at the maturity date of the
agreement;
- Value
of government bonds sold by the seller when the government bond repo takes
effect;
-
Difference between the original sale price and the repurchase price of
Government bonds under the government bonds paid by the seller.
Debit
balance: Value of government bonds held by the purchaser to the
maturity.
Credit
balance: Value of government bonds held by the seller to the maturity.
3.
Method of accounting for several major transactions:
3.1.
Accounting for government bonds’ sellers under repo
a) When
the government bond repo takes effect, the following accounts shall be
recorded:
Dr 111,
112 (sale price)
Cr 171 –
Government bond repos.
b)
Periodically, the seller shall distribute the difference between original sale
prices and repurchase price of government bonds to expenses as follows:
Dr 635 –
Financial expenses (other than securities company)
Cr 171 –
Government bond repos (distributing time in conformity with time of agreement)
c) On
the maturity date of the government bond repo, the seller shall make payment
specified in the government bond repo and receive those securities, and then
the following accounts shall be recorded:
Dr 171 –
Government bond repos
Cr 111,
112 (repurchase price specified in the repo).
d) When
the purchaser pays for coupons which the purchaser keeps on behalf of the
seller at the times during the term of the repo, the seller shall record as
follows:
Dr 111,
112, 138
Cr 515 –
Financial incomes (other than securities company) (numbers of coupon payments
of bonds).
3.2.
Accounting for government bonds’ purchasers under repo
a) When
the agreement takes effect, according documents on cash disbursement and other
documents, the following accounts shall be recorded:
Dr 171 –
Government bond repo
Cr 111,
112 (purchase price)
b)
Periodically, the purchaser shall distribute the difference between original
purchase price and resale price of government bonds to revenues as follows:
Dr 171 –
Government bond repo
Cr 515 –
Financial incomes (other than securities company) (allocated according to
duration of agreement).
c) When
receiving coupon payments of bonds from the seller at the times during the term
of the repo, the following accounts shall be recorded:
Dr 111,
112, etc.
Cr 338 –
Other payables or receivables (3388).
d) When
the agreement expires, the following accounts shall be recorded:
Dr 111,
112, 138
Cr 171 –
Government bond repo.
Concurrently,
when repaying coupons of bonds which the purchaser keeps on behalf of the
seller at the times during the term of repo, the following accounts shall be
recorded:
Dr 338 –
Other payables or receivables.
Cr 111,
112, etc.
Article
34. Rules for accounting for fixed assets, investment properties and
construction in progress
1. Fixed
assets, investment properties and construction in progress must be kept track,
recorded, managed and used in accordance with regulations of law in force.
2. The
source acquiring fixed assets shall be kept track to distribute depreciation
costs following the rules below:
- If the
fixed assets are acquired from loan capital or owner's equity for operation,
their depreciation costs shall be allocated to operating costs;
- If the
fixed assets are acquired from welfare funds, science and technology
development funds or funding source, their depreciation costs shall be recorded
as decreases in such funds or funding source.
3. Fixed
assets and investment properties shall be classified according to their use
purposes. If there is an asset used for multiple purposes, e.g. a mixed-use
building for offices, lease and sale, their fair value (every part) shall be
estimated in conformity with their use purposes.
- If a
major part of the asset is used for a specific purpose other than purposes of
remaining parts, the total asset shall be classified according to that major
part;
- If
there is any change in function of parts of the asset, the asset shall be
re-classified according to use purposes prescribed in relevant VAS.
4. When
buying fixed assets, if they are bundled with equipment or spare parts for
replacement (provision for break down), the equipment or spare parts for
replacement shall be recorded separately with fair value. If equipment or spare
parts for replacement meet requirements for fixed assets, they shall be
recorded to fixed assets account, if not, they shall be recorded to inventory
account. Historical cost of a fixed asset purchased shall equal total cost of
the fixed asset minus (-) cost of equipment or spare parts for replacement.
5. Fixed
assets, investment properties and construction in progress related to foreign
currencies shall be accounted for in accordance with Article 69 – Guidance on
accounting method for exchange rate differences.
Article
35. Account 211 – Tangible fixed assets
1.
Rules for accounting
a) This
account is used to record current cost and decrease and increase in total
tangible fixed assets of an enterprise according to their historical costs.
b)
Tangible fixed assets mean assets in physical forms which are possessed by an
enterprise for operation in conformity with the recognition criteria of
tangible fixed assets.
c)
Tangible fixed assets having independent structure, or separate parts
associated in a system for performance of one or several functions, the system
shall not be operated in case of lack of any part. An asset meeting all four
recognition criteria below shall be treated as a fixed asset:
-
Future economic benefits will surely be obtained;
- Their historical cost has been determined
reliably;
- Their
useful life is at least 1 year;
- It
meets all value criteria as prescribed in regulations in force.
In a
system associated by separate parts, in which every part has different useful
life and the system still operate normally regardless of lack of any part, if
every part is managed and used separately and meets all four recognition
criteria, they shall be treated as independent tangible fixed assets.
With
regard to working animals or producing animals for production of commodities,
if each animal species meets all four recognition criteria for fixed assets,
they shall be treated as tangible fixed assets.
With
regard to perennial gardens, if every garden or plant meets all four
recognition criteria for fixed assets, they shall be treated as tangible fixed
assets.
d) The
costs of tangible fixed assets shall be recorded to account 211 according to
their historical costs. The historical costs of each fixed asset must be keep
records specifically. Depending on acquisition sources, the historical cost of
a tangible fixed asset shall be determined as follows:
d1)
Historical costs of purchased tangible fixed assets include: purchase prices
(deducted from trade discounts or rebates), taxes (excluding refundable taxes)
and any directly-attributable expenses of putting such assets into
ready-for-use state, such as site preparation, initial delivery and material
handling, installation or testing costs (deducted (-) from any recoverable
values on products or scraps from testing), professional fees and any other
directly-attributable expenses. The interest cost from loans for purchase of
completed fixed assets (fixed assets available for immediate use without
construction investment) shall not be capitalized on historical costs of fixed
assets.
- When
purchasing fixed assets, if they are bundled with equipment or spare parts for
replacement, such equipment or spare parts shall be determined and recorded
separately according to their fair value. Historical cost of a fixed asset
purchased shall equal total costs of putting the fixed asset into ready-for-use
state minus (-) cost of equipment or spare parts for replacement.
- Historical
costs of tangible fixed assets purchased in instalment: equal purchase price
(lump sum payment) plus (+) directly related costs of putting such assets into
ready-for-use state (excluding refundable taxes). The difference between the
instalment price and lump sum price shall be recorded to operating costs
according to the payment schedule.
-
Historical costs of fixed assets-properties: When buying properties, the value
of land use right and properties on land shall be separated as prescribed. The
properties on land shall be recorded to tangible fixed assets; land use rights
shall be recorded to intangible fixed assets or prepaid expenses incurred from
a case-by-case basis as prescribed.
d2)
Historical costs of tangible fixed assets acquired from capital
investment
-
Historical costs of fixed assets under contract awarding: equal settled costs
of building works as prescribed in Regulations on investment and construction
management in force plus (+) directly-attributable expenses and property
transfer taxes (if any). With regard to fixed assets which are working
animals or producing animals, perennial gardens, their historical costs shall
equal total actual costs covered their development up to putting them into use
plus (+) directly related costs.
-
Self-constructed or self-made tangible fixed assets:
The
historical cost of self-constructed tangible fixed assets is the settled cost
of the building work which is put into use. If the fixed asset is put into used
but it is not settled, their historical cost shall be recorded to provisional
cost and it shall be adjusted after settlement of the finished building work.
The
historical cost of a self-made tangible fixed asset is the actual cost of
tangible fixed assets plus (+) directly-attributable expenses of putting such
fixed asset into ready-for-use state.
- In
above both cases, the historical cost of the fixed asset includes installation
and testing costs (deducted from any recoverable values on products or scraps
from testing) Internal profits and unreasonable expenses (wasted raw materials,
labor or other costs in excess of the normal levels arising in the
self-constructed or self-made process) shall not be included in the historical
cost of tangible fixed assets.
d3) The
historical cost of a tangible fixed asset purchased in the form of exchange for
a dissimilar tangible fixed asset or other assets shall be determined according
to their fair value of the received tangible fixed assets, or the fair value of
the exchanged ones, after adjusting the cash amounts or cash equivalents which
are additionally paid or received plus (+) directly-attributable expenses of
putting such asset into ready-for-use state (excluding refundable taxes).
The
historical cost of a tangible fixed asset purchased in the form of exchange for
similar one, or possibly formed through its sale in exchange for ownership of
similar ones (similar assets are those with similar utilities, in the same
business field and having equivalent value). In both cases, no gain or
loss is recorded during the exchange. The historical cost of the received
fixed asset shall be the residual value of the exchanged one.
d4) The
historical cost of a tangible fixed asset which is granted or transferred shall
equal: residual value shall be recorded to fixed assets account in the
accounting records of the donating or presenting enterprise or the value
assessed by the Board of exchange or a professional appraisal organization as
prescribed plus (+) directly-attributable expenses (transport, material
handling, upgrade, installation, testing or registration property transfer
taxes (if any), etc paid by the asset receiver up to time in which the fixed
asset is put into ready-for-use state.
The
historical cost of a tangible fixed asset transferred between dependent
accounting units having no legal status of an enterprise shall be their
historical cost recorded in the transferor in conformity with dossier on such
fixed asset. The received unit shall record the fixed assets to their accounting
records according to the historical cost, accumulated depreciation, residual
value stated in the accounting records and dossier on such fixed asset. The
costs related to donations of fixed assets between dependent accounting units
having no legal status shall not be recorded an increase in historical cost of
fixed assets but they shall be recorded to operating cost during a period.
d5) The
historical cost of a tangible fixed asset contributed as capital or return of
capital is the value assessed by founding members or shareholders or agreed by
the enterprise and contributors or assessed by a professional appraisal
organization as prescribed and approved by the founding members or
shareholders.
d6) The
historical cost of a tangible fixed asset which is donated or presented shall
equal: actual value assessed by the Board of exchange or a professional
appraisal organization plus (+) directly-attributable expenses (transport,
material handling, installation, testing or property transfer taxes (if any), etc
paid by the asset receiver up to time in which the fixed asset is put into
ready-for-use state.
d7) The
historical cost of a fixed asset purchased in foreign currencies shall comply
with regulations in Article 69 – Guidance on accounting method for exchange
rate differences.
dd) The
historical cost of a tangible fixed asset shall only be modified in following
cases:
- The
fixed asset is undergone a re-evaluation as prescribed in regulations of the
State;
- The
fixed asset is constructed or equipped with additional parts;
- Parts of the tangible fixed asset are modified
to extend their useful life or to increase their capacity;
- Parts
of the tangible fixed asset are upgraded to substantially increase product
quality;
- New
technology process is adopted to reduce operating expenses;
- One or
several parts of the tangible fixed asset shall be dismantled.
Any case
of increase or decrease in tangible fixed assets must be prepared exchange
reports, liquidation reports on fixed assets and following procedures as
prescribed. The accountant is responsible for preparation and completion of
accounting records of fixed assets.
e) The
repair and maintenance costs of a fixed asset shall not be recorded to fixed
assets account but they are shall be recorded to expenses incurred during a
period. With regard to those fixed assets subject to periodical repair or
maintenance (power plants’ turbines, aircraft engines, etc), a provision
payable shall be made and recorded to operating costs in a given period for the
repair or maintenance.
g)
Operating lease tangible fixed assets still are depreciated in accordance with
VAS and financial policies in force.
h) The
tangible fixed assets must be kept in details by every item of fixed assets,
every type of fixed assets and every place in which they are used, managed or
preserved.
2.
Structure and contents of account 211 –Tangible fixed assets
Debit:
- An
increase in historical cost of the tangible fixed asset due to completed
constructions, purchase, receipt of capital contribution, grant, donation,
present, or surplus;
- An
increase in historical cost of the fixed assets after adjustment due to
additional construction or equipment, or upgrade;
- An
increase in historical cost of the fixed assets due to re-evaluation.
Credit:
- An decrease
in historical cost of the tangible fixed assets due to transfer to other
enterprises, liquidation or contribution into joint venture, etc.
- A
decrease in historical cost of the fixed asset due to dismantlement of one or
several parts;
- A
decrease in historical cost of the fixed asset due to re-evaluation.
Debit
balance: Current historical costs of the fixed assets of the enterprise.
Account
211 –Tangible fixed assets comprises 6 sub-accounts:
-
Account 2111 – Buildings and structures: records the cost of construction
works, such as buildings, structures, hedges, basins, water towers, ground; or
infrastructures, such as roads, bridges, railroads, peers, wharfs, etc.
-
Account 2112 – Machinery and equipment: records costs of machinery or
equipment used in operation of an enterprise, including special-use machines;
work machinery or equipment, technological lines and individual machines.
- Account 2113 – Means of transportation and
transmitters: records costs of
means of transport, including roads, rail, waterborne, waterway, air, pipes and
transmitters.
-
Account 2114 – Office equipment and furniture: records costs of equipment
and furniture used in management, business and administrative management.
- Account 2115 – Perennial plants, working and
producing animals: records costs
of fixed assets such as perennial plants, working and producing animals.
- Account 2118 – Other fixed assets: records costs of other fixed assets not
recorded to above sub-accounts.
3.
Method of accounting for several major transactions
3.1.
Accounting for increases in tangible fixed assets
a) When
receiving owner’s equity or capital in form of tangible fixed assets, the
following accounts shall be recorded:
Dr 211 –
Tangible fixed assets (negotiable prices)
Cr 411 –
Owner’s invested equity.
b) Purchased fixed assets:
- When purchasing a tangible fixed asset whose
input VAT is deductible, according to documents on purchase of such fixed
asset, the historical cost of the fixed asset shall be determined, accounting
records and receipt slip of fixed asset shall be prepared and the following
accounts shall be recorded:
Dr 211 –
Tangible fixed assets (VAT-exclusive prices)
Dr 133 –
Deductible VAT (1332)
Cr 111,
112, etc.
Cr 331 –
Trade payables
Cr 341 –
Borrowings and finance lease liabilities (3411).
- When purchasing tangible fixed assets bundled with
equipment or spare parts for replacement, the following accounts shall be
recorded:
Dr 211 –
Tangible fixed assets (fixed asset purchased and equipment or spare parts for
replacement treated as fixed assets in details)
Dr 153 –
Tools and supplies (1534) (equipment or spare parts for replacement)
Dr 133 –
Deductible VAT (1332)
Cr 111,
112, etc.
Cr 331 –
Trade payables
Cr 341 –
Borrowings and finance lease liabilities (3411).
- If the
input VAT is not deductible, the historical cost of the fixed asset includes
VAT.
- If the
fixed asset is purchased by capital expenditure used for operation, if the
financial report is approved by the competent agency, an increase in operation
capital and a decrease in capital shall be recorded as follows:
Dr 441 –
Capital expenditure funds
Cr 411 –
Owner’s invested equity.
c) When
purchasing tangible fixed assets in deferred payment or instalment:
- When
purchasing tangible fixed assets in deferred payment or instalment and put them
into use, the following accounts shall be recorded:
Dr 211 –
Tangible fixed assets (historical cost – cash prices)
Dr 133 –
Deductible VAT (1332) (if any)
Dr 242 –
Prepaid expenses (deferred interest equals (=) total payment minus (-) cash
price and VAT (if any).
Cr 111,
112, 331.
- When
make periodical payment to sellers, the following accounts shall be recorded:
Dr 331 –
Trade payables
Cr 111,
112 (periodical payables, including periodical principal and interest in deferred
payment or instalment payables).
- The
interest in deferred payment or instalment payables shall be periodically
recorded as follows:
Dr 635 –
Financial expenses
Cr 242 –
Prepaid expenses.
d) When
the enterprise receives donated or presented tangible fixed assets for put in
use, the following accounts shall be recorded:
Dr 211 –
Tangible fixed assets
Cr 711 -
Other income.
Other
directly-attributable expenses incurred from donated or presented tangible
fixed assets shall be recorded to historical cost as follows:
Dr 211 –
Tangible fixed assets
Cr 111,
112, 331, etc.
dd)
Self-made tangible fixed assets:
When
converting self-made products of the enterprise to tangible fixed assets, the
following accounts shall be recorded:
Dr 211 –
Tangible fixed assets
Cr 155 –
Finished goods (dispatched from inventories)
Cr 154 –
Work in progress (put into use).
e) When
purchasing tangible fixed assets in the form of exchange:
-
Exchange between two similar tangible fixed assets: When receiving similar
tangible fixed assets in exchange and put into use, the following accounts
shall be recorded:
Dr 211 –
Tangible fixed assets (historical cost of the received tangible fixed asset
shall be recorded according to residual value of the exchanged fixed asset)
Dr 214 –
Depreciation of fixed asset (depreciation of exchanged fixed asset)
Cr 211 –
Tangible fixed assets (historical cost of exchanged fixed asset)
- Exchange between two dissimilar tangible fixed
assets:
+ When
transferring the tangible fixed asset to exchanging entity, the following
accounts shall be recorded:
Dr 811 –
Other expenses (residual value of exchanged fixed asset)
Dr 214 –
Depreciation of fixed assets (depreciated value)
Cr 211 –
Tangible fixed assets (historical cost).
+ And an
increase in income shall be recorded due to exchange of fixed assets:
Dr 131 –
Trade receivables (total payment)
Cr 711 –
Other expenses (residual value of exchanged fixed asset)
Cr 3331
– VAT payables (33311) (if any)
+ When
receiving the fixed asset in exchange, the following accounts shall be
recorded:
Dr 211 –
Tangible fixed assets (residual value of received fixed asset)
Dr 133 –
Deductible VAT (1332) (if any)
Cr 131 –
Trade receivables (total payment)
+ If it
is required to collect additional payment because the cost of exchanged fixed
asset is greater than the received fixed asset, the following accounts shall be
recorded when the additional payment is received:
Dr 111,
112 (additional payment)
Cr 131 –
Trade receivables.
+ If it is required to collect additional payment
because the residual value of exchanged fixed asset is smaller than the
received fixed asset, the following accounts shall be recorded when the
additional payment is received:
Dr 131 –
Trade receivables.
Cr 111,
112, etc.
g) When
purchasing fixed assets which are buildings, structures associated with land
use rights put into use, the following accounts shall be recorded:
Dr 211 –
Tangible fixed assets (historical cost – buildings, structures in details).
Dr 213 –
Intangible fixed assets (historical cost – land use rights).
Dr 133 –
Deductible VAT (if any)
Cr 111,
112, 331, etc.
h)
Increase in tangible fixed assets due to completion of capital investment: In
case the construction work or work items have been completed and put into use,
but their capital expenditure has not been approved, the historical cost shall
be provisionally determined according to actual capital expenditure in order to
record the increase or decrease in fixed assets (for calculating and
depreciating the fixed asset put into use). Once the settlement of capital
expenditure is approved, if there is any difference with provisional value of
the fixed asset, the increase or decrease in the difference shall be adjusted.
- In
case the capital investment progress is recorded in the same accounting book
system of the enterprise:
+ Upon
the completion of the construction and putting assets into use, the following
accounts shall be recorded:
Dr 211 –
Intangible fixed assets (historical cost).
Cr 241 –
Construction in progress.
+ If the
self-constructed assets documents not meet all recognition criteria for
tangible fixed assets as prescribed in the accounting standard on tangible
fixed assets, the following accounts shall be recorded:
Dr 152,
153 (if they are materials, inventoried tools and supplies)
Cr 241 –
Construction in progress.
- In
case the capital investment progress is not recorded in the same accounting
book system of the enterprise (investor has a project management board having
its own accounting system to keep track of the capital investment progress):
When receiving construction, the investor shall record as follows:
Dr 111,
112, 152, 153, 211, 213
Cr 136 –
Intra-company receivables
Cr 331,
333, etc (accept receivables, if any)
- If the
fixed asset is invested by capital expenditure, when the settlement is approved
by the competent agency, an increase in owner's invested equity shall be
recorded as follows:
Dr 441 –
Capital expenditure funds
Cr 411 –
Owner’s invested equity.
- Once
the settlement is approved, if there is any difference between settled price
and provisional price, the historical cost of the fixed asset shall be adjusted
as follows:
+ A
decrease in historical cost shall be recorded as follows:
Dr 138 –
Trade receivables (amounts of recovery shall not be settled)
Cr 211 –
Tangible fixed assets.
+ An
increase in historical cost shall be recorded as follows:
Dr 211,
213, 217, 1557
Cr,
relevant accounts.
i) When
receiving fixed assets from internal General company (without payment), the
following accounts shall be recorded:
Dr 211 –
Tangible fixed assets (historical cost).
Cr 214 –
Depreciation of fixed assets (depreciated value)
Cr 336,
411 (residual value).
k) When
putting fixed assets purchased by non-business funds into use in non-business
activities, the following accounts shall be recorded:
Dr 211 –
Tangible fixed assets
Cr 111,
112
Cr 241 –
Construction in progress.
Cr 331 –
Trade payables
Cr 461 –
Non-business funds (4612).
An
increase in non-business funds used for acquisition of the fixed asset shall be
recorded as follows:
Dr 161 –
Non-business expenditure (1612).
Cr 466 –
Non-business funds used for fixed asset acquisitions.
When
withdrawing estimates to purchase fixed assets, the enterprise shall keep
records of them in the presentation of financial statements.
l) When
putting fixed assets purchased by welfare funds into use in cultural and
welfare fund, the following accounts shall be recorded:
Dr 211 –
Tangible fixed assets (total payment)
Cr 111,
112, 331, 3411, etc.
- And,
the following accounts shall be recorded:
Dr 3532
– Welfare fund
Cr 3533
– Welfare funds used for fixed asset acquisitions.
m) Costs
incurred after initial recognition of tangible fixed assets (repair, innovation
or upgrade):
- When
incurring costs of repair, innovation or upgrade after initial recognition of
tangible fixed assets:
Dr 241 –
Construction in progress.
Dr 133 –
Deductible VAT (1332)
Cr 112,
152, 331, 334, etc.
-
Completion of repair, innovation or upgrade of fixed assets put into use:
+ If
there is an increase in historical cost of tangible fixed assets, the following
accounts shall be recorded:
Dr 211 –
Tangible fixed assets
Cr 241 –
Construction in progress.
+ If
there is not an increase in historical cost of tangible fixed assets, the
following accounts shall be recorded:
Dr 623,
627, 641, 642 (if their value is small)
Cr 242 –
Prepaid expenses. (if their value is great, they must be allocated gradually)
Cr 241 –
Construction in progress.
3.2.
Accounting for decreases in tangible fixed assets
An decrease
in historical cost of the tangible fixed assets due to sale, liquidation,
losses, shortage detected under physical inventory count, contribution into
joint venture or transfer to other enterprises, dismantlement of one or several
parts, etc. Any case of decrease in tangible fixed assets shall be
followed procedures and exactly determined the losses and income (if any).
According to relevant documents, every specific case shall be keep records as
follows:
3.2.1.
In case of sale of fixed assets used for business or non-business activities:
the purchased fixed asset is unnecessary or deems ineffective. The fixed asset
must be purchase following procedures prescribed in regulations of law.
According to receipt slip of the fixed asset and documents on sale of the fixed
asset:
a) When
selling fixed assets used for business, the following accounts shall be
recorded:
Dr 111,
112, 131, etc.
Cr 711 –
Other income (VAT-exclusive prices)
Cr 3331
– VAT payables (33311).
If the
VAT is not separable, the other income shall include VAT. A decrease in VAT
payables shall be recorded to other income.
- A
decrease in purchased fixed asset shall be recorded according to receipt slip
of fixed asset:
Dr 214 –
Depreciation of fixed assets (2141) (depreciated value)
Dr 811 –
Other expenses (residual value)
Cr 211 –
Tangible fixed assets (historical cost).
- Costs
related to sale of fixed assets shall be recorded to Dr 811 “Other expenses”.
b) In
case of selling fixed assets used for non-business activities:
- A
decrease in sold fixed asset shall be recorded according to receipt slip of
fixed asset as follows:
Dr 466 –
Funds used for fixed asset acquisitions (residual value)
Dr 214 –
Depreciation of fixed assets (depreciated value)
Cr 211 –
Tangible fixed assets (historical cost).
-Revenues
and expenses related to sale of the fixed asset shall be recorded to relevant
accounts as prescribed in regulations of competent agency.
c) In
case of selling fixed assets used for culture or activities welfare:
- A
decrease in sold fixed asset shall be recorded according to receipt slip of
fixed asset as follows:
Dr 353 –
Welfare fund (3533) (residual value)
Dr 214 –
Depreciation of fixed assets (depreciated value)
Cr 211 –
Tangible fixed assets (historical cost).
-
Receipts from sale of the fixed asset shall be recorded as follows:
Dr 111,
112, etc.
Cr 353 –
Welfare fund (3532)
Cr 333 –
Taxes and other payables to the State (3331) (if any)
-
Expenditures on sale of the fixed asset shall be recorded as follows:
Dr 353 –
Welfare fund (3532)
Cr 111,
112, etc.
3.2.2.
Liquidation of fixed assets: Liquidated fixed assets are damaged fixed assets
impossible for use, obsolete fixed assets or not appropriate to operating
activities. Once there is any fixed asset
subject to liquidation, the enterprise must issue a decision on liquidation and
establish a Liquidation board of fixed assets. The Liquidation board of fixed
assets is responsible for carrying out liquidation of fixed assets following
procedures as prescribed in financial management regime and make “Report on
liquidation of fixed assets” as prescribed. The report shall be prepared into
two copies, one copy shall be transferred to accounting department to record,
and one copy shall be transferred to the department in charge of management and
use of the fixed asset.
According
to the report on liquidation of fixed asset and other documents on revenues and
expenses incurred from liquidation of fixed assets, etc the liquidation of
fixed asset shall be recorded similarly to sale of fixed assets.
3.2.3.
When contributing tangible fixed assets as capital to subsidiaries,
joint-venture companies, the following accounts shall be recorded:
Dr 221,
222 (re-evaluated value)
Dr 214 –
Depreciation of fixed assets (depreciated value)
Dr 811 –
Other expenses (re-evaluated value is smaller than residual value of the fixed
asset)
Cr 211 –
Tangible fixed assets (historical cost).
Cr 711 –
Other expenses (re-evaluated value is greater than residual value of the fixed
asset)
3.2.4.
Shortage or surplus of tangible fixed assets: The reason for any shortage or
surplus of fixed assets must be uncovered. The shortage or surplus must
be accurately and promptly recorded according to “Report on physical inventory
count of fixed assets” and Conclusion issued by the Inventory board according
to specific reasons:
a)
Surplus of fixed assets:
- If the
surplus of fixed assets is detected due to unrecording, an increase in fixed
assets shall be recorded according to dossier on fixed assets as follows:
Dr 211 –
Tangible fixed assets
Cr 241,
331, 338, 411, etc.
- If the
fixed assets in surplus are being used, apart from recording the increase in
tangible fixed assets, the depreciation value used for calculation and
deduction of additional depreciation of fixed asset used for welfare,
non-business or project purpose, the following accounts shall be recorded:
Dr,
operating costs (fixed assets used for business)
Dr 3533 – Welfare funds used for fixed asset
acquisitions (used for welfare)
Dr 466 –
Non-business funds used for fixed asset acquisitions.
Cr 214 –
Depreciation of fixed assets (2141).
- If the fixed assets in surplus are fixed assets
of other enterprises, the owner of such fixed assets must be notified.
If it fails to determine the owner of such fixed assets, the superior agency
and finance agency must be notified for handling (regarding state-owned
enterprises) During handling period; those fixed assets shall be provisionally
kept and monitored according to documents on physical inventory count.
b)
Shortage of fixed assets: it is required to uncover reasons, offenders and
handled as prescribed in financial regime in force.
- In
case there is a decision on handling of shortage: the historical cost and
depreciated value of such asset must be accurately determined according to approved
“Report on handling of shortage of fixed assets” and dossier on fixed assets,
then record an decrease in fixed assets and handle the residual value of the
fixed assets. According to the decision on handling of shortage, the following
accounts shall be recorded:
+ The
shortage of fixed assets used for business shall be recorded as follows:
Dr 214 –
Depreciation of fixed assets (depreciated value)
Dr 111,
112, 334, 138 (1388) (if the offender is required to make compensation)
Dr 411 –
Owner’s invested equity (if the decrease in equity is permitted to be recorded)
Dr 811 –
Other expenses (if the enterprise suffers losses)
Cr 211 –
Tangible fixed assets.
+ The
shortage of fixed assets used for non-business activities shall be recorded as
follows:
A decrease
in the fixed asset shall be recorded as follows:
Dr 214 –
Depreciation of fixed assets (depreciated value)
Dr 466 –
Funds used for fixed asset acquisitions (residual value)
Cr 211 –
Tangible fixed assets (historical cost).
The
residual value of the shortage of fixed assets must be recovered according to
the decision on handling of shortage and the following accounts shall be
recorded:
Dr 111,
112 (if collecting money)
Dr 334 –
Payables to employees (deducted from salaries of employees)
Cr,
relevant accounts (according to report on handling).
+ The
shortage of fixed assets used for culture or activities welfare shall be
recorded as follows:
A
decrease in the fixed asset shall be recorded as follows:
Dr 214 –
Depreciation of fixed assets (depreciated value)
Dr 3533
– Funds used for fixed asset acquisitions (residual value)
Cr 211 –
Tangible fixed assets (historical cost).
The
residual value of the shortage of fixed assets must be recovered according to
the decision on handling of shortage and the following accounts shall be
recorded:
Dr 111,
112 (if collecting money)
Dr 334 –
Payables to employees (deducted from salaries of employees)
Cr 3532
– Welfare fund
- If the
reasons for shortage of fixed assets are not uncovered and awaiting solutions:
+ The
shortage of fixed assets used for business shall be recorded as follows:
A
decrease in fixed assets shall be recorded for residual value of the shortage
of fixed assets:
Dr 214 –
Depreciation of fixed assets (2141) (depreciated value)
Dr 811 –
Other expenses (residual value)
Cr 211 –
Tangible fixed assets (historical cost).
If there
is a decision on handling of residual value of shortage of fixed assets, the
following accounts shall be recorded:
Dr 111,
112 (compensation)
Dr 138 –
Other receivables (1388) (if the offender is required to make compensation)
Dr 334 –
Payables to employees (deducted from salaries of employees)
Dr 411 –
Owner’s invested equity (if the decrease in equity is permitted to be recorded)
Dr 811 –
Other expenses (if the enterprise suffers losses)
Cr 138 -
Other income (1381).
+ The
shortage of fixed assets used for non-business activities shall be recorded as
follows:
A
decrease in the fixed asset shall be recorded as follows:
Dr 214 –
Depreciation of fixed assets (depreciated value)
Dr 466 –
Funds used for fixed asset acquisitions (residual value)
Cr 211 –
Tangible fixed assets (historical cost).
The
residual value of the shortage of fixed assets shall be recorded to account
1381 “Assets in shortage awaiting resolution” as follows:
Dr 1381
– Assets in shortage awaiting resolution
Cr 138 -
Other payables or receivables.
When
there is a decision on compensation for residual value of the shortage of fixed
assets, the following accounts shall be recorded:
Dr 111,
334, etc.
Cr 1381 –
Assets in shortage awaiting resolution
Concurrently,
the compensation for residual value of the shortage of fixed assets shall be
recorded to relevant accounts according to the decision issued by the competent
agency as follows:
Dr 138 -
Other payables or receivables.
Cr,
relevant accounts (333, 461, etc).
+ The
shortage in fixed assets used for culture or activities welfare shall be
recorded as follows:
A
decrease in the fixed asset shall be recorded as follows:
Dr 214 –
Depreciation of fixed assets (depreciated value)
Dr 3533
– Funds used for fixed asset acquisitions (residual value)
Cr 211 –
Tangible fixed assets (historical cost).
The
residual value of the shortage of fixed assets shall be recorded to account
1381 “Assets in shortage awaiting resolution” as follows:
Dr 1381
– Assets in shortage awaiting resolution
Cr 3532
– Welfare fund
When
there is a decision on compensation for residual value of the shortage of fixed
assets, the following accounts shall be recorded:
Dr 111,
334, etc.
Cr 1381 –
Assets in shortage awaiting resolution
3.2.5.
With regard to tools and supplies not meeting all recognition criteria of
tangible fixed assets used for business, the following accounts shall be
recorded:
Dr 623,
627, 641, 642 (if their residual value is small)
Dr 242 –
Prepaid expenses. (if their value is great, they must be allocated gradually)
Dr 214 –
Depreciation of fixed assets (depreciated value)
Cr 211 –
Tangible fixed assets (historical cost of fixed asset).
3.2.6.
Accounting for sale and leaseback of tangible fixed assets which is operating
lease (refer to account 811 or 711).
3.3.
Accounting for tangible fixed assets under physical inventory count under
evaluation of enterprises for equitization of wholly-state-owned enterprises
a)
Reports on physical inventory count: When receiving notification or decision on
equitization of the competent agency, the equitized enterprise must conduct
physical inventory count and classify tangible fixed assets under management
and use of the enterprise at the time in which the enterprise is undergone
evaluation.
- In
case of shortage of tangible fixed assets, the following accounts shall be
recorded:
Dr 1381
– Assets in shortage awaiting resolution (residual value)
Dr 214 –
Depreciation of fixed assets (cumulatively-depreciated value)
Cr 211 –
Tangible fixed assets (historical cost).
- In
case of surplus of fixed assets: the enterprise shall keep records of surplus
of fixed assets in the presentation of the financial statement Once the
reasons for surplus are uncovered and the decision on resolution to surplus is
issued by the competent agency, they shall be recorded to relevant accounts in
the balance sheet.
b)
Accounting for surplus or shortage of tangible fixed assets under physical
inventory count: the enterprise must uncover the reasons for the surplus or
shortage and determine material responsibility for compensation taken by
organizations or individuals as prescribed. The value of shortage of tangible
fixed assets (deducted from compensation) shall be recorded to other expenses.
- With
regard to shortage of assets detected under physical inventory count, according
to “Report on resolution to shortage or surplus of assets under physical
inventory count”, the following accounts shall be recorded:
Dr 111 –
Cash (individual or organization paying compensation)
Dr 1388
- Other receivables (individual or organization paying compensation)
Dr 334 –
Payables to employees (deducted from salaries of employees)
Dr 811 –
Other expenses (residual value of shortage of fixed assets detected under
physical inventory count shall be recorded to losses of the enterprise)
Cr 1381
– Assets in shortage awaiting resolution.
- With
regard to surplus of assets detected under physical inventory count, according
to “Report on resolution to shortage or surplus of assets under physical
inventory count”, the following accounts shall be recorded:
Dr 3381
– Surplus of assets awaiting resolution.
Cr 331 –
Trade payables (if the assets in surplus belong to sellers)
Cr 138 -
Other payables or receivables (3388)
Cr 411 –
Owner's invested equity (regarding tangible fixed assets impossible to uncover
reasons and determine the owner).
c)
Accounting for sale or liquidation of unnecessary assets or unsold assets
pending liquidation: after receiving approval issued by agency deciding the
equitization, the enterprise shall sell or liquidate assets as prescribed. The
revenues, expenses and decreases in assets shall be recorded as follows:
-
Revenues from sale or liquidation of unnecessary fixed assets or fixed assets
pending liquidation shall be recorded as follows:
Dr
111,112,131
Cr 711 -
Other income.
Cr 3331
– VAT payables (if any).
-
Expenditures on sale or liquidation of unnecessary fixed assets or fixed assets
pending liquidation shall be recorded as follows:
Dr 811 –
Other expenses
Dr 133 –
Deductible VAT (if any)
Cr 111,
112, 331.
-
Decreases in fixed assets which are sold or liquidated shall be recorded as
follows:
Dr 811 –
Other expenses (residual value)
Dr 214 –
Depreciation of fixed assets
Cr 211 –
Tangible fixed assets.
d) When
the enterprise transfers tangible fixed assets which are unnecessary or pending
liquidation as prescribed, the following accounts shall be recorded:
Dr 411 –
Owner’s invested equity.
Dr 214 –
Depreciation of fixed assets
Cr 211 –
Tangible fixed assets.
dd)
Accounting for transfer assets which are welfare constructions
- When
transferring housing of officials or employees of the enterprise invested by
the welfare funds to real estate authority of the local government to manage,
the following accounts shall be recorded:
Dr 3533
– Funds used for fixed asset acquisitions (residual value)
Dr 214 –
Depreciation of fixed assets (depreciated value)
Cr 211 –
Tangible fixed assets (historical cost).
- If the
equitized enterprise uses the welfare constructions invested by state capital
for business, the following accounts shall be recorded:
Dr 466 –
Non-business funds used for fixed asset acquisitions.
Cr 411 –
Owner’s invested equity.
e)
Accounting for value of tangible fixed assets which are undergone re-valuation.
According
to dossier on revaluation of the enterprise, the value of the tangible fixed
assets shall equal: Increase in residual value of fixed asset which is recorded
to Cr 412 - Differences upon asset revaluation; Decrease in residual value of
fixed asset which is recorded to Dr 412 - Differences upon asset revaluation
and such differences must be in details according to every fixed asset. In
particular:
- In
case the value of re-evaluated fixed asset is greater than book value and
historical cost of the fixed asset or re-evaluated cumulative depreciation is
greater than book value, the following accounts shall be recorded:
Dr 211 –
Historical costs of fixed assets (increase evaluation).
Cr 214 –
Depreciation of fixed assets (increase evaluation).
Cr 412 -
Differences upon asset revaluation (value of fixed asset in increase).
- In
case the value of re-evaluated fixed asset is smaller than book value and
historical cost of the fixed asset or re-evaluated cumulative depreciation is
smaller than book value, the following accounts shall be recorded:
Dr 214 –
Depreciation of fixed assets (decrease evaluation).
Dr 412 -
Differences upon asset revaluation (value of fixed asset in decrease).
Cr 211 –
Historical costs of fixed assets (decrease evaluation).
The
enterprise depreciates the fixed asset according to new historical cost
determined after re-evaluation.
g)
Transferring fixed assets to joint-stock companies
-
Equitization of independent enterprises
With
regard to equitization of independent enterprises, it is required to comply
with regulations on transfer of assets, accounts payables and capital funds of
joint-stock companies. All accounting documents, accounting records and
financial statements of the equalized enterprise required archive shall be
transferred to the joint-stock company for keep archiving.
- With
equitization of dependent accounting enterprises of state-owned companies,
groups, general companies, parent companies, or independent accounting
companies of the general companies.
When
transferring assets, accounts payables and capital funds to joint-stock
companies, the value of tangible fixed assets transferred to the joint-stock
company shall be recorded as follows according to receipt slip of assets, appendixes,
relevant accounting records or documents.
Dr 411 –
Owner’s invested equity.
Dr 214 –
Depreciation of fixed assets (depreciated value).
Cr 211 –
Tangible fixed assets.
Article
36. Account 212 – Financial lease fixed assets
1.
Rules for accounting
a) This
account is used to record current value and increase and decrease in total
financial lease fixed assets of an enterprise. This account is used to record
historical costs of financial lease fixed assets of the lessee (such fixed
assets are not under ownership of the enterprise, but the enterprise has legal
liability to manage and use them similarly to their assets).
b)
Financial lease: a lease that transfers substantially all the risks and rewards
incidental to ownership of an asset to the lessee. Ownership of the asset may
be transferred at the end of the lease term.
c)
Recognition of financial lease: a financial lease must satisfy at least one of
five criteria below:
-
Ownership of the asset is transferred to the lessee at the end of the lease term;
- At the
inception of the lease, the lessee has an option to purchase the asset at a
price which is expected to be sufficiently lower than the value at the end of
the lease term;
-
The lease term is for the major part of the economic life of the asset even if
title is not transferred;
- At the
inception of the lease, the present value of the minimum lease payments amounts
to at least substantially all of the fair value of the leased asset;
-
The leased assets are of a specialized nature such that only the lessee can use
them without major modifications being made.
d) An
asset lease shall be considered a financial lease if it meets at least one of
three criteria below:
- If the
lessee cancels the lease and compensates the losses caused by the cancellation
of the lease to the lessor;
- Gains
or losses from variation in the fair value of the residual value of the leased
asset shall be borne by the lessee;
- The
lessee has ability to continue the lease after the termination of the lease at
a rent which is lower than the market rent. Leases of assets which are land use
rights shall be classified as operating lease.
dd)
Historical cost of a financial lease fixed asset shall equal fair value of the
lease or present value of minimum lease payments amounts (in case the fair
value is greater than present value of minimum lease payments amounts) plus (+)
initial direct costs incurred in connection with financial leasing activities.
If
the input VAT is deductible, present value of minimum lease payments amounts
shall not include VAT payables to the lessor.
When
calculating the present value of minimum lease payments amounts, the enterprise
may use the implicit interest rate, interest rate stated in the lease or the
incremental borrowing interest rate of the lessee.
e) The
non-deductible input VAT on the leased asset which is paid by the lessee on
behalf of the lessor shall be recorded as follows:
- If the
non-deductible input VAT is made a lump sum payment when recording the leased
asset, the historical cost of the leased asset shall include VAT;
- If the
non-deductible input VAT is paid instalment, it shall be recorded to operating
cost during a period in conformity with depreciation costs of financial lease
assets.
g)
Operating lease fixed assets shall not be recorded to this account.
h) The lessee shall calculate, depreciate the
fixed asset and charge to operating costs periodically in conformity with the
depreciation policy applied to its owned-fixed assets in kind. If it not
sure that the lessee shall acquire the ownership of the asset at the end of the
lease term, the leased asset shall be depreciated according to the lease term
if the lease term is shorter than the useful life of the leased asset.
i) Account 212 shall be detailed to keep track of
every type of leased fixed asset.
2.
Structure and contents of account 212 – Financial lease fixed assets
Debit:
Increases in historical costs of the financial lease fixed assets.
Credit:
Decreases in historical costs of financial lease fixed assets due to
returning to the lessor at the end of the lease term or buying and converting
into the fixed assets of the enterprise.
Debit
balance: Historical cost of existing financial lease fixed assets.
Account
212 – Financial lease fixed assets comprises 2 sub-accounts
-
Account 2121 – Financial lease tangible fixed assets: records current value and
increases and decreases in total financial lease tangible fixed assets of the
enterprise;
-
Account 2122 – Financial lease intangible fixed assets: records current value
and increases and decreases in total financial lease intangible fixed assets of
the enterprise.
3.
Method of accounting for several major transactions
3.1.
When incurring initial direct cost in connection with the financial lease asset
before receiving the leased asset, such as: commission fees, legal fees, etc,
the following accounts shall be recorded:
Dr 242 –
Prepaid expenses
Cr 111,
112, etc.
3.2.
When paying an advance of the financial lease rent or deposit to secure the
lease, the following accounts shall be recorded:
Dr 341 –
Borrowings and finance lease liabilities (3412) (prepaid lease payments)
Dr 244 –
Mortgage, collaterals and deposits
Cr 111,
112, etc.
3.3.
When receiving a financial lease fixed asset, the value of the financial lease
fixed assets (input VAT-exclusive prices) shall be recorded according to the
lease and related documents, the following accounts shall be
recorded:
Dr 212 –
Financial lease fixed assets (VAT-exclusive prices)
Cr 341 –
Borrowings and finance lease liabilities (3412) (present value of minimum lease
payments amounts or fair value of the leased asset, excluding refundable
taxes).
Initial
direct costs in connection with financial lease activities shall be recorded to
the historical cost of the financial lease fixed assets as follows:
Dr 212 –
Financial lease fixed assets
Cr 242 –
Prepaid expenses, or
Cr 111,
112, etc. (Direct costs in connection with financial lease activities
incurred when receiving the financial lease asset).
3.4.
Periodically, upon the receipt of the financial lease invoices:
When
paying the principal and lease interest to the lessor, the following accounts
shall be recorded:
Dr 635 –
Financial expenses (lease interest of current period)
Dr 341 –
Borrowings and finance lease liabilities (3412) (lease principal of current
period)
Cr 111,
112, etc.
3.5.
When receiving an invoice for input VAT sent by the lessor who is paid by the
lessee:
a) If
the VAT is deductible, the following accounts shall be recorded:
Dr 133 –
Deductible VAT (1332)
Cr 112 –
Cash in bank (lump sum payment)
Cr 338 -
Other payables (input VAT payables to the lessor).
b) If
the VAT is not deductible, the following accounts shall be recorded:
Dr 212 –
Financial lease fixed assets (if the input VAT is not deductible and the VAT is
paid lump sum when recording the financial lease fixed assets)
Dr 627,
641, 642 (if the non-deductible input VAT is paid whenever the invoice is
received)
Cr 112 –
Cash in bank (lump sum payment)
Cr 338 -
Other payables (input VAT payables to the lessor).
3.6. When
paying the commitment fees to the lessor, the following accounts shall be
recorded:
Dr 635 –
Financial expenses.
Cr 111,
112, etc.
3.7.
When returning the financial lease fixed assets as mentioned in the lease to
the lessor, a decrease in the value of the financial lease fixed assets shall
be recorded as follows:
Dr 214 –
Depreciation of fixed assets (2142)
Cr 212 –
Financial lease fixed assets.
3.8. If
the lease prescribes that the lessee only rent a part of the value of the asset
and buy it then, when the lessee receives the transfer of the ownership of the
asset, a decrease in financial lease fixed assets and an increase in tangible
fixed assets under ownership of the enterprise shall be recorded. When
converting the financial lease asset to the asset under ownership of the
enterprise, the following accounts shall be recorded:
Dr 211 –
Tangible fixed assets
Cr 212 –
Financial lease fixed assets (residual value of the financial lease fixed
asset)
Cr 111,
112, etc. (additional payables).
And,
when transferring depreciated value, the following accounts shall be recorded:
Dr 2142
– Depreciation of financial lease fixed assets
Cr 2141
– Depreciation of tangible fixed assets
3.9.
Accounting for sale and leaseback of financial lease fixed assets:
a) If the
sale and leaseback gives the price which is greater than the residual value of
the fixed asset:
-
Accounting for the sale transaction (refer to account 711)
- Those
entries recording leased assets and accounts payables in connection with
finance lease shall comply with regulations from Point 3.1 to 3.6 of this
Article.
-
Periodically, the depreciation of the financial lease fixed asset shall be
calculated, deducted and recorded to operating costs as follows:
Dr 623,
627, 641, 642, etc.
Cr 2142
– Depreciation of financial lease fixed assets
-
Periodically, when transferring the difference between the price and residual
value of the leased back fixed asset (profit) to operating costs of the period
over then lease term, the following accounts shall be recorded:
Dr 3387
- Unearned revenue
Cr 623,
627, 641, 642, etc.
b) If
the sale and leaseback gives the price which is smaller than the residual value
of the fixed asset:
-
Accounting for the sale transaction (refer to account 711)
- Those
entries recording leased assets and accounts payables in connection with
finance lease, periodical rents shall comply with regulations from Point 3.1 to
3.6 of this Article.
-
Periodically, when transferring the difference between the price and residual
value of the leased back fixed asset (loss) to operating costs of the period
over then lease term, the following accounts shall be recorded:
Dr 623,
627, 641, 642, etc.
Dr 242 –
Prepaid expenses
Article
37. Account 213 – Intangible fixed assets
1.
Rules for accounting
a) This
account is used to record current value and increases and decreases in
intangible fixed assets of the enterprise; Intangible fixed assets mean assets
which have no physical form but the value of which can be determined and which
are held and used by the enterprises in their business or leased to other
entities in conformity with the recognition criteria of intangible fixed
assets.
b)
Historical costs of intangible fixed assets means all costs incurred by the
enterprises to acquire intangible fixed assets up to the time of putting these
assets into use as expected.
- The
historical cost of an intangible fixed asset purchased separately shall equal
its purchase price (minus (-) any trade discounts and rebates), taxes
(excluding refundable taxes) and directly-attributable expenses incurred from
putting the asset into use as expected;
- If the
intangible fixed asset is purchased in instalment or deferred payment, their
historical cost shall be recorded to the cash price. The difference between the
deferred price and the cash price shall be recorded to operating costs
according to the payment period, unless such difference is recorded to the
historical cost of the intangible fixed assets (capitalization) as prescribed
in VAS “Borrowing costs";
- If an
intangible fixed asset is purchased in the form of exchange with another
dissimilar intangible fixed asset, their value shall equal the fair value of
the received asset or the fair value of the exchanged asset after adjustment.
If the exchange and payment against documents is related to the capital
ownership of the enterprise, the historical cost shall equal the fair value
stated in such documents.
- The
historical cost of an intangible fixed asset which is land use rights means an
amount of money paid to acquire lawful land use rights (including expenses paid
to the transferor or expenses incurred from compensation for land clearance,
leveling of premises, property transfer taxes, etc) or an amount agreed by
contracting parties when contributing capital. The land use rights shall be
considered whether or not intangible fixed assets in accordance with
regulations of relevant law provisions.
- The
historical cost of an intangible fixed asset granted by the State or presented
shall equal the initial fair value plus (+) directly-attributable expenses
incurred from putting the asset into use as expected.
- The
historical cost of the intangible fixed assets transferred shall be the
historical cost recorded in the accounting records of the receiver.
c) All
actual expenses incurring during the development stage which fails to be
recognized as intangible fixed asset shall be recorded to operating costs in
the period. If the development stage of the asset meets recognition criteria of
intangible fixed assets as prescribed in VAS “Intangible fixed assets”,
expenses of the development stage shall be recorded to account 241
“Construction in progress” (2412). At the end of the development stage, those
expenses incurred from historical cost of intangible fixed assets acquisitions
during the development stage must be transferred to the Dr 213 "Intangible
fixed assets".
d)
During the operation process, it is required to depreciate and record the
intangible fixed asset to the operating costs as prescribed in VAS for
intangible fixed assets. With regard to fixed assets which are land use rights,
only intangible fixed assets which are termed land use rights are depreciated.
dd)
Costs related to intangible fixed assets, which are incurred after initial
recognition, must be recognized as operating costs in the period; if they meet
all two following criteria, an increase in the historical costs of the
intangible fixed asset shall be recorded:
- These
costs can help intangible fixed assets generate more future economic benefits
than the original operation evaluation;
- These
costs are appraised in a certain way and associated with a specific intangible
asset.
e) The
costs incurred to generate future economic benefits for the enterprises include
enterprise establishment cost, personnel-training cost and advertising cost
incurred before the newly-set up enterprises start to operate, costs for the
research stage, relocation cost, shall be recorded to operating costs in the
period or gradually allocated into operating costs in the maximum period of
three years.
g) Costs
related to intangible assets, which have been recorded by the enterprises to
costs of determining the business operation results in the previous period,
shall not be re-recorded to the historical cost of intangible fixed assets.
h)
Trademarks, brand names, distribution right, customers’ name list and similar
items which are internally established in the enterprise shall not be
recognized as intangible fixed assets.
i)
Intangible fixed assets shall be kept records in details according to every
item in the “Fixed assets register”.
2.
Structure and contents of account 213 – Intangible fixed assets
Debit:
Increases in historical costs of intangible fixed assets.
Credit:
Decreases in historical costs of intangible fixed assets.
Debit
balance: Historical costs of existing intangible fixed assets of the
enterprise.
Account
213 – Intangible fixed assets comprise 7 sub-accounts:
-
Account 2131 – Land use rights: records land use rights which are recognized as
intangible fixed assets as prescribed.
Value of
intangible fixed assets which are land use rights shall equal actual expenses
directly related to land use rights, such as: money paid for the land use
rights, expenses incurred from compensation, land clearance, leveling of
premises (if the land use rights are acquired separately from any investment in
buildings and structures on land), property transfer taxes (if any), etc. This
account shall not record any expenses incurred from constructions on land.
-
Account 2132 – Copy rights: records value of intangible fixed assets which
are total actual expenses paid to acquire copyrights.
-
Account 2133 – Patents and inventions: records value of intangible fixed
assets which are total actual expenses paid to acquire patents and inventions.
- Account
2134 – Trademarks and trade names: records value of intangible fixed assets
which are total actual expenses paid for trademarks of goods.
-
Account 2135 – Computer software: records value of intangible fixed assets
which are total actual expenses paid for computer software.
-
Account 2136 - Licenses and franchises: records value of intangible fixed
assets which are expenses incurred from licenses and franchises, such as:
development permits, permits for production of new products, etc.
-
Account 2138 – Other intangible fixed assets: records value of other
intangible fixed assets which are not recorded to above accounts.
3.
Method of accounting for several major transactions
3.1.
Purchase of intangible fixed assets:
- When
purchasing intangible fixed assets used for business which are subject to VAT
using credit-invoice method, the following accounts shall be recorded:
Dr 213 –
Intangible fixed assets (VAT-exclusive prices)
Dr 133 –
Deductible VAT (1332)
Cr 112 –
Cash in bank
Cr 141 -
Advances
Cr 331 –
Trade payables
- When
purchasing intangible fixed assets used for business which are not subject to
VAT, the following accounts shall be recorded:
Dr 213 –
Intangible fixed assets (total payments)
Cr 112,
331, etc (total payments)
3.2.
Purchase of intangible fixed assets in instalment or deferred payment:
- When
purchasing intangible fixed assets used for business which are subject to VAT
using credit-invoice method, the following accounts shall be recorded:
Dr 213 –
Intangible fixed assets (VAT-exclusive cash prices)
Dr 242 –
Prepaid expenses
(deferred
interest shall equal (=) difference between total payment minus (-) cash price
and input VAT (if any))
Dr 133 –
Deductible VAT (1332)
Cr 111,
112
Cr 331 –
Trade payables
- When
purchasing intangible fixed assets used for business which are not subject to
or subject to VAT using subtraction method, the following accounts shall be
recorded:
Dr 213 –
Intangible fixed assets (VAT-exclusive cash prices)
Dr 242 –
Prepaid expenses (deferred interest shall equal (=) difference between total
payment minus (-) cash price)
Cr 331 –
Trade payables (total payments).
- When
paying the interest for purchase of intangible fixed assets in instalment or
deferred payment periodically, the following accounts shall be recorded:
Dr 635 –
Financial expenses.
Dr 242 –
Prepaid expenses
- When
making payment to the seller, the following accounts shall be recorded:
Dr 331 –
Trade payables
Cr 111,
112, etc.
3.3.
Purchase of intangible fixed assets in the form of exchange
a)
Exchange of two similar intangible fixed assets: When receiving an intangible
fixed asset in exchange of a similar intangible fixed asset and putting into
operation, the following accounts shall be recorded:
Dr 213 –
Intangible fixed assets (the historical cost of the received intangible fixed
asset shall be recorded according to the residual value of the exchanged
intangible fixed asset)
Dr 214 –
Depreciation of fixed assets (2143) (depreciation of exchanged fixed asset)
Cr 213 –
Intangible fixed assets (2143) (historical cost of exchanged fixed asset)
b)
Exchange of two dissimilar intangible fixed assets:
- A
decrease in the exchanged intangible fixed assets shall be recorded as follows:
Dr 214 –
Depreciation of fixed assets (depreciation value)
Dr 811 –
Other expenses (residual value of the exchanged fixed asset)
Cr 213 –
Intangible fixed assets (historical cost)
- And
the revenue from exchange of fixed assets shall be recorded as follows:
Dr 131-
– Trade receivables (total payments)
Cr 711 –
Other income (fair value of exchanged fixed asset)
Cr 3331
–VAT payables (33311) (if any).
- An
increase in the exchanged intangible fixed assets shall be recorded as follows:
Dr 213 –
Intangible fixed assets (fair value of the received fixed asset)
Dr 133 –
Deductible VAT (1332) (if any)
Cr 131 –
Trade receivables (total payments).
3.4.
Value of intangible fixed assets acquired intra-company in the development
stage:
a) When
incurring expenses in the development stage, if the results do not satisfy
recognition criteria of intangible fixed assets, such expenses shall be
recorded to operating costs within a period or prepaid expenses, the following
accounts shall be recorded:
Dr 242 –
Prepaid expenses (for great value) or
Dr 642 –
General administration expenses
Cr 111,
112, 152, 153, 331, etc.
b) If
the result of development stage satisfies recognition criteria of intangible
fixed assets:
- When
collecting actual expenses incurring in the development stage to add to the
historical cost of the intangible fixed assets, the following accounts shall be
recorded:
Dr 241 –
Construction in progress
Dr 133 –
Deductible VAT (1332 - if any)
Cr 111,
112, 152, 153, 331, etc.
- When
completing development stage, total actual expenses incurring which shall be
recorded to the historical cost of the intangible fixed asset, the following
accounts shall be recorded:
Dr 213 –
Intangible fixed assets
Cr 241 –
Construction in progress
3.5.
When purchasing intangible fixed assets which are land use rights associated
with buildings or structures on land, the intangible fixed assets which are
land use rights and tangible fixed assets which are buildings or structures
must be separately recorded as follows:
Dr 211 –
Tangible fixed assets (historical costs of buildings or structures)
Dr 213 –
Intangible fixed assets (historical costs of land use rights)
Dr 133 –
Deductible VAT (1332 - if any)
Cr 111,
112, 331, etc.
3.6.
When an intangible fixed asset acquired by exchange of documents on capital
ownership of joint-stock companies, the historical cost of such intangible
fixed asset shall be the fair value stated in those documents, and the
following accounts shall be recorded:
Dr 213 –
Intangible fixed assets
Cr 411 –
Owner's invested equity.
3.7.
Granted, donated or presented intangible fixed assets which are put into
operation:
- When
receiving a granted, donated or presented intangible fixed asset, the following
accounts shall be recorded:
Dr 213 –
Intangible fixed assets
Cr 711 –
Other income
- When
incurring expenses related to donated or presented intangible fixed assets, the
following accounts shall be recorded:
Dr 213 –
Intangible fixed assets
Cr 111,
112, etc.
3.8.
When receiving land use rights as capital, the following accounts shall be
recorded according to dossiers on transfer of land use rights:
Dr 213 –
Intangible fixed assets
Cr 411 –
Owner's invested equity.
3.9.
When converting use purposes of the investment properties which are land use
rights to intangible fixed assets, the following accounts shall be recorded:
Dr 213 –
Intangible fixed assets (2131)
Cr 217 –
Investment properties.
And when
transferring cumulative depreciation of the investment properties to cumulative
depreciation of the intangible fixed assets, the following accounts shall be
recorded:
Dr 2147
– Depreciation of investment properties
Cr 2143
– Depreciation of tangible fixed assets
3.10.
When investing in subsidiaries or joint-venture companies in the form of
contribution of intangible fixed assets, according to re-evaluated value of
intangible fixed assets:
a) In
case the re-evaluated value is smaller than the residual value of the
contributed intangible fixed asset, the following accounts shall be recorded:
Dr 221,
222 (according to re-evaluated value)
Dr 214 –
Depreciation of fixed assets (2143) (depreciation value)
Dr 811 –
Other expenses (the negative difference between the re-evaluated and the
residual value of the intangible fixed asset)
Cr 213 –
Intangible fixed assets (historical cost).
b) In
case the re-evaluated value is greater than the residual value of the
contributed intangible fixed asset, the following accounts shall be recorded:
Dr 221,
222 (according to re-evaluated value)
Dr 214 –
Depreciation of fixed assets (2143) (depreciation value)
Cr 213 –
Intangible fixed assets (historical cost).
Cr 711 –
Other expenses (the positive difference between re-evaluated value and the
residual value of the intangible fixed asset).
3.11.
The sale or liquidation of intangible fixed assets shall be recorded similarly
to the sale or liquidation of tangible fixed assets (refer to account 211).
Article
38. Account 214 – Depreciation of fixed assets
1.
Rules for accounting
a) This
account is used to record increases or decreases in depreciation value and
accumulated depreciation of fixed assets and investment properties due to
deduction from depreciation of fixed assets, investment properties and other
increases or decreases of depreciation of fixed assets or investment
properties.
b) In
principle, all fixed assets or investment properties of the enterprise for
lease related to operation (including unused, unnecessary or
liquidation-pending assets) must be depreciated as prescribed in regulations in
force. The depreciation of fixed assets used for operation and depreciation of
investment properties shall be recorded to operating costs within a period;
depreciation of unused, unnecessary, or liquidation-pending fixed assets shall
be recorded to other expenses. With regard to special cases not subject to
depreciation (such as fixed assets for reservation or common use in society,
etc), the enterprise must comply with regulations of law in force. It is not
required to depreciate fixed assets used for non-business activities or
welfare, only depreciation of such fixed asset are calculated and decreases in
funds for those fixed assets acquisition are recorded.
c)
Pursuant to regulations of law and management requests of the enterprise, one
of methods of calculation or deduction of depreciation as prescribed in
conformity with every fixed asset or investment property in order to develop
business and ensure the recovery of payback promptly, sufficiently and in
conformity with financial ability of the enterprise.
The
depreciation method applying to every fixed asset or investment property must
be conducted consistently and may be changed when there is any change in method
of recovering economic benefits of the fixed asset or investment property.
d) The
useful life and depreciation method must be re-considered at least at the end
of every fiscal year.
If the
estimated useful life of the asset is different significantly from previous
estimated useful life, the useful life must be changed equivalently. The method
of depreciation of fixed assets shall be changed once there is a significant
change in payback of economic benefits of the fixed assets. In this case, the
depreciation costs of the current year and succeeding years shall be adjusted
and they shall be presented in the financial statements.
dd) If a
fixed asset is fully depreciated (the capital is fully paid back), but it is
still be used in operation, it shall not be kept depreciating. If a fixed asset
is not fully depreciated (the capital is not fully paid back), but it is
damaged or pending liquidation, it is required to uncover reasons,
responsibility of groups or individuals for compensation; and the residual
value of the fixed asset which is not paid back or compensated shall be
compensated by the amounts collected from the liquidation of such fixed asset,
the amounts of compensation shall be decided by the leaders of the enterprise.
If the amounts collected from liquidation or compensation is not enough to
compensate the residual value of the fixed asset which is not paid back or the
value of the lost fixed asset, the remaining difference shall be considered loss
from liquidation and recorded to other expenses. With regard to state-owned
enterprises, they shall be handled according to current financial policies of
the Government.
e)
Regarding intangible fixed assets, depending on the effective period of time of
such assets for depreciating from they are put into use (according to the
contract, commitment or decision of the competent agency) Regarding intangible
fixed assets which are land use rights, only term land use rights are
depreciated. If it fails to determine useful life, they shall be not
depreciated.
g)
Regarding financial lease fixed assets, during the period in which the assets
are used; the lessee must depreciate over the lease term and charge to
operating costs in order to recover all capital.
h)
Regarding investment properties for operating lease, they shall be depreciated
and recorded to operating costs within a period. The enterprise may estimate
the useful life and determine the appropriate depreciation method according to
owner-occupied property in kind. If an investment property is held for capital
appreciation, the enterprise shall not depreciate but determine the loss due to
depreciation.
2.
Structure and contents of account 214 – Depreciation of fixed assets
Debit:
Decreases in depreciation of fixed assets, investment properties because
the fixed assets or investment properties are liquidated, sold, or transferred
to other enterprises or contributed to other enterprises as capital.
Credit:
Increases in depreciation of fixed assets or investment properties because
the fixed assets or investment properties are depreciated.
Debit
balance: Accumulated depreciation of existing fixed assets or investment
properties of the enterprise.
Account
214 – Depreciation of fixed assets, comprise 4 sub-accounts:
-
Account 2141 – Depreciation of tangible fixed assets: records the
depreciation value of tangible fixed asset during the using period and other
increases or decreases of tangible fixed assets.
-
Account 2142 – Depreciation of financial lease fixed assets: records the
depreciation value of tangible fixed asset during the using period and other
increases or decreases of financial lease fixed assets.
-
Account 2143 – Depreciation of intangible fixed assets: records the
depreciation value of intangible fixed asset during the using period and other
increases or decreases of intangible fixed assets.
- Account
2147 – Depreciation of investment properties: records depreciation value of
investment properties used for operating lease of the enterprise.
3.
Method of accounting for several major transactions
a)
Periodically, when calculating, deducting and recording fixed assets to
operating costs, the following accounts shall be recorded:
Dr 623,
627, 641, 642, 811
Cr 214 –
Depreciation of fixed assets (appropriate sub-account)
b) When
receiving used fixed assets which are transferred intra-company between
dependent accounting units having no legal status, the following accounts shall
be recorded:
Cr 211 –
Tangible fixed assets (historical cost).
Cr 336,
411 (residual value)
Cr 214 –
Depreciation of fixed assets (2141) (depreciation value)
c)
Periodically, when deducting depreciation of investment properties for
operating lease, the following accounts shall be recorded:
Dr 632 –
Costs of goods sold (investment property operating expenses)
Cr 214 –
Depreciation of fixed assets (2147)
d) If
there is any decrease in fixed assets or investment properties, decreases in
both historical costs of the fixed assets and depreciated value of the fixed
assets or investment properties shall be recorded (refer to accounts 211, 213,
and 217).
dd) When
calculating depreciation value of fixed assets for non-business activities at
the end of the fiscal year, the following accounts shall be recorded:
Dr 466 –
Non-business funds used for fixed asset acquisitions
Cr 214 –
Depreciation of fixed assets
e) When
calculating depreciation value of fixed assets for cultural activities or
welfare at the end of the fiscal year, the following accounts shall be
recorded:
Dr 3533
– Welfare funds used for fixed asset acquisitions
Cr 214 –
Depreciation of fixed assets.
g) At
the end of the fiscal year, the enterprise shall review the useful life and the
depreciation methods for fixed assets, if there is any change in the
depreciation rate, the depreciation recorded in the accounting records shall be
adjusted as follows:
- If the
depreciation rate rises against the depreciated amounts in the year leading an
increase in the depreciation difference due to the adjustment of the
depreciation methods or period, the following accounts shall be recorded:
Dr 623,
627, 641, 642 (increase in depreciation difference)
Cr 214 –
Depreciation of fixed assets (appropriate sub-account)
- If the
depreciation rate falls against the depreciated amounts in the year leading a
decrease in the depreciation difference due to the adjustment of the
depreciation methods or period, the following accounts shall be recorded:
Dr 214 –
Depreciation of fixed assets (appropriate sub-account)
Cr 623,
627, 641, 642 (decrease in depreciation difference)
h)
Accounting for value of tangible fixed assets which are undergone re-valuation:
According to dossier on revaluation of the enterprise, the value of the
tangible fixed assets shall equal: Increase in residual value of fixed asset
which is recorded to Cr 412 - Differences upon asset revaluation;
Decrease in residual value of fixed asset which is recorded to Dr 412 -
Differences upon asset revaluation and such differences must be recorded in
details according to every fixed asset In particular:
- In
case the value of re-evaluated fixed asset is greater than book value and
historical cost of the fixed asset or re-evaluated accumulated depreciation is
greater than book value, the following accounts shall be recorded:
Dr 211 -
Historical costs of fixed assets (the increase value)
Cr 412 -
Differences upon asset revaluation (value of additional assets)
Cr 214 –
Depreciation of fixed assets (the increase value)
- In
case the value of re-evaluated fixed asset is smaller than book value and
historical cost of the fixed asset or re-evaluated accumulated depreciation is
smaller than book value, the following accounts shall be recorded:
Dr 214 –
Depreciation of fixed assets (the decrease value)
Dr 412 -
Differences upon asset revaluation (value of additional assets)
Cr 211 -
Historical costs of fixed assets (the decrease value)
The
enterprise shall deduct depreciation of fixed assets according to new
historical cost after re-evaluation. Time for re-evaluation of depreciation of
fixed assets when evaluating a joint-stock company is the date on which the
equitized enterprise is granted Certificate of Business registration of a
joint-stock company.
i)
Equitization of dependent accounting units of independent state-owned
companies, groups, general companies, parent companies, independent accounting
units of the general companies:
When
transferring a fixed asset to the joint-stock company, an increase in asset
transferred to joint-stock company shall be recorded, according to receipt slip
of assets, special appendixes on transfer of assets to joint-stock company and
relevant documents or accounting records:
Dr 411 –
Owner's invested equity (residual value)
Dr 214 –
Depreciation of fixed assets (depreciated value)
Cr
211,213 (historical cost).
Article
39. Account 217 – Investment properties
1.
Rules for accounting
1.1 This
account is used to record current value and increases or decreases in
investment properties of an enterprise according to their historical costs,
which is kept records similarly to fixed assets. Investment property includes
land-use rights, a building or part of a building or both, infrastructure held
by the owner or by the lessee under a finance lease to earn rentals or for
capital appreciation, rather than for:
- Use in
the production or supply of goods or services or for administrative purposes;
or
- Sale
in the ordinary course of business.
1.2.
This account is used to record value of investment properties meeting
recognition criteria of investment properties. Property held for sale in the ordinary
course of business or in the process of construction or development for such
sale, owner-occupied property, or property that is being constructed or
developed for future use as investment property shall not be recorded to this
account.
Investment
property shall be recognized as an asset when the following conditions are met:
- It is
probable that the future economic benefits associated with the investment
property will flow to the enterprise; and
- The
cost of the investment property can be measured reliably.
1.3. An
investment property shall be recorded in this account according to their
cost. Cost of an investment property means the amount of cash or cash
equivalents paid or the fair value of other consideration given to acquire an
investment property at the time of its acquisition or construction.
-
Depending on cases, cost of an investment property shall be determined as
follows:
The cost
of a purchased investment property comprises its purchase price, and any
directly-attributable expenses, such as: professional fees for legal services,
property transfer taxes and other transaction costs, etc.
+ If
payment for an investment property is deferred, its cost is the cash price
equivalent. The difference between this amount and the total payments is
recognized as interest expense over the period of credit, except when the
difference is charged to cost of investment property in accordance with VAS
“Borrowing Costs”;
+ The
cost of a self-constructed investment property is its actual cost and directly-attributable
expense on the date when the construction or development is completed;
+ If a
finance lease property for operating lease meets recognition criteria of an
investment property, the cost of such investment property at the initial lease
shall comply with VAS “Leases”.
- The
cost of an investment property is not increased by:
+
Start-up costs (unless they are necessary to bring the property to its working
condition);
+
Initial operating losses incurred before the investment property achieves the
planned level of occupancy;
+
Abnormal amounts of wasted material, labor or other resources incurred in
constructing or developing the property.
1.4.
Subsequent expenditure relating to an investment property that has already been
recognized should be added to the net-book value of the investment property
when it is probable that future economic benefits, in excess of the originally
assessed standard of performance of the existing investment property, will flow
to the enterprise and an increase in the cost of the investment property shall
be recorded.
1.5.
During the operating lease period, the investment property must be depreciated
and recorded to business costs (including postponement period). The
enterprise may estimate the useful life and determine the appropriate
depreciation method according to owner-occupied property in kind.
- In
case the enterprise records revenue from total advances from investment
property lease, total estimated cost equivalent to the revenue shall be
recorded (including calculated depreciation in advance).
- The
cost of an investment property includes: investment property depreciation
expenses and directly-attributable expenses, such as: outsourcing expense,
salaries of employees in charge of management of the leased property, depreciation
expense on auxiliary construction serving the investment property lease.
1.6.
Property held for capital appreciation shall not be depreciated. In case it is
evident that the investment property falls against market fair value and the
decrease is determined reliably, the decrease in cost of the investment
property and the loss shall be recorded to costs of goods sold (similarly to
provision for properties held for sale).
1.7.
With regard to purchased investment properties which must be constructed,
innovated or upgraded before being used for investment purpose, the value of
the property, purchasing costs and constructing, innovating or upgrading costs
shall be recorded to account 241 “Construction in progress”. Upon the
construction, innovation or upgrading completes, the cost of the investment
property must be determined and transferred to account 217 “Investment
property".
1.8. The
transfer from owner-occupied property to investment property or from investment
property to owner-occupied property or inventory shall be made only if there is
any change in use purpose as following cases:
-
Investment property shall be converted into owner-occupied property when the
owner begins to use this property;
-
Investment property shall be converted into inventory when the owner begins to
sell it;
-
Owner-occupied property shall be converted into investment property when the
owner finishes using that property and leasing it to other party for operation;
-
Inventory shall be converted into investment property when the owner begins to
lease it to other party for operation;
-
Construction property shall be converted into investment property at the end of
the construction period and put into investment period (during the construction
period, it shall be recorded to VAS "Tangible fixed assets").
The
transfer of use purpose between investment property and owner-occupied property
or inventory does not change the book value of the transferred asset and the
cost of the property for their evaluation or for preparation of financial
statements.
1.9.
When the enterprise decides to sell an investment property without repair,
innovation or upgrading period, the investment property still be recorded to
account 217 “Investment property” until it is sold (not converted into inventory).
1.10.
The whole purchase price of an investment property shall be recorded to
revenues (VAT-exclusive prices regarding enterprises subject to VAT using
credit-invoice method). If payment for an investment property is deferred, the
consideration received is recognized initially at the cash price equivalent
(VAT-exclusive prices regarding enterprises subject to VAT using credit-invoice
method). The difference between the nominal amount of the consideration and the
cash price equivalent is recognized as interest revenue.
1.11. A
decrease in investment property shall be recorded in following cases:
-
Converting use purposes from investment property to inventory or owner-occupied
property;
-
Selling or disposing investment property;
-
Returning investment property to the lessor at the end of the financial lease.
2.
Structure and contents of account 217 – Investment property
Debit:
Increases in costs of investment property in the period.
Credit:
Decreases in costs of investment property in the period.
Debit
balance: Costs of existing investment property.
3.
Method of accounting for several major transactions
3.1.
Purchase of investment properties:
a) If
the instalment payment is made and the input VAT is deductible, the following
accounts shall be recorded:
Dr 217 –
Investment property
Dr 133 –
Deductible VAT (1332)
Cr 111,
112.
If the
VAT is not deductible, the historical cost of the investment property shall
include VAT.
b) If
the deferred payment is made:
- And
the input VAT is deductible; the following accounts shall be recorded:
Dr 217 –
Investment property (VAT-exclusive cash prices)
Dr 242 –
Prepaid expenses (deferred interest shall equal (=) total payment minus (-)
cash price minus (-) input VAT)
Dr 133 –
Deductible VAT (1332)
Cr 331 –
Trade payables
If the
VAT is not deductible, the historical cost of the investment property shall
include VAT.
-
Periodically, when calculating and allocating the interest payable of the
purchased investment property in deferred payment, the following accounts shall
be recorded:
Dr 635 –
Financial expenses.
Dr 242 –
Prepaid expenses
- When
making payment to seller, the following accounts shall be recorded:
Dr 331 –
Trade payables
Cr 515 –
Financial income (discount obtained due to early payment, if any)
Cr 111,
112, etc.
3.2.
Acquisition of investment property due to completion of:
- When
incurring construction expenses of investment property, they shall be recorded
to Dr 241 “Construction in progress” according to relevant documents and
materials (similarly to construction of tangible fixed assets, refer to account
211 “Tangible fixed asset”).
- When
the construction in progress is completed and the investment asset is converted
into investment property, the following accounts shall be recorded according to
the transferred documents:
Dr 217 –
Investment property
Cr 241 –
Construction in progress.
3.3.
When converting owner-occupied property or inventory to investment property,
the following accounts shall be recorded according to documents on convert of
use purposes:
a) When
converting a fixed asset into an investment property:
Dr 217 –
Investment property
Cr 211 –
Tangible fixed asset, or
Cr 213 –
Intangible fixed assets.
And,
when transferring accumulated depreciation, the following accounts shall be
recorded:
Dr 2141,
2143.
Cr 2147
– Depreciation of investment property (property for lease)
Cr 217 –
Investment property (property held for capital appreciation).
b) When
converting from inventory into investment property, the following accounts
shall be recorded according to the documents on convert of use purposes:
Dr 217 –
Investment property
Cr 1557,
1567.
If the
investment property is used for lease, it shall be depreciated as prescribed.
If the investment property is held for capital appreciation, it shall not be
depreciated, but the decrease in the investment property shall be determined If
the loss due to depreciation is determined reliably, the loss shall be recorded
to costs of goods sold and the decrease in cost of the investment property
shall be recorded.
3.4.
When renting an asset under finance lease in order to lease them under one or
multiple operating leases, if such asset meets recognition criteria of
investment property:
a)
According to financial lease and relevant documents, the following accounts shall
be recorded:
Dr 217 –
Investment property
Cr 111,
112, 3412.
(Lease
payments shall be made upon the receipt of financial lease invoice as
prescribed in account 212 “Financial lease fixed assets”).
b) When
the finance lease expires
- When
returning financial lease investment property which is classified as investment
property, the following accounts shall be recorded:
Dr 2147
– Depreciation of investment properties
Dr 632-
Costs of goods sold (difference between cost of the leased investment property
and accumulated depreciation)
Cr 217 –
Investment property (cost).
- When
purchasing a financial lease investment property which is classified as an
investment property, an increase in investment property (additional payables)
shall be recorded as follows:
Dr 217 –
Investment property
Cr 111,
112, etc
- When
purchasing a financial lease property which is classified as an investment
property used for operation or management of the enterprise, it shall be
classified as an owner-occupied property and the following accounts shall be
recorded:
Dr 211 –
Tangible fixed asset, or
Dr 213 –
Intangible fixed assets
Cr 217 –
Investment property
Cr 111,
112, (additional payables).
And,
when transferring accumulated depreciation, the following accounts shall be recorded:
Dr 2147
– Depreciation of investment properties
Cr 2141,
2143.
3.5.
When subsequent expenses relating to an investment property occur after initial
recognition of investment property, if they satisfy the criteria to be
capitalized or they are necessary to make the investment property to be ready
for use, an increase in the cost of the investment property shall be recorded:
- When
subsequent expenses (upgrading or innovating) relating to an investment
property actually occurring after initial recognition of investment property
shall be recorded as follows:
Dr 241 –
Construction in progress.
Dr 133 –
Deductible VAT (1332)
Cr 111,
112, 152, 331, etc.
- When
completing upgrading, innovation, etc of investment property, an increase in
the cost of the investment property shall be recorded as follows:
Dr 217 –
Investment property
Cr 241 –
Construction in progress.
3.6.
Accounting for sale or disposal of investment property;
a)
Recognition of revenue from sale or disposal of investment property:
- If the
output VAT payable is separable when the investment property is sold or
disposed, the following accounts shall be recorded:
Dr 111,
112, 131 (total payment)
Cr 511 –
Revenues (5117) (VAT-exclusive disposal prices)
Cr 3331
– VAT payables (33311).
- If the
output VAT payable is inseparable when the investment property is sold or
disposed, the revenue shall include output VAT payable. Periodically, the VAT
payables shall be determined and decreases in revenues shall be recorded as
follows:
Dr 511 -
Revenues
Cr 3331
– VAT payables.
b)
Decreases in the cost and residual value of sold or disposed investment
property shall be recorded as follows:
Dr 214 –
Depreciation of fixed assets (2147 – Depreciation of investment property - if
any)
Dr 632 –
Costs of goods sold (residual value of investment property)
Cr 217 –
Investment property (cost of investment property).
3.7.
Accounting for investment property lease
a)
Revenues from investment property lease shall be recorded as follows:
Dr 111,
112, 131
Cr 511 –
Revenues (5117).
b)
Recognition of the cost of investment property lease
- When
collecting total cost of investment property, the following accounts shall be
recorded:
Dr 632 –
Costs of goods sold
Cr 214 –
Accumulated depreciation (2147)
Cr 111,
112, 331, etc.
- If the
total cost of investment property is not collected because a part of the
project is not completed (leasing out the completed part), the cost shall be
estimated similarly to estimating method applying to sale of property.
3.7.
Converting investment property into inventory or owner-occupied property:
a) If
the investment property is converted into inventory when the owner decides to
repair, innovate or upgrade it for sale:
- When
there is a decision on repair, innovation or upgrade of investment property for
sale, the residual value of the investment property shall be transferred to
account 156 “Goods”, the following accounts shall be recorded:
Dr 156 –
Goods (Account 1567 – Residual value of investment property)
Dr 214 –
Depreciation of fixed assets (2147 – accumulated depreciation - if any)
Cr 217 –
Investment property (cost).
- When
incurring expenses incurred from repair, innovation or upgrade for sale, the
following accounts shall be recorded:
Dr 154 –
Work in progress
Dr 133 –
Deductible VAT (if any)
Cr 111,
112, 152, 334, 331, etc.
- When
the repairing, innovation and upgrading are completed for sale, all the
expenses shall be added to the cost of the property for sale, the following
accounts shall be recorded:
Dr 156 –
Goods (1567)
Cr 154 –
Work in progress.
b) When
converting investment property into owner-occupied property, the following
accounts shall be recorded:
Dr 211,
213.
Cr 217 –
Investment property.
And, the
following accounts shall be recorded:
Dr 2147
– Depreciation of investment properties (if any)
Cr 2141,
2143.
3.8. If
the investment property is held for capital appreciation, it shall not be
depreciated, but the loss due to depreciation shall be determined (similarly to
determination of provision for decline in value of properties held for sale).
If the loss is determined reliably, the following accounts shall be recorded:
Dr 632 –
Costs of goods sold
Cr 217 –
Investment property.
Article
40. Rules for accounting for investments in associates
1.
Investments in associates include investments in subsidiaries, joint ventures
and other investments for long-term held. The investment may be conducted in
the following forms:
a)
Investments in the form of capital contribution in associates (capital
mobilized by the investee): in this form, the assets contributed by the
contributor shall be recorded to balance sheet of the investee;
b)
Investments in the form of purchase of capital contribution of other associates
(purchase of owner’s equity): in this form, the assets of the buyer (the
investor or transferee) shall be transferred to the seller (the transferor);
they shall not be recorded to balance sheet of the unit issuing equity
instruments (investee)
2. When
investing by non-monetary assets, the investor must apply appropriate
accounting method according to type of investment, in particular:
a) If a
non-monetary asset is used for capital contribution, the investor must
re-evaluate such asset under agreement. The difference between book value or
residual value and re-evaluate price of the asset for capital contribution
shall be recorded to other income or other expenses;
b) Sale
of capital holding of other associates and payment of non-monetary asset to the
transferor:
- If the
non-monetary asset for payment is an inventory, the ethnic minorities shall
account for them similarly to sale of inventories in the form of barter
agreement (the revenue and cost of the inventory used for exchange with
purchased capital holding shall be recorded);
- If the
non-monetary asset for payment is a fixed asset or an investment property, the
investor shall account for them similarly to sale of fixed assets or investment
properties (revenue, other income or other expenses shall be recorded, etc);
- If the
non-monetary asset for payment is an equity instrument (shares) or a debt
instrument (bonds, receivables, etc), the investor shall account for them
similarly to sale of investments (gains or losses shall be recorded to
financial income or financial expenses).
3. The
cost of an investment shall be recorded according to their original cost,
including purchase price plus (+) directly-attributable expenses (if any), such
as: transactions, brokerage, consultancy, auditing, fees, taxes and bank’s
fees, etc. In case a non-monetary asset is invested, the cost of the investment
shall be recorded according to the fair value of the non-monetary asset at the
incurring time.
4. Every
investment spread over each subsidiary, joint-venture company or other
associate shall be kept records in details. A
long-term financial investment shall be recorded when the ownership is
acquired, in particular:
- Listed securities are recorded at the time of
matching (T+0);
- Unlisted securities, other investments shall be
recorded at the time in which the ownership is required as prescribed.
5. All
dividends and profits allocated to the financial statement of the parent
company must be kept records sufficiently and promptly. The dividends and
profits shall be recorded as follows:
a)
Dividends and profits allocated in money or non-monetary asset after investment
date shall be recorded to financial income according to the fair value on the
date in which the dividends and profits are received;
b)
Dividends and profits allocated in money or non-monetary asset before
investment date shall not be recorded to financial income according to the fair
value but they shall be recorded as a decrease in value of investment.
c) When
determining value of the enterprise for equitization, if investments in other
units are recorded as an increase equivalent to the portion of ownership of the
equitized enterprise in the undistributed post-tax profits of the subsidiary,
joint venture or associate, the equitized enterprise must record the increase
in state capital as prescribed. When the equitized enterprise receives the
dividends or profits which are used for evaluation of state capital, it shall
not record financial income but record a decrease in value of investment.
d) If
the dividends are received in the form of shares, it is required to follow
rules below:
-
Non-wholly-state-owned companies shall only keep track of number of shares
stated in the financial statement, but not record an increase in value of
investment and financial income.
-
Wholly-state-owned companies shall comply with regulations of law on
wholly-state-owned companies.
6. When
liquidating or selling financial investments, their costs shall be determined
according to mobile weighted average.
7. The
enterprise is not required to classify investments in subsidiary, joint venture
or associate into trade securities, unless it liquidated or sold those
investments, leading losing control of subsidiary, losing jointly control over
joint venture and no longer having significant influence on the associate.
8. The
control, jointly control, significant influence shall be temporarily determined
when the investments are initially recorded. In this case, those investments
shall be recorded to investments in other units or trade securities, but not
recorded to investments in subsidiary or joint venture or associate.
9. When
preparing the financial statement, the enterprise must determine value of
investment loss to create allocation for investment loss.
Article
41. Account 221 – Investments in subsidiaries
1.
Rules for accounting
a) This
account is used to record current value and increases or decreases in capital
directly invested in subsidiaries. Subsidiary is an entity which has
legal status, does independent accounting, and is controlled by another
enterprise (parent company), (including associate companies of general company
and other units having legal status and doing independent accounting).
b) The
account 221 “Investments in subsidiaries” is only recorded if the investor
holds over 50% voting shares in the subsidiary (except for the case prescribed
in below Point c) and has significant influence on financial and operating
activities to gain economic benefits from such activities. When the parent
company has no longer influence on the subsidiary, a decrease in investment in
the subsidiary shall be recorded. In case the investor temporarily holds over
50% voting shares in the subsidiary, but the investor does not intend to
exercise that voting shares because their investment purpose is trading in
equity instruments for profit (investment held for commercial purpose and the
control right is temporary), such investment shall not be recorded to this
account but to short-term investments.
c) When
a parent company holds under 50% voting shares in a subsidiary, the following
investments are still recorded to account 221 “Investments in subsidiaries” if
there are other agreements:
- Other
investors agree to give the parent company over 50% voting shares;
- The
parent company has influence on financial or operating policies under agreed
regulations;
- The
parent company has right to assign or dismiss most of board of directors’
members or equivalent;
- The
parent company has right to vote a majority of ballots at Board of Directors’
meetings or at equivalent management level’s meetings;
d) When
buying an investment in a subsidiary in the business combination transaction,
the buyer must determine the acquisition date, the cost of the business
combination and follow accounting procedures as prescribed in VAS “Business
combination”.
dd)
Accounting for investments in subsidiaries must comply with rules prescribed in
Article 40 of this Circular.
e) In
case the parent company dissolves the subsidiary and merge all assets and
liabilities of the subsidiary into the parent company (the parent company
inherits all interests and liabilities of the subsidiary), the accounting shall
be done according to rules below:
- A
decrease in book value of investments in subsidiaries of the parent company
shall be recorded,
- All
assets or liabilities of the dissolved subsidiary shall be recorded to balance
sheet of the parent company according to fair value on the date on which the
subsidiary is merged into the parent company;
- The
difference between the cost of investment in subsidiary and the fair value of
assets and liabilities shall be recorded to financial income or financial
expenses.
g) The
profits shall be allocated to owners of the parent company according to
non-allocated post-tax profits under ownership of the parent company on the
consolidated financial statements. When allocating profits in cash, the
enterprise must consider following issues:
- There
is enough cash flow to allocate;
- The
profits from negative goodwill shall not be allocated until disposal of the
subsidiary;
- The
profits from transactions related to revaluation (differences upon re-valuation
of asset contributed as capital or financial instruments) shall not be
allocated until disposal or sale of investments;
- The
profits from applying equity capital method shall not allocate until such
profits are received in cash or other assets from joint-venture companies.
d) The
enterprise may not convert investments in subsidiaries into trade securities or
other investments unless such investments are disposed leading out of control.
The control right to the subsidiary shall not consider temporary even if the
enterprise has intention of disposing the subsidiary in the future.
2.
Structure and contents of account 221 – Investments in subsidiaries
Debit:
Increases in actual value of investments in subsidiaries.
Credit:
Decreases in actual value of investments in subsidiaries.
Debit
balance: Actual value of existing investments in subsidiaries of the parent
company.
3.
Method of accounting for several major transactions
3.1.
Capital contribution
a) When
a parent company invests money in subsidiaries, the following accounts shall be
recorded according to amounts of investments and directly-attributable
expenses:
Dr 221 –
Investments in subsidiaries
Cr 111,
112, 3411, etc.
And
every type of shares at face value shall be kept records in details
(investments in subsidiaries in the form of purchase of shares).
b)
Capital contribution in non-monetary assets:
When the
parent company contributes capital to the subsidiary by inventory or a fixed
asset (other than business combination transactions), the parent company must
record the difference between book value (for materials or goods) or residual
value (for fixed assets) and re-evaluated value of the contributed asset to
other income or other expenses; when receiving the contributed asset, the
subsidiary must record the increase in the owner's invested equity and received
asset according to contractual price.
- In
case the book value or the residual value of the contributed asset is smaller
than re-evaluated value, the increase in asset shall be recorded to other
income as follows:
Dr 221 –
Investments in subsidiaries
Dr 214 –
Depreciation of fixed assets
Cr 211,
213, 217 (contributing fixed assets or investment properties)
Cr 211,
213, 217 (contributing inventories)
Cr 711 –
Other income (increase in difference of evaluation).
- In
case the book value or the residual value of the contributed asset is greater
than re-evaluated value, the decrease in asset shall be recorded to other
expenses as follows:
Dr 221 –
Investments in subsidiaries
Dr 214 –
Depreciation of fixed assets
Dr 811 –
Other expenses (decrease in difference of evaluation).
Cr 211,
213, 217 (contributing fixed assets or investment properties)
Cr 152,
153, 155, 156 (contributing inventories)
3.2.
Purchase of capital contribution:
In this
case, the cost of investment shall be determined in accordance with VAS
“Business combination”. On acquisition date, the acquirer shall measure the
cost of a business combination as the aggregate of the fair values, on the
exchange date, of assets given, liabilities incurred or assumed, and equity
instruments issued by the acquirer, in exchange for control rights of the
acquiree plus (+) any costs directly attributable to the business combination.
Concurrently, the acquirer, which is the parent company, shall record the
acquirer’s interest in the subsidiary similarly to an investment in subsidiary.
a) If
the trading in business combination is paid in cash or cash equivalent by the
acquirer, the following accounts shall be recorded:
Dr 221 –
Investments in subsidiaries
Cr 111,
112, 121, etc.
b) If
the trading in business combination is carried out by the acquirer ‘share
issuance:
- And
issue price (according to fair value) of the share on the exchange date is
greater than face value of the share; the following accounts shall be recorded:
Dr 221 –
Investments in subsidiaries (according to fair value)
Cr 4111
– Contributed capital (according to face value)
Cr 4112
– Capital surplus (positive difference between the fair value and the face value
of the share).
- And
issue price (according to fair value) of the shares on the exchange date are
smaller than face value of the share, the following accounts shall be recorded:
Dr 221 –
Investments in subsidiaries (according to fair value)
Dr 4112
– Capital surplus (negative difference between the fair value and the face
value of the share).
Cr 4111
– Contributed capital (according to face value)
- Stock
floatation cost actually induced will be recorded as follows:
Dr 4112
– Capital surplus
Cr 111,
112, etc.
c) If
the trading in business combination is carried out by exchange of assets
between the acquirer and the acquiree:
- When
exchanging fixed assets, a decrease in fixed assets shall be recorded as
follows:
Dr 811 –
Other expenses (residual value of the exchanged fixed assets)
Dr 214 –
Depreciation of fixed assets (depreciation value)
Cr 211 –
Tangible fixed asset (cost).
And, an
increase in other income and investments in subsidiaries due to exchange of
fixed assets shall be recorded as follows:
Dr 221 –
Investments in subsidiaries (total payment)
Cr 711 –
Other income (residual value of the exchanged fixed assets)
Cr 3331
– VAT payables (account 33311) (if any).
- When
dispatching goods for exchange, the following accounts shall be recorded:
Dr 632 –
Costs of goods sold
Cr 155,
156, etc.
And, an
increase in investments in subsidiaries and revenues shall be recorded as
follows:
Dr 221 –
Investments in subsidiaries
Cr 511 -
Revenues
Cr 333 –
Taxes and other payables to the State (33311).
d) If
the trading in business combination is carried out by the acquirer’s bond
issuance:
- When
paying by bonds at par value, the following accounts shall be recorded:
Dr 221 –
Investments in subsidiaries (according to fair value)
Cr 34311
- Par value of bonds.
- When
paying by discount bonds, the following accounts shall be recorded:
Dr 221 –
Investments in subsidiaries (according to fair value)
Dr 34312
– Bond discounts (discount amount)
Cr 34311
- Par value of bonds
- When
paying by premium bonds, the following accounts shall be recorded:
Dr 221 –
Investments in subsidiaries (according to fair value)
Cr 34311
- Par value of bonds.
Cr 34313
– Bond premiums (premium amount).
dd)
Directly-attributable expenses to business combination such as legal services,
price appraisal, etc, the following accounts shall be recorded by the acquirer:
Dr 221 –
Investments in subsidiaries
Cr 111,
112, 331, etc.
3.3.
Accounting for dividends or profits which are divided in cash or non-monetary
assets (excluding receipt of dividends in shares):
a) When
receiving notification of dividends or profits divided issued by the subsidiary
after investment date, the following accounts shall be recorded:
Dr 138 –
Other receivables (1388)
Cr 515 –
Financial income.
When
receiving dividends or profits divided, the following accounts shall be
recorded:
Dr,
relevant accounts (according to fair value)
Cr 138 –
Other receivables (1388)
b) When
receiving notification of dividends or profits divided before the date on which
investments in subsidiaries are made, the following accounts shall be recorded:
Dr 138 –
Other receivables (1388)
Cr 221 –
Investments in subsidiaries
c) When
receiving the dividends or profits which are used for re-evaluation of cost of
investments in subsidiaries in case of evaluation of the parent company for
equitization, an increase in state capital shall be recorded as follows:
Dr 138 –
Other receivables (1388)
Cr 221 –
Investments in subsidiaries
3.4.
When providing additional investment in order to convert investments in
joint-venture companies or financial instruments into investments in
subsidiaries, the following accounts shall be recorded:
Dr 221 –
Investments in subsidiaries
Cr 121,
128, 222, 228
Cr,
relevant accounts (fair value of additional investment amounts)
3.5.
When disposing a part or total investments in subsidiaries, the following
accounts shall be recorded:
Dr,
relevant accounts (fair value of collected amounts from disposal)
Dr 222 -
Investments in joint ventures or associates (the subsidiary becomes a joint
venture or an associate)
Dr 228 –
Other investments (the subsidiary becomes ordinary investment)
Dr 635 –
Financial expenses (for losses)
Cr 221 –
Investments in subsidiaries (book value)
Cr 515 –
Financial income (for gains).
3.6.
When dissolving a subsidiary to merge all their assets and liabilities to their
parent company, a decrease in investments in subsidiaries and assets or
liabilities of the subsidiary according to the fair value on the merging date,
the following accounts shall be recorded:
Dr,
accounts recording assets (according to fair value on the merging date)
Dr 635 –
Financial expenses (positive difference between book value of the investment
and the fair value of merged assets or liabilities)
Cr,
accounts recording liabilities (according to fair value on the merging date)
Cr 221 –
Investments in subsidiaries (book value)
Cr 515 –
Financial expenses (negative difference between book value of the investment
and the fair value of merged assets or liabilities)
Article
42. Account 222 – Investments in joint ventures or associates
1.
Rules for accounting
a) This
account is used to record all equity contributed into a joint venture and an
associate; recovery of invested equity in joint ventures or associates; gains
or losses from investments in the joint venture or associate. This account
shall not record transactions in the form of business cooperation contract
(BCC) which does not require a legal entity.
- A
joint venture is established by joint venturers who have joint control over financial
and operating policies and it is an independent accounting unit having legal
status. The joint venture must do accounting separately as prescribed in
regulations of law on accounting in force, take responsibility for control of
assets, liabilities, revenues, other income and expenses incurred. Each joint
venturer shall receive a portion of operating outcome of the associate
according to the joint venture agreement.
- An
investment shall be classified as an investment in the associate when investors
directly or indirectly hold from 20% to under 50% voting shares of the investee
without any other agreement.
b)
Accounting for investments in a joint venture must comply with rules prescribed
in Article 40 of this Circular.
c) When
the investor no longer has joint control, a decrease in investments in joint
ventures shall be recorded; when the investor no longer has significant
influence over associates, a decrease in investments in associates shall be
recorded.
d)
Directly-attributable expenses to investments in joint ventures or associates
shall be recorded to financial expenses within a period.
dd) When disposing, selling or recovering
contributed capital in joint ventures or associates, a decrease in contributed
capital shall be recorded according to recovered asset value. The
difference between the fair value of recovered amounts and the book value of
investments shall be recorded to financial income (gains) or financial expenses
(losses).
e) Every
investment spread over each joint venture or associate shall be kept records in
details in every investment, disposal or sale.
2.
Structure and contents of account 222 – Investments in joint ventures or
associates
Debit:
Increases in investments in joint ventures or associates
Credit:
Decreases in investments in joint ventures or associates due to
disposal, sale or recovery.
Debit
balance: Ending balance of investments in joint ventures or associates.
3.
Method of accounting for several major transactions
3.1.
When contributing joint venture capital in cash to joint ventures or
associates, the following accounts shall be recorded:
Dr 222 -
Investments in joint ventures or associates Cr 111, 112.
3.2.
When incurring directly-attributable expenses to investments in joint ventures
or associates (information, brokerage, transactions investment progress), the
following accounts shall be recorded:
Dr 222 –
Investments in joint ventures or associates
Cr 111,
112.
3.3. In
case the joint venturer contributes non-monetary assets to a joint venture or
an associate:
When investing
inventory or fixed assets in a joint venture or an associate, it is required to
record the difference between book value (for materials or goods) or residual
value (for fixed assets) and re-evaluated value of the contributed assets to
other income or other expenses; when receiving the contributed assets, the
joint venture or associate must record an increase in the owner's invested
equity and received asset according to contractual price.
- In
case the book value or the residual value of the contributed asset is smaller
than re-evaluated value, an increase in asset shall be recorded to other income
as follows:
Dr 222 –
Investments in joint ventures or associates
Dr 214 –
Depreciation of fixed assets
Cr 211,
213, 217 (contributing fixed assets or investment properties)
Cr 152,
153, 155, 156 (contributing inventories)
Cr 711 –
Other income (increase in difference of evaluation).
- In
case the book value or the residual value of the contributed asset is greater
than re-evaluated value, a decrease in asset shall be recorded to other
expenses as follows:
Dr 222 –
Investments in joint ventures or associates
Dr 214 –
Depreciation of fixed assets
Dr 811 –
Other expenses (decrease in difference of evaluation).
Cr 211,
213, 217 (contributing fixed assets or investment properties)
Cr 152,
153, 155, 156 (contributing inventories)
3.4.
Purchase of capital contribution in joint ventures or associates:
On
acquisition date, the acquirer shall measure the cost of investments in the
joint venture or associate as the aggregate of the fair values, on the exchange
date, of assets given, liabilities incurred or assumed, and equity instruments
issued by the acquirer, in exchange for control rights of the acquiree plus (+)
any costs directly attributable to the purchase of capital contribution in the
joint venture or associate.
- If the
investments in the joint venture or associate are paid in cash or cash
equivalent by the acquirer, the following accounts shall be recorded:
Dr 222 –
Investments in joint ventures or associates
Cr 111,
112, 121, etc.
- If the
investments in the joint venture or associate are carried out by the acquirer
‘share issuance:
+ And
issue price (according to fair value) of the share on the exchange date is
greater than face value of the share; the following accounts shall be recorded:
Dr 222 –
Investments in joint ventures or associates (according to fair value)
Cr 4111
– Contributed capital (according to face value)
Cr 4112
– Capital surplus (positive difference between the fair value and the face
value of the shares).
+ And
issue price (according to fair value) of the share on the exchange date is
smaller than face value of the share; the following accounts shall be recorded:
Dr 222 –
Investments in joint ventures or associates (according to fair value)
Dr 4112
– Capital surplus (negative difference between the fair value and the face
value of the share).
Cr 4111
– Contributed capital (according to face value)
+ Stock
floatation cost actually induced will be recorded as follows:
Dr 4112
– Capital surplus
Cr 111,
112, etc.
- If the
investments in the joint venture or associate are paid by non-monetary assets:
+ When
exchanging fixed assets, a decrease in fixed assets shall be recorded as
follows:
Dr 811 –
Other expenses (residual value of the exchanged fixed assets)
Dr 214 –
Depreciation of fixed assets (depreciation value)
Cr 211 –
Tangible fixed asset (cost).
And, an
increase in other income and investments in joint ventures or associates due to
exchange of fixed assets shall be recorded as follows:
Dr 222 –
Investments in joint ventures or associates (total payment)
Cr 711 –
Other income (residual value of the exchanged fixed assets)
Cr 3331
– VAT payables (account 33311) (if any).
+ When
dispatching goods for exchange, the following accounts shall be recorded:
Dr 632 –
Costs of goods sold
Cr 155,
156, etc.
And, an
increase in investments in joint ventures or associates and revenues shall be
recorded as follows:
Dr 222 –
Investments in joint ventures or associates
Cr 511 -
Revenues
Cr 333 –
Taxes and other payables to the State (33311).
- If the
investments in joint ventures or associates are carried out by the acquirer
‘share issuance:
+ When
paying by bonds at face value, the following accounts shall be recorded:
Dr 222 –
Investments in joint ventures or associates (according to fair value)
Cr 34311
- Face value of bonds.
+ When
paying by discount bonds, the following accounts shall be recorded:
Dr 222 –
Investments in joint ventures or associates (according to fair value)
Dr 34312
– Bond discounts (discount amount)
Cr 34311
- Face value of bonds.
+ When
paying by premium bonds, the following accounts shall be recorded:
Dr 222 –
Investments in joint ventures or associates (according to fair value)
Cr 34311
- Par value of bonds.
Cr 34313
– Bond premiums (premium amount).
+
Directly-attributable expenses to investments in joint ventures or associates
such as legal services, price appraisal, etc, the following accounts shall be
recorded by the acquirer:
Dr 222 –
Investments in joint ventures or associates
Cr 111,
112, 331, etc.
3.5.
When incurring attributable expenses to joint ventures or associates within a
period, such as loan interests for capital contribution or other expenses, the
following accounts shall be recorded:
Dr 635 –
Financial expenses
Dr 133 –
Deductible VAT (if any).
Cr 111,
112, 152, etc.
3.6.
Accounting for dividends or profits:
- When
receiving notification of dividends or profits divided in cash from the joint
venture or associate after the investment date, the following accounts shall be
recorded:
Dr 138 –
Other receivables (1388)
Cr 515 –
Financial income.
- When
receiving dividends or profits before the investment date or the dividends or
profits (divided in cash) are used for re-evaluation of value of investments in
joint ventures or associates in case of evaluation of the enterprise for
equitization, the following accounts shall be recorded:
Dr 112,
138.
Cr 222 –
Investments in joint ventures or associates
3.7.
Accounting for disposal or sale of investments in joint ventures or associates:
Dr 111,
112, 131, 152, 153, 156, 211, 213, etc.
Dr 228 –
Other investment (significant influence no longer exists)
Dr 635 –
Financial expenses (for losses)
Cr 222 –
Investments in joint ventures or associates
Cr 515 –
Financial income (for gains).
3.8.
When incurring expenses incurred from disposal or sale of investments in joint
ventures or associates, the following accounts shall be recorded:
Dr 635 –
Financial expenses
Dr 133 –
Deductible VAT
Cr 111,
112, 331, etc.
3.9.
When providing additional investment in order to the joint venture or associate
becoming a subsidiary and hold control rights, the following accounts shall be
recorded:
Dr 221 –
Investments in subsidiaries
Cr 111,
112, etc.
Cr 222 –
Investments in joint ventures or associates
3.10.
Accounting for joint venture capital in form of land use rights allocated by
the State:
- When a
Vietnamese enterprise is allocated land by the State to participate in joint
venture with foreign enterprises in form of land use rights, water surface use
rights, sea surface use rights, after receiving decision on allocation of land
issued by the State and procedures for joint venture, the following accounts
shall be recorded:
Dr 222 –
Investments in joint ventures or associates
Cr 411 –
Owner’s invested equity (state capital in details).
- In
case the Vietnamese enterprise is allocated land by the State to participate in
joint venture, when transferring contributed capital:
+ When
transferring joint venture capital to foreign parties and returning land use
rights to the State, the following accounts shall be recorded:
Dr 411 –
Owner's invested equity
Cr 222 –
Investments in joint ventures or associates.
+ If the
party pays an asset other than land use rights to Vietnamese party (the joint
venture changes to land lease), the following accounts shall be recorded:
Dr 111,
112, etc.
Cr 515 –
Financial income.
- If the
Vietnamese party transfers joint venture capital to the foreign party and
returns land use rights and changes to land lease. The joint venture must
record a decrease in land use rights and decrease in operating capital
equivalent to land use rights. The capital shall be preserved or recorded
increases depending on the following investments of the owner. Land rents paid
by that enterprise shall not include in the owner’s equity but they shall be
recorded to operating costs in the equivalent periods.
3.11.
Accounting for trading between joint venturers and joint venture: similarly to
accounting for trading with ordinary customers (unless the owner's equity
method is applied).
Article
43. Account 228 – Other investments
1.
Rules for accounting
a) This
account is used to record current value and increases or decreases in other
investments (other than investments in subsidiaries, investments in joint
ventures or associates), such as:
-
Investments in equity of other entities but not control or joint control, or
significant influence on the investee;
-
Precious metals or gemstones which are not used as raw materials for production
or trading; value paintings, photographs or documents which are not put into
normal operation.
- Other
investments.
The
investments or capital contribution related to BBC which does not require a
legal entity shall not be recorded to this account.
b) Other
investments shall be kept records in details according to invested quantity or
entities.
b)
Accounting for other investments shall comply with rules prescribed in Article
40 of this Circular.
2.
Structure and contents of account 228 – Other investments
Debit:
Increases in other investments.
Credit:
Decreases in other investments.
Debit
balance: Value of other existing investments at the reporting time.
Account
228 – “Other investments” comprises 2 sub-accounts:
-
Account 2281 – Investments in equity of other entities: records investments
in equity instruments which the enterprise has no right to hold control or
joint control or significant influence on the investee.
-
Account 2288 – Other investments: records investments in non-financial
assets other than investment properties and others related to investment
activities recorded in other accounts. Other investments may include precious
metals or gemstones (not used as inventories), value paintings, photographs or
documents (other than items classified as fixed assets), etc, which are not put
into normal operation but they are purchased to held for capital appreciation.
3.
Method of accounting for several major transactions
3.1.
When the enterprise buys shares or contributes long-term capital but it has no
right to hold control or joint control or significant influence on the
investee:
a) In
case of investment in cash
Dr 228 –
Other investments (2281) (the original cost of investment +
directly-attributable expenses incurred from investment activities, such as
brokerage expenses, etc)
Cr 111,
112.
b) In
case of investment by non-monetary assets:
- When
contributing a non-monetary asset as capital, the following accounts shall be
recorded according to re-evaluated value of materials, goods or fixed assets:
Dr 228 –
Other investments (2281)
Dr 214 –
Depreciation of fixed assets (depreciation value)
Dr 811 –
Other expenses (negative difference between re-evaluated value and the book
value of materials or goods or residual value of fixed assets)
Cr 152,
153, 156, 211, 213, etc.
Cr 711 –
Other income (positive difference between re-evaluated value and the book value
of materials or goods or residual value of fixed assets)
- In
case of sale of capital contribution by non-monetary assets:
+
When exchanging fixed assets:
Dr 811 –
Other expenses (residual value of the exchanged fixed assets)
Dr 214 –
Depreciation of fixed assets (depreciation value)
Cr 211,
213 (cost).
And, an
increase in other income and long-term investments due to exchange of fixed
assets shall be recorded as follows:
Dr 22 –
Other investments (2281) (total payment)
Cr 711 –
Other income (residual value of received investment)
Cr 3331
– VAT payables (account 33311) (if any).
+ When
dispatching goods for exchange, the following accounts shall be recorded:
Dr 632 –
Costs of goods sold
Cr 155,
156, etc.
And, an
increase in other investments and revenues shall be recorded as follows:
Dr 22 –
Other investments (2281) (total payment)
Cr 511 –
Revenues (fair value of received investment)
Cr 333 –
Taxes and other payables to the State (33311).
3.2.
Accounting for dividends or profits which are divided in cash or non-monetary
assets (excluding receipt of dividends in shares):
- When
receiving notification of dividends or profits divided after the investment
date, the following accounts shall be recorded:
Dr 138 –
Other receivables (1388)
Cr 515 –
Financial income.
- When
receiving notification of dividends or profits divided before the investment
date, the following accounts shall be recorded:
Dr 138 –
Other receivables (1388)
Cr 228 –
Other investments (2281)
- When
receiving the dividends or profits which are used for re-evaluation of cost of
investments in case of evaluation of the company for equitization, an increase
in state capital shall be recorded as follows:
Dr 138 –
Other receivables (1388)
Cr 228 –
Other investments (2281)
3.3.
When the investor no longer has control or joint control and significant
influence over associates because it sells a part of investment to subsidiary,
joint venture or associate, the following accounts shall be recorded:
Dr 111,
112, 131, etc.
Dr 228 –
Other investments (2281)
Dr 635 –
Financial expenses (for losses)
Cr 221,
222
Cr 515 –
Financial income (for gains).
3.4.
Disposal or sale of other investments:
- When
earning profits from sale or disposal, the following accounts shall be
recorded:
Dr 111,
112,131, etc.
Cr 228 –
Other investments (book value)
Cr 515 –
Financial income (sale price is greater than book value).
- When
incurring losses from sale or disposal, the following accounts shall be
recorded:
Dr 111,
112,131, etc.
Dr 635 –
Financial expenses (sale price is smaller than book value)
Cr 228 –
Other investments (book value).
3.5.
When the investor contributes additional capital and becomes parent company
which has joint control or significant influence, the following accounts shall
be recorded:
Dr 221,
222.
Cr 111,
112 (additional investment)
Cr 228 –
Other investments
Article
44. Accounting for BCC
1.
Rules for accounting
A BCC
means a cooperation contract between two or more venturers in order to carry
out specific business activities, but it does not require establishment of a
new legal entity. Those activities may be jointly controlled by venturers under
BCC (hereinafter referred to as venturers) or controlled by one of them.
1.2. BCC
may be conducted under form of jointly controlled assets or jointly controlled operations.
Contracting parties of BCC may agree to divide revenues, products or post-tax
profits.
1.3. In
any cases, when receiving money or assets from other entities in the BCC, they
should be recorded to liabilities, not be recorded to owner's equity.
1.4. BCC
in the form of jointly controlled assets
a)
Jointly controlled asset under BCC mean any asset which is purchased or
constructed by BCC venturers the purposes of the joint ventures.
Venturers shall record their portions in the jointly controlled assets to their
assets account on their financial statements.
b) Each
venturer may take a share of the output from the jointly controlled assets and
each bears an agreed share of the expenses incurred.
c) A
venturer must keep records in the same system of accounting records and record
in its financial statements:
- Its
share of the jointly controlled assets, classified according to the nature of
the assets;
- Any
liabilities that it has incurred;
- Its
share of any liabilities incurred jointly with the other venturers in the
relation to the joint venture;
- Any
income from the sale or use of its share of the output of the venture, together
with its share of any expenses incurred by the joint venture;
- Any
expenses that is has incurred in respect of its interest in the joint venture.
With regard to fixed asset or investment property
which is contributed to BCC and the ownership of the contributor is not
transferred to the joint ownership of BCC venturers, the receiver shall keep
records of assets without recording any increase in assets or business funds;
the contributor shall not include a decrease in assets in the accounting
records but keep records of the places of assets.
With regard to fixed asset or investment property
which is contributed to BCC and the ownership of the contributor is transferred
to the joint ownership; during construction of jointly controlled assets, the
contributor shall include a decrease in assets in the accounting records and
the value of assets shall be recorded to construction in progress. After
putting jointly controlled assets into operation, the venturers shall record
their increases in assets in conformity with their use purposes according to
value of their assets' shares.
1.5. BCC
in the form of jointly controlled operations
a) BCC
in the form of jointly controlled operations is a joint venture which does not
require establishment of a new business entity. Venturers shall fulfill
obligations and exercise rights according to the BCC. The joint venture
activities may be carried out alongside other ordinary activities of each
venture.
b) Each
venture shall bear its own expenses incurred from its share in jointly
controlled operations. The joint expenses (if any) shall be divided to
venturers according to the BCC
c) A BCC
venturer must include in accounting records and record in its financial
statements:
- The
assets of joint venture that it controls;
- The
liabilities that it incurs;
- Its
share of the income that it earns from the sale of goods or services by the
joint venture;
- The
expenses that it incurs.
d) When
any joint expenses incur, they shall be kept records. If the BCC regulates
joint expense allocation, a Table of joint expense allocation shall be made,
certified and held by every venturer (original copy). Each venture shall
account for joint expenses allocated from BCC according to the table of joint
expense allocation together with lawful original documents.
e) In
the BCC regulates shares of products, a Table of shares of products shall be
made, certified quantity or specifications of shares of products from BCC and
held by every venturer (original copy). When receiving products, the venturer
must make two copies of receipt slips of products (or delivery order); one
venturer shall hold one copy. The receipt slip of product shall be the basis
for accounting records and disposal of contracts.
d) In
case any joint expenses or income borne or earned by venturers under BCC, the
venturers must comply with regulations on accounting similarly to jointly
controlled operations.
1.6. BCC
in the form of shares of post-tax profits
a) BCC
in the form of shares of post-tax profits is usually in the form of jointly
controlled operations or individually controlled operations. When giving shares
of post-tax profits under BCC, all venturers shall appoint a venture to account
for all transactions in BCC, record revenues, expenses, separately keep records
of income statement of BCC and make tax declaration. When the venturers decide
to enter into BCC in above form, they must consider the risks possibly take due
to:
- Any
expenses which is not included in the taxable expense due to failure in
transfer of assets among venturers, for example:
+
Depreciation expenses incurred from several fixed assets are not accepted by
the tax authority because the venturer fails to transfer ownership of the fixed
assets to the venture in charge of accounting and tax declaration for BCC;
+
Several expenses of the venturers shall not be accepted by the tax authority
because the input invoices do not state the name of the venture in charge of
accounting and tax declaration for BCC;
+
Several expenses of the venturers which are unable to transfer to the venture
in charge of accounting and tax declaration due barrier of law, for example,
the venturer has an invoice of payment of land levies, but the law does not
allow that venturer re-lease their land to the venture in charge of accounting
and tax declaration, so that the land lease expense shall not be included in
the expenses of BCC.
- Risks
of policies:
+ The
venturer in charge of accounting and tax declaration for BCC may incur
accumulated losses, but the output of BCC activities must generate profits. In
this case, the enterprise still be required to pay corporate income tax on BCC
instead of offsetting BCC profits against other activities’ losses; if the BCC
incurs losses but other activities generate profits, the enterprise may only
offset a portion of the loss in proportion to its share of the BCC;
+ If
other venturers put their fixed assets into operation of BCC, their
depreciation expenses incurred from the fixed assets shall not be considered
deductible expenses in the enterprise because they are not used in the
enterprise’s operation (not conformity with revenues from other operations).
b) If
the BCC regulates shares of post-tax profits, the venture in charge of
accounting and tax declaration must do accounting following the rules below:
- If the
BCC regulates that other venturers shall earn an amount of fixed profit
regardless of output of BCC activities, in this case, the legal form of the
contract is BCC, but it is a lease in the nature. In this case, the venturer in
charge of accounting and tax declaration shall has right to administrate and
govern the BCC activities, apply accounting method for lease to the contract,
and include payables to other venturers in expenses incurred from determination
of output of business within a period, in particular:
+ All
revenues, expenses and post-tax profits of BCC shall be included in their
income statements; earnings per share and financial standards shall be
calculated according to total income, expenses and post-tax profits of BCC;
+ Total
post-tax profits of BCC shall be included in the item “Undistributed post-tax
profits” of the balance sheet, financial standards related to post-tax profit
ratio which is calculated including total output of BCC.
+ Other
venturers shall record their shares of BCC to revenues from lease.
- If the
BCC regulates that other venturers of BCC may only be divided profits if the
BCC activities generate profits and they must suffer losses, in this case, even
though the legal form of BCC is post-tax profit division but the nature of BCC
is division of revenues and expenses, they usually have rights, condition and
ability to jointly control operation and cash flow of BCC. The venturer in
charge of accounting and tax declaration must apply accounting method for
shares of income under BCC to record revenues, expenses and business output
within a period, and provide evidence for tax declaration to other venturers,
in particular:
+ All
revenues, expenses and shares of profits under BCC shall be included in their
income statements; earnings per share and financial indicator shall only be
calculated according to the revenues, expenses and profits stated in the income
statements; the venturer in charge of tax declaration shall provide copies of
documents on fulfillment in obligations of BCC to government budget in order to
serve the tax declaration of other venturers of BCC;
+
Undistributed post-tax profits of the balance sheet only include shares of
post-tax profit of each venturer.
+ Other
venturers shall send reports on their shares of revenues and expenses whose tax
liabilities are covered stated in the income statements to the tax authority in
order to adjust their corporate income tax payables.
2.
Method of accounting for BCC in the form of jointly controlled assets
2.1. In
case venturers jointly buy jointly controlled assets, the following accounts
shall be recorded according to actual amounts of money of each venturer:
Dr 211,
213, 217
Dr 133 –
VAT payables (if any).
Cr 111,
112, 331, 341.
2.2. In
case venturers construct jointly controlled assets themselves or cooperate with
other entities to construct the jointly controlled assets, the following accounts
shall be recorded according to actual expenses paid by each venturer:
Dr 241 –
Construction in progress (jointly controlled assets in details)
Dr 133 –
VAT payables (if any).
Cr 111,
112, 152, 153, 155, 156, 211, 213, etc.
Cr 331,
3411, etc.
2.3. When
the construction works are completed and put into operation, the venturers must
make declaration and divide the value of the jointly controlled assets.
According to the report on shares of jointly controlled asset, venturers shall
determine the fair value of each asset to keep records in accordance with
regulations of law as follows:
Dr 211,
213, 217 (fair value of shares of jointly controlled assets in details)
Dr 138 –
Other receivables (un-approved and recoverable expenses)
Dr 811 –
Other expenses (if the fair value of the share of asset is smaller than the
construction expense)
Cr 241 –
Construction in progress
Cr 711 –
Other expenses (if the fair value of the share of asset is greater than the
construction expense)
2.4. The
method of accounting for expenses or incomes borne or earned by the venturers
under BCC in the form of jointly controlled assets and BCC which is converted
into the form of jointly controlled operations shall be applied similarly to
BCC in the form of jointly controlled operations.
3.
Method of accounting for BCC in the form of jointly controlled operations.
3.1.
Accounting for contributed capital of jointly controlled operations
a) For
the capital contributee
-
According to the report on capital contribution of the venturer of jointly
controlled BCC, the contributee shall record as follows:
Dr 111,
112, 152, 155, 156, etc.
Cr 138 –
Other payables, receivables.
When
returning contributed capital to venturers, reverse the above entry. If there
is any difference between the fair value of returned asset and the value of
contributed capital of venturers, such difference shall be recorded to other
income or other expenses.
- If a
fixed asset is received without any transfer of ownership, the contributee
shall keep records of that asset in their administration system and record to
asset held under a trust.
b) For
the capital contributor
-
According to the report on capital contribution of the venturer of jointly
controlled BCC, the contributor shall record as follows:
Dr 138 –
Other receivables
Cr 111,
112, 152, 155, 156, etc.
When
receiving contributed capital by the contributee, reverse the above entry. If
there is any difference between the fair value of received asset and the value
of contributed capital of venturers, such difference shall be recorded to other
income or other expenses.
- If a
fixed asset is received without any transfer of ownership, the contributor
shall not record a decrease in fixed assets but keep records of that asset in
their administration system and present the place where the asset is located.
3.2.
Accounting for own expenses of each venturer
-
According to relevant invoices or documents on own expenses borne by each
venture in the jointly controlled operations, the following accounts shall be
recorded:
Dr 621,
622, 627, 641, 642 (BCC in details)
Dr 133 –
VAT payables (if any).
Cr 111,
112, 331, etc.
- When
transferring separate expenses to add to operating expense of BCC at the end of
the accounting period, the following accounts shall be recorded:
Dr 154 –
Work in progress (BCC in details)
Cr 621,
622, 627, (BCC in details)
3.3.
Accounting for joint expenses borne by every venture:
a) In
the venturer bearing joint expenses:
- When
incurring joint expenses borne by every venture, the following accounts shall
be recorded according to relevant invoices or documents:
Dr 621,
622, 627, 641, 642 (BCC in details)
Dr 133 –
VAT payables (if any).
Cr 111,
112, 331, etc.
- If the
BCC regulates shares of joint expenses, a Table of shares of joint expenses
shall be made and certified by all venturers, then the following accounts shall
be recorded:
Dr 138 –
Other receivables (in details for every venturer)
Cr 133 –
Deductible VAT (for input VAT).
Cr 3331
– VAT payables (if all amounts of input VAT on joint expenses are deductible,
an increase in output VAT payable shall be recorded).
Cr 621,
622, 627, 641, 642.
b) In
the venturer whose joint expenses incurred from BCC are not accounted:
According
to the Table of shares of joint expenses approved by the venturers (notified by
a venturer bearing joint expenses), the following accounts shall be recorded:
Dr 621,
622, 623, 641, 642 (BCC in details)
Dr 133 –
VAT payables (if any).
Cr 338 –
Other payables (in details for the venturer bearing joint expenses).
3.4.
Accounting for products sharing agreement:
- When
receiving shares of products from BCC and delivering them to inventory, the
following accounts shall be recorded according to receipt slip, delivery order
and relevant documents:
Dr 152 –
Raw materials (if the shares of products are not finished goods)
Dr 155 –
Finished goods (if the shares of products are finished goods)
Dr 157 –
Goods on consignment (if the shares of products are sold without delivering to
inventories)
Cr 154 –
Work in progress (including separate expenses and joint expenses borne by every
venturers) (BCC in details)
- When
receiving shares of products from BCC and putting them into production of other
products, the following accounts shall be recorded according to receipt slip
and relevant documents:
Dr 621 –
Direct raw materials costs
Cr 154 –
Work in progress (including separate expenses and joint expenses borne by every
venturers) (BCC in details)
- If the
BCC regulates assigning a venturer to sell products instead of sharing
products, after issuing invoices to the seller, transferring separate expenses
and joint expenses borne by every venturers to costs of goods sold, the
following accounts shall be recorded:
Dr 632 –
Costs of goods sold
Cr 154 –
Work in progress (including separate expenses and joint expenses borne by every
venturers) (BCC in details)
3.5.
Accounting for revenues from sale of products in case a venturer sells products
under a trust and share revenues to other venturers:
a) For
the seller:
- When
selling products under the BCC, the sell must issue invoices for all sold
products and total amounts of sale of products shall be recorded as follows:
Dr 111,
112, 131, etc.
Cr 338 –
Other payables or receivables (BCC in details)
Cr 3331
– VAT payables (if any).
- According to provisions of the BCC and the table
of revenue allocation, the shares of revenues received by each venture shall be
recorded as follows:
Dr 338 –
Other payables or receivables (BCC in details)
Cr 511 –
Revenues (interests earned by the seller under BCC).
- After
comparing joint expenses borne by each venture and shares of revenues earned by
each venture, the other receivables and the other payables shall be offset (in
details for each venturer), then the following accounts shall be recorded:
Dr 138 –
Other payables, receivables.
Cr 138 –
Other receivables
- When
giving shares of products sold to other venturers (other than the seller), the
following accounts shall be recorded:
Dr 338 –
Other payables or receivables (every venturers)
Cr 111,
112, etc.
b) For other
venturers (other than the seller):
-
According to the table of revenue allocation certified by all venturers and
documents provided by the seller, other venturers shall issue invoices of their
shares of revenues and give them to the seller and the following accounts shall
be recorded:
Dr 138 –
Other receivables (including VAT if output VAT is shared, in details for the
sellers)
Cr 511 –
Revenues (BCC in details and amounts of shares).
Cr 3331 – VAT payables (in case of sharing output
VAT).
- When
the venturers repay for sale of products, the following accounts shall be
recorded according to the actual received amounts:
Dr 111,
112, etc. (amounts repaid by venturers)
Cr 138 –
Other receivables (in details for every seller).
4.
Method of accounting for BCC in the form of post-tax profits
4.1. In
case venturers receive fixed shares regardless of business output of BCC (the
venturer in charge of accounting and tax declaration shall control the BCC):
a) For
the venturer in charge of accounting and tax declaration for BCC
- When
receiving money, materials or goods from capital contributors, the following
accounts shall be recorded:
Dr 112,
152, 156, etc.
Cr 138 –
Other payables, receivables.
- When
incurring revenues or expenses incurred from BCC, the venturer in charge shall
record total income or expenses similarly to their transactions as prescribed.
- When
determining amounts payable to other venturers periodically under BCC, the
following accounts shall be recorded:
Dr 627,
641, 642
Cr 138 –
Other payables, receivables.
- When
returning amounts of money or materials contributed as capital, the following
accounts shall be recorded:
Dr 138 –
Other payables, receivables.
Cr 112,
152, 156, etc.
If there
is any difference between the fair value of returned asset and the value of
contributed capital of venturers, such difference shall be recorded to other
income or other expenses.
b) For
the venturer not in charge of accounting and tax declaration for BCC
- When
contributing capital to BCC, the following accounts shall be recorded:
Dr 138 –
Other receivables
Cr 112,
152, 156, etc.
- When
receiving notification of shares of profits earned from BCC, the following
accounts shall be recorded:
Dr 138 –
Other receivables
Cr 511 –
Revenues (5113)
- When
receiving contributed capital, the following accounts shall be recorded:
Dr 112,
152, 156, etc.
Cr 138 –
Other receivables
If there
is any difference between the fair value of received asset and the value of
contributed capital of venturers, such difference shall be recorded to other
income or other expenses.
4.2. In
case the venturers receive shares of profits depending on the business output
of BCC (they have rights to jointly control BCC):
a) For
the venturer in charge of accounting and tax declaration
a1) The
recording of contributed capital and returning of contributed capital to
venturers shall comply with Point 4.1.
a2) When
recording revenues of BCC, total revenues included in accounting records in
account 511 shall be the basis for comparison, explanation and determination of
taxable revenues for BCC:
-
Revenues for BCC shall be recorded as follows:
Dr 112,
131.
Cr 511 -
Revenues
Cr 3331
– VAT payables.
On the
income statement, only shares of revenues are included in the item “Revenues”
-
Periodically, a decrease in shares of revenues for BCC, the following accounts
shall be recorded:
Dr 511 -
Revenues
Dr 3331
– VAT payables (if VAT is shared).
Cr 138 –
Other payables, receivables.
a3)
Total expenses incurred from accounting records shall be the basis for
comparison and determination of taxable expenses of BCC:
- When
incurring expenses of BCC, the following accounts shall be recorded:
Dr 632,
641, 642, etc.
Cr 112,
331, 154, 155, etc.
On the
income statement, only shares of revenues are included in the item “Expenses”
-
Periodically, a decrease in expenses incurred from BCC borne by venturers, the
following accounts shall be recorded:
Dr 138 –
Other receivables
Cr 632,
641, 642.
- After
determining the corporate income tax payables for BCC, the venturer in charge
shall notify other venturers of amounts payable and the following accounts
shall be recorded:
Dr 8211
– Expenses incurred from corporate income tax (tax payables of the venturer in
charge)
Dr 138 –
Other receivables (tax payables of other venturers in the BCC)
Cr 3334
– Corporate income tax (total corporate income taxes payable)
- After
comparing joint expenses borne by each venture and shares of revenues earned by
each venture, the other receivables and the other payables shall be offset (in
details for each venturer), then the following accounts shall be recorded:
Dr 138 –
Other payables, receivables.
Cr 138 –
Other receivables
b) For
the venturer not in charge of accounting and tax declaration
- When
contributing capital to BCC, the following accounts shall be recorded:
Dr 138 –
Other receivables
Cr 112,
152, 156, etc.
-
According to the Table of shares of joint expenses approved by the venturers
(notified by a venturer bearing joint expenses), the following accounts shall
be recorded:
Dr 621,
622, 623, 641, 642 (BCC in details)
Dr 133 –
VAT payables (if any).
Cr 138 –
Other payables, receivables.
-
According to the amounts of corporate income tax payable notified by the
venturer in charge, the following accounts shall be recorded:
Dr 821 –
Expenses incurred from corporate income tax in force
Cr 138 –
Other payables, receivables.
-
According to the table of shares of revenues certified by all venturers and
documents provided by the seller, other venturers shall issue invoices of their
shares of revenues and give them to the seller and the following accounts shall
be recorded:
Dr 138 –
Other receivables (including VAT if output VAT is shared, in details for the
seller)
Cr 511 –
Revenues (BCC in details and amounts of shares).
Cr 3331 – VAT payables (if sharing output VAT).
- After
comparing joint expenses borne by each venture and shares of revenues earned by
each venture, the other receivables and the other payables shall be offset (in
details for each venturer), then the following accounts shall be recorded:
Dr 138 –
Other payables, receivables.
Cr 138 –
Other receivables
- When
the venturers repay for sale of products, the following accounts shall be
recorded according to the actual received amounts:
Dr 111,
112, etc. (amounts repaid by venturers)
Cr 138 –
Other receivables (in details for every seller).
- When
receiving contributed capital, the following accounts shall be recorded:
Dr 112,
152, 156, etc.
Cr 138 –
Other receivables
If there
is any difference between the fair value of received asset and the value of
contributed capital of venturers, such difference shall be recorded to other
income or other expenses.
Article
45. Account 229 – Allowances for impairment of assets
1.
Rules for accounting
This
account is used to record current value and increases or decreases in allowance
for impairment of assets, including:
a)
Allowance for decline in value of trading securities: means an allowance for
impairment caused by decline in value of trading securities of an enterprise;
b) Allowance
for impairment of investments in other entities: means an allowance for
impairment because the contributee (subsidiaries, joint ventures or associates)
suffers losses leading the irrecoverability of the investor or allowance due to
decline in investments in subsidiaries, joint ventures or associates.
- With
regard to investments in a joint venture or an associate, the investor only
create allowance due to the losses of the joint venture or the associate if the
financial statement is not applied the owner's equity method for investments in
joint ventures or associates.
- With
regard to long-term investments (other than trade securities) not influencing
significantly on the investee, the allowances shall be carried out as follows:
+ If an
investment in listed shares or the fair value of the investment is determined
reliably, the allowance shall be made according to the market value of the
shares (similarly to allowance for decline in value of trading securities);
+ With
regard to an investment whose fair value is not identifiable at the reporting
time, the allowance shall be made according to the loss of the investee
(allowance for impairment of investments in other entities)
c)
Allowance for doubtful debts: means an allowance for receivables and other held
for maturity investments which are similar to doubtful debts.
d)
Allowance for decline in inventories: means an allowance for decline in
inventories due to increases in net realizable value against original value of
inventories.
1.2.
Method of accounting for allowance for decline in value of trading securities
a) The
enterprise may create allowance for the probable impairment loss if it is
evident that the market value of held for sale securities of the enterprise
decline against the book value.
b) Requirements
bases and allowance which is created or reverted shall comply with regulations
of law.
c) The
creating or reverting of allowance for decline in value of trading securities
shall be carried out at the time in which the financial statement is prepared:
- If the
allowance for current year is higher than the allowance in the accounting
records, the enterprise shall create the additional difference of allowance and
record it to financial expenses within a period.
- If the
allowance for current year is lower than the unused allowance for previous
year, the enterprise shall revert such difference and record a decrease in
financial expenses.
1.3.
Method of accounting for allowance for impairments in other entities
a) If
the investee is a parent company, the investor shall create an allowance for
impairments in other entities according to the consolidated financial statement
of such parent company. If the investee is an independent company having no
subsidiary, the investor shall create an allowance for impairments in other
entities according to the consolidated financial statement of such investee.
b) The
creating or reverting of allowance for impairments in other entities shall be
carried out at the time in which the financial statement for every investment
is prepared:
- If the
allowance for current year is higher than the allowance in the accounting
records, the enterprise shall create the additional difference of allowance and
record it to financial expenses within a period.
- If the
allowance for current year is lower than the unused allowance for previous
year, the enterprise shall revert such difference and record a decrease in
financial expenses.
1.4.
Method of accounting for allowance for doubtful debts
a) When
preparing financial statement, the enterprise shall determine doubtful debts
and held to maturity investments whose nature is similar to doubtful debts to
create or revert the allowance for doubtful debts.
b) The
enterprise shall make an allowance for doubtful debts when:
- An
overdue debt under an economic contract, a loan agreement, a contractual
commitment or a promissory note has been demanded for several times, but it is
unrecoverable. The time overdue of the doubtful debt requiring creation of the
allowance shall be determined according to time in which the principal is
repaid according to the sale contract, exclusive of the debt rescheduling
between contracting parties;
- The
debts are not due but the debtor is close to bankruptcy or undergone procedures
for dissolution, or the debtor is missing or makes a getaway;
c)
Requirements or bases for allowance for doubtful debts
-
Original documents or promissory note of the debtor about the outstanding
debts, including: economic contracts, loan agreements, liquidation of contract,
promissory note, etc.
- The
amounts of allowance for doubtful debts shall be created as prescribed in
regulations in force.
- Other
requirements as prescribed in regulations of law.
d) The
establishing or reverting of allowance for doubtful debts shall be carried out
at the time in which the financial statement is prepared:
- If the
amount of allowance for doubtful debts at the end of current accounting period
is greater than the allowance recorded in the accounting records, the positive
difference shall be recorded to an increase in allowance and an increase in
administrative expenses of the enterprise.
- If the
amount of allowance for doubtful debts at the end of current accounting period
is greater than the allowance recorded in the accounting records, the positive
difference shall be recorded to an increase in allowance and an increase in
administrative expenses of the enterprise.
e) With
regard to doubtful debts for several years, if the enterprise fails to collect
payment of debts regardless of all measures taken and they are bad debts, the
enterprise shall sell that debts to Vietnam Asset Management Company (VAMC) or
eliminate doubtful debts account on the accounting records. The elimination of
doubtful debts account must be complied with regulations of law and the charter
of the enterprise. These doubtful debts shall be monitored in the
administration system of the enterprise and presented in the financial
statement. After elimination, if the enterprise may collect payment of these
doubtful debts, they shall be recorded to the account 711 "Other
income".
1.5.
Method of accounting for allowance for decline in inventories
a) The
enterprise shall create an allowance for decline in inventories if it is
evident that there is a decrease in net realizable value against the original
cost of inventories. Allowance for decline in inventories means an estimated
amount of decline in value of inventories against book value of inventories
which is included in the operating cost in order to compensating actual damage
caused by the decline.
b) The
allowance for decline in inventories shall be created at the time in which the
financial statement is prepared. The creation of allowance for decline in
inventories must be complied in accordance with VAS “Inventories” and financial
regime in force.
c) The
allowance for decline in inventories shall be created according to every
inventoried material or good. With regard to services in progress, the
allowance for decline in inventories shall be created according to every
service having their own prices.
d) Net
realizable value (NRV) means the estimated selling price in the ordinary course
of business minus (-) any cost to complete and to sell the goods.
dd) When
preparing financial statement, the creation of allowance for decline in
inventories shall be determined according to quantity, original cost and NRV of
every material, good or service in progress:
- If the
amount of allowance for decline in inventories at the end of current accounting
period is greater than the allowance for decline in inventories recorded in the
accounting records, the positive difference shall be recorded to an increase in
allowance and an increase in costs of goods sold.
- If the
amount of allowance for decline in inventories at the end of current accounting
period is smaller than the allowance for decline in inventories recorded in the
accounting records, the negative difference shall be recorded to a decrease in
allowance and a decrease in costs of goods sold.
2.
Structure and contents of account 229 – Allowance for impairment of
assets
Debit:
-
Reverting negative difference between the allowance of this period and the
unused allowance of previous period;
-
Compensating for investments in other entities when the created allowance is
compensated for the impairment loss.
-
Compensating for the value of allowance for doubtful debts which is eliminated
due to unrecoverability.
Credit:
Creating
allowances for impairment of assets at the time in which the financial
statement is prepared.
Credit
balance: Ending allowance for impairment of assets.
Account
229 – Allowance for impairment of assets comprises 4 sub-accounts
Account
2291 – Allowance for decline in value of trading securities: this account
is used to record creating or reverting of allowance for decline in value of
trading securities.
Account
2292 – Allowance for impairments in other entities: this account is used to
record creating or reverting of allowance for impairments suffered by an
investor due the loss of the investee.
Account
2293 – Allowance for doubtful debts: This account is used to record
creating or reverting of allowance for doubtful receivables and held to
maturity investments.
Account
2294 – Allowance for decline in inventories: this account is used to record
creating or reverting of allowance for decline in inventories.
3.
Method of accounting for several major transactions
3.1.
Method of accounting for allowance for decline in value of trading securities
a) When
preparing a financial statement, if the allowance created in this period is
greater than the allowance created in the previous period, the difference
between them shall be additionally created according to the variation in market
value of trading securities and the following accounts shall be recorded:
Dr 635 –
Financial expenses
Cr 229 –
Allowance for impairment of assets (2291).
a) When
preparing a financial statement, if the allowance created in this period is
smaller than the allowance created in the previous period, the difference
between them shall be reverted according to the variation in market value of
trading securities and the following accounts shall be recorded:
Dr 229 –
Allowance for impairment of assets (2291).
Cr 635 –
Financial expenses
c)
Accounting for allowance for decline in value of trading securities of an wholly-state-owned
enterprise before it is converted into a joint-stock company: The remaining
allowance for decline in value of trading securities after compensating for the
impairment loss shall be recorded to an increase in state capital as follows:
Dr 229 –
Allowance for impairment of assets (2291).
Dr 635 –
Financial expenses (amounts not covered by the allowance)
Cr 121 –
Trading securities (amounts recorded to the decrease in the enterprise’s value)
Cr 411 –
Owner's invested equity (created allowance is greater than the impairment
loss).
3.2.
Method of accounting for allowance for impairments in other entities
a) When
preparing a financial statement, if the allowance created in this period is
smaller than the allowance created in the previous period, the difference
between them shall be created and the following accounts shall be recorded:
Dr 635 –
Financial expenses
Cr 229 –
Allowance for impairment of assets (2292).
b) When
preparing a financial statement, if the allowance created in this period is smaller
than the allowance created in the previous period, the difference between them
shall be reverted and the following accounts shall be recorded:
Dr 229 –
Allowance for impairment of assets (2292).
Cr 635 –
Financial expenses
c) When
the impairment loss incurs, the investments are unrecoverable or recoverable
with the cost which are lower than the original cost, if the enterprise use the
allowance for decline in value of long-term investments to compensate for
impairment losses of the long-term investment, the following accounts shall be
recorded:
Dr 111,
112, etc. (if any)
Dr 229 –
Allowance for impairment of assets (2292) (created allowance)
Dr 635 –
Financial expenses (amount not covered by the allowance)
Cr 221,
222, 228 (the original cost of investments suffering losses)
d) The
remaining allowance for decline in value of long-term investments after
compensating for the impairment loss shall be recorded to an increase in state
capital as follows when a wholly-state-owned enterprise is converted into a
joint-stock company:
Dr 229 –
Allowance for impairment of assets (2292).
Cr 411 –
Owner's invested equity.
3.3.
Method of accounting for allowance for doubtful debts
a) When
preparing a financial statement, if the allowance for doubtful debts created in
this period is greater than the unused allowance for doubtful debts created in
the previous period, the difference between them shall be additionally created
and the following accounts shall be recorded:
Dr 642 –
General administration expenses
Cr 229 –
Allowance for impairment of assets (2293).
b) When
preparing a financial statement, if the allowance for doubtful debts created in
this period is smaller than the unused allowance for doubtful debts created in
the previous period, the difference between them shall be reverted and the
following accounts shall be recorded:
Dr 229 –
Allowance for impairment of assets (2293).
Cr 642 –
General administration expenses.
c) With
regard to doubtful debts which are considered bad debts, the elimination of
debts shall be carried out in accordance with regulations of law in force
According to the decision on elimination of debts; the following accounts shall
be recorded:
Dr 111,
112, 331, 334, etc (organization or individual subject to compensation)
Dr 229 –
Allowance for impairment of assets (2293) (created allowance)
Dr 642 –
General administration expenses (amounts recorded to expenses)
Cr 131,
138, 128, 244, etc.
d) With
regard to doubtful debts which are eliminated, if they are recovered, the
following accounts shall be recorded according to the actual value of the
recovered debts:
Dr 111,
112, etc.
Cr 711 –
Other income.
dd) With
regard to overdue debts sold at contractual prices, the following accounts
shall be recorded:
- If
there is not any allowance for overdue debts, the following accounts shall be
recorded:
Dr 111,
112 (according to contractual prices)
Dr 642 –
General administration expenses (impairment loss from sale of debts)
Cr 131,
138,128, 244, etc.
- If
there is an allowance for overdue debts, but such allowance is not enough for
compensating for impairment loss from sale of debts, the remaining loss shall
be recorded to the general administration expenses as follows:
Dr 111,
112 (according to contractual prices)
Dr 229 –
Allowance for impairment of assets (2293) (created allowance)
Dr 642 –
General administration expenses (impairment loss from sale of debts)
Cr 131,
138,128, 244, etc.
e)
Accounting for allowance for doubtful debts of a wholly-state-owned enterprise
before it is converted into a joint-stock company: The remaining allowance for
doubtful debts after compensating for the impairment loss shall be recorded to
an increase in state capital as follows:
Dr 229 –
Allowance for impairment of assets (2293).
Cr 411 –
Owner's invested equity.
3.4.
Method of accounting for allowance for decline in inventories
a) When
preparing a financial statement, if the allowance for decline in inventories
created in this period is greater than the allowance created in the previous
period, the difference between them shall be additionally created and the
following accounts shall be recorded:
Dr 632 –
Costs of goods sold
Cr 229 –
Allowance for impairment of assets (2294).
b) When
preparing a financial statement, if the allowance for decline in inventories
created in this period is smaller than the allowance created in the previous
period, the difference between them shall be converted and the following
accounts shall be recorded:
Dr 229 –
Allowance for impairment of assets (2294).
Cr 632 –
Costs of goods sold.
c)
Accounting for allowance for decline in inventories regarding materials or
goods which are destroyed after expiry date, degraded, deteriorates, or
useless, the following accounts shall be recorded:
Dr 229 –
Allowance for impairment of assets (2292) (compensation covered by the
allowance)
Dr 229 –
Costs of goods sold (if the impairment loss is greater than the allowance)
Cr 152,
153, 155, 156.
d)
Accounting for allowance for decline in inventories before the
wholly-state-owned enterprise is converted into a joint-stock company: The
remaining allowance for decline in inventories after compensating for the
impairment loss shall be recorded to an increase in state capital as follows:
Dr 229 –
Allowance for impairment of assets (2294).
Cr 411 –
Owner's invested equity.
Article
46. Account 241 – Construction in progress
1.
Rules for accounting
a) This
account is only used in a non-project management board unit to record expenses
of capital investment projects (including new acquisition of fixed assets, new
construction, repairs, improvement, extension or refurbishment of
construction), and settlement condition of capital investment projects in those
enterprises having fixed assets acquisitions, capital investment, or major
repairs of fixed assets.
Capital
investment and major repairs of fixed assets of the enterprise may be carried
out under contract awarding method and or self-constructed method. If the
enterprise carries out capital investment under self-constructed method, this
account must also record expenses incurred during construction or repair
process.
Those
units establishing project management board and accounting structure shall
comply with regulations in the Circular No. 195/2012/TT-BTC on guidelines for
Accounting standards for investors.
b)
Expenses of capital investment projects are total necessary expenses of new
construction, repairs, improvement, extension or technical refurbishment of
construction. Expenses of capital investment are determined according to work
volume, economic and technical indicators or quotas and state policies, and in
conformity with objective factors of the market in every period and carried out
with regulations in capital investment management. Capital investment
expenses include:
-
Construction expenses;
- Equipment
expenses.
-
Compensation, support and resettlement expenses;
-
General administration expenses;
-
Construction consultancy expenses;
- Other
expenses.
The
account 241 is kept recorded in details for each building work, work item. Each
work item must be specifically recorded every capital investment expenses and
is observed on accrual basis from the commencement date until the date on which
the building works or work items are finished and put into operation.
c) In
capital investment, construction and equipment expenses are usually charged
directly to every building work, general administration expenses and other
expenses are usually common expenses. Investors must calculate and allocate
general administration expenses and other expenses incurred from every building
work according to following rules:
-
General administration expenses and other expenses related directly to each
building work shall be charged directly to that building work.
-
General administration expenses and other common expenses generally related to
many building works but not charged directly to every building work shall be
allocated to every building work which is most appropriate.
d) In
case the project is finished and put into operation, but project settlement
report is not approved, the enterprise shall record an increase in fixed assets
historical cost at provisional price (provisional price will be based on actual
expenses disbursed to acquire the fixed assets) for depreciation, but then the
provisional price shall be adjusted by the approved settlement price.
dd)
Repair or maintenance expenses incurred from the fixed assets shall be directly
recorded to operating costs within a period. If the repair or maintenance
expenses incur periodically, an allowance payable may be created then the
allowance shall be included in operating costs.
e) The
investor of property construction shall use this account to record fixed asset
construction expenses and investment property construction expenses. In case
the property is used for multiple purposes (office, lease or sale, i.e.
mixed-used building), the construction-directly attributable expenses still be
recorded to the account 241. When the building work is completed and put into
operation, the construction expenses shall be transferred in conformity with
the nature of every asset according to method of use of asset.
g)
Exchange rate differences arising from capital investment progress shall
following rules below:
Exchange
rate differences before operation:
+
Regarding wholly-state-owned enterprises performing tasks of security, national
defense or macroeconomic stability, exchange rate differences arising before
the operation shall be accumulatively recorded to the account 413 – Exchange
rate differences. When the building work is put into operation, the exchange
rate differences shall be gradually allocated from account 413 to account 515 –
Financial income (in case of profits) or account 635 – Financial expenses (in
case of losses). If the allocation may not expire the regulated duration, if the
exchange rate loss is recorded to Dr 413, the income statement shall state zero
profit (the enterprise may not both record exchange rate loss to the item –
Exchange differences in the balance sheet and record post-tax profit in the
income statement).
+
Regarding other enterprises, the exchange rate differences before the operation
shall be recorded to financial income (in case of profits) or financial
expenses (in case of losses), but not stated in the exchange rate difference on
the account 413.
- Regarding
exchange rate differences relating to capital investment when the enterprise
put into operation (including new investment and extension investment):
All
types of enterprises, including wholly-state-owned enterprises performing tasks
of security, national defense or macroeconomic stability, exchange rate
differences arising from capital investment (including new investment or
extension investment) shall be recorded to financial income (in case of
profits) or financial expenses (in case of losses), not recorded to exchange
rate differences on the account 413.
h) If
the project of investment is cancelled, the enterprise must dispose and recover
the expenses incurred from the project. The difference between actual
investment expenses and amounts collected from disposal shall be recorded to
other expenses or the compensation of the organization or individual.
Account
241 – Construction in progress, comprise 3 sub-accounts:
-
Account 2411: Fixed assets acquisition: records expenses of fixed assets
acquisition and settlement of fixed assets expenses in case fixed assets must
be assembled and operated for testing before put into use (including both new
fixed assets acquisition or used fixed assets). If acquired fixed assets
need additional investment or furnishment before being use, then total expenses
of additional investment or furnishment must be recorded to this account.
-
Account 2412: Capital construction: records capital investment expenses and
settlement of capital expenditure. This account is kept records in
details for each building work or work item (for each asset acquired though
investment) and every capital investment expense incurred in each asset must be
kept records in details.
-
Account 2413: Major repairs of fixed assets: records major repairs expenses
of fixed assets and settlement of major repairs expenses of fixed assets.
The expenses incurred in regular repairs of fixed assets shall not be
recorded to this account, but be charged directly to operating costs within a
period.
2. Structure and contents of account 241 –
Construction in progress
Debit:
-
Expenses incurred from capital construction, purchase or major repairs of fixed
assets (tangible fixed assets and intangible fixed assets);
-
Expenses incurred from renovation or upgrading of fixed assets;
-
Expenses incurred from sale of investment properties (in case construction
investment stage is necessary);
-
Expenses incurred from capital investment properties:
-
Expenses incurred after initial recording of fixed assets or investment properties.
Credit:
- Value
of fixed assets acquired from capital construction investment or sale which is
put into operation.
- Value
of rejected works and other expenses which were approved to be rejected and
transferred when settlement report is approved.
- Value
of major repairs of fixed assets which is completed and transferred when the
settlement report is approved.
- Value
of investment property acquired from capital construction which is finished.
-
Transferring expenses incurred after initial recording of fixed assets or
investment properties to related accounts.
Debit
balance:
-
Expenses incurred from construction investment project and major repairs of
fixed assets in progress.
- Value
of construction and major repairs of fixed assets which are finished, but have
not been yet put into operation or settlement report is not yet approved.
- Value
of construction of investment property in progress.
3.
Method of accounting for several major transactions
3.1.
Accounting for capital investment expenses
3.1.1.
Advances paid to contractors
a)
Advances in VND:
- When
paying an advance in VND to a contractor, the following accounts shall be
recorded:
Dr 331 –
Trade payables
Cr 112 –
Cash in bank (1122) (weighted average book rates).
- When
accepting completed the capital investment, the construction in progress
expenses for advance amounts shall be recorded as follows:
Dr 241 –
Construction in progress
Cr 331 –
Trade payables.
b)
Advances paid in foreign currencies:
- When
paying an advance in foreign currency to a contractor according to the actual
exchange rate at the payment time, the following accounts shall be recorded:
Dr 331 –
Trade payables (actual exchange rates)
Dr 635 –
Financial expenses (if losses of exchange rates incur)
Cr 112 –
Cash in bank (1122) (weighted average book rates).
Cr 515 –
Financial expenses (if profits of exchange rates incur)
- When
accepting completed the capital investment, the construction in progress
expenses for advance amounts in foreign currency shall be recorded as follows according
to the book exchange rates (actual exchange rates at the payment time):
Dr 241 –
Construction in progress
Cr 331 –
Trade payables.
3.1.2
When receiving the completed capital investment or repaired fixed assets from
the contractor, if the input VAT is deductible, the following accounts shall be
recorded according to awarding contract, acceptance report or sale invoice:
Dr 241 –
Construction in progress (2412, 2413)
Dr 133 –
Deductible VAT (1332) (if any)
Cr 331 –
Trade payables.
- If the
input VAT is not deductible, the value of capital investment expenses in
progress shall include VAT.
- If the
awarding contract regulates that the contract is paid in foreign currencies,
the amounts payable (after deducting from advance amounts) shall be recorded
according to the actual exchange rates at the accepting time (selling exchange
rates of the commercial bank where the enterprise regularly enters into
transactions).
3.1.3.
When buying capital investment equipment, if the input VAT is deductible, the
following accounts shall be recorded according to invoices or warehouse
receipt:
Dr 152 –
Raw materials (VAT-exclusive prices)
Dr 133 –
Deductible VAT (1332)
Cr 331 –
Trade payables (total payment)
When
transferring directly non-assembly equipments to working site for the
contractor, the following accounts shall be recorded:
Dr 241 –
Construction in progress
Dr 133 –
Deductible VAT (1332)
Cr 331 –
Trade payables.
Cr 151 –
Goods in transit
3.1.4.
When paying to the contractor, or material, good or service suppliers related
to capital construction, the following accounts shall be recorded:
Dr 331 –
Trade payables
Cr 111,
112, etc.
3.1.5.
Delivering capital investment equipment to the contractor:
a) For
non-assembly equipment, the following accounts shall be recorded:
Dr 241 –
Construction in progress
Cr 152 –
Raw materials.
b) For
assembly equipment:
- When
delivering capital investment equipment to the contractor, only the assembly
equipment is kept records in details.
- When
receiving finished assembly volume transferred by party B, which is accepted
for payment, then value of equipment delivered for new assembly will be charged
to capital investment expenses and the following accounts shall be recorded:
Dr 241 –
Construction in progress (2412)
Cr 152 –
Raw materials.
3.1.6.
When incurring other expenses, such as interest expenses, expenses incurred
from capitalized bond issuance, tender expenses, (after offsetting against
amounts of money collected from sale of tender dossiers), expenses incurred
from dismantling for premises returning (after offsetting against recoverable
wastes), etc, the following accounts shall be recorded:
Dr 241 –
Construction in progress (2412)
Dr 133 –
Deductible VAT (1332) (if any)
Cr 111,
112, 331, 335, 3411, 343, etc.
The remaining
amounts of money collected from sale of tender dossiers (after offsetting
against tender expenses) shall be recorded to a decrease in construction
expenses (recorded to Cr 241).
3.1.7.
When the contractor collects fines leading a decrease in amounts payable to the
contractor, the following accounts shall be recorded:
Dr 112,
331
Cr 241 –
Construction in progress
3.1.8.
Any exchange rate difference incurring from capital investment (including
before-operation stage) shall be recorded financial income (in case of profits)
or financial expenses (in case of losses) at the incurring time (other than
enterprises prescribed in Point 3.1.9 below):
- When
incurring exchange rate profits, the following accounts shall be recorded:
Dr,
relevant accounts
Cr 515 –
Financial income
- When
incurring exchange rate losses, the following accounts shall be recorded:
Dr 635 –
Financial expenses
Cr,
relevant accounts
3.1.9.
Regarding wholly-state-owned enterprises performing tasks of security, national
defense or macroeconomic stability, if exchange rate differences arise before
the operation (not engaged in the operation):
- When
incurring exchange rate profits, the following accounts shall be recorded:
Dr,
relevant accounts
Cr 413 –
Exchange rate differences
- When
incurring exchange rate losses, the following accounts shall be recorded:
Dr 413 –
Exchange rate differences
Cr,
relevant accounts
- When
the building work is put into operation, the exchange rate differences shall be
transferred to financial income or financial expenses, and the following
accounts shall be recorded:
+ When
transferring exchange rate profits, the following accounts shall be recorded:
Dr 413 –
Exchange rate differences
Cr 515 –
Financial income
+ When
transferring exchange rate losses, the following accounts shall be recorded:
Dr 635 –
Financial expenses
Cr 413 –
Exchange rate differences
3.1.10.
With regard to testing expenses and amounts of money collected from sale of
experimental products:
a)
Regarding testing expenses without production of experimental products, the
following accounts shall be recorded:
Dr 241 –
Construction in progress
Cr,
relevant accounts
b) With
regard to testing expenses and amounts of money collected from sale of
experimental products:
- When
incurring testing expenses with production of experimental products, total
expenses shall be recorded as follows:
Dr 154 –
Work in progress
Cr,
relevant accounts
- When
delivering experimental products to inventory, the following accounts shall be
recorded:
Dr 1551
– Finished goods inventory
Cr 154 –
Work in progress.
- When
selling experimental products, the following accounts shall be recorded:
Dr 112,
131
Cr 1551
– Finished goods inventory
Cr 154 –
Work in progress (sale without inventory)
Cr 3331
– VAT payable (if any)
- The
differences between testing expenses and amounts of money collected from sale
of experimental products shall be transferred as follows:
+ In
case the testing expenses are greater than the amounts of money collected from
sale of experimental products, the positive difference between them shall be
recorded to an increase in construction in progress; the following accounts
shall be recorded:
Dr 241 –
Construction in progress
Cr 154 –
Work in progress.
+ In
case the testing expenses are smaller than the amounts of money collected from
sale of experimental products, the negative difference between them shall be
recorded to a decrease in construction in progress; the following accounts
shall be recorded:
Dr 154 –
Work in progress.
Cr 241 –
Construction in progress
3.1.11.
When the building work is completed and totally accepted and put into
operation: If the financial report is approved instantly, the accounting
records shall be kept according to the value of assets acquired through
investments. If the financial report is not approved, an increase in value of
the assets acquired through investment shall be recorded according to
provisional prices (provisional prices are actual expenses paid to acquire the
assets according to account 241). The following accounts shall be recorded in
above both cases:
Dr 211,
213, 217
Dr 1557
- Finished goods – property (a part of property shall be used for sale which is
not recorded to account 154)
Cr 241 –
Construction in progress (approved prices or provisional prices)
In case
the building work is finished, but it is not transferred for use, awaiting
preparation or approval for report, it shall be kept records to account 241
“Construction in progress” in details.
3.1.12.
When the financial report on capital investment is approved, the provisional
prices shall be adjusted according to the approved value of assets:
- If the
approved value of asset acquired though capital investment is smaller than the
provisional price, the following accounts shall be recorded:
Dr 138 –
Other receivables (rejected expenses subject to recovery)
Cr 211,
213, 217, 1557.
- If the
approved value of asset acquired though capital investment is greater than the
provisional price, the following accounts shall be recorded:
Dr 211,
213, 217, 1557
Cr,
relevant accounts
- If the
fixed asset invested by capital expenditure funds and the competent agency
permit to increase operating capital and the following accounts shall be
recorded:
Dr 441 –
Capital expenditure funds
Cr 241 –
Construction in progress (damages approved to be rejected)
Cr 411 –
Owner's invested equity (approved value of asset)
- If the
fixed asset is acquired by welfare funds and used for welfare purpose, when the
investor approves the settlement of investment capital, an increase in the
welfare fund used for fixed asset acquisitions:
Dr 3632
– Welfare fund
Cr 3533
– Welfare fund used for fixed asset acquisitions.
3.1.13.
If the enterprise is an investor having project management board to do
accounting for capital investment:
a)
Accounting for investor:
- When
receiving the settled building work, the investor shall record the value of
building work to settled value as follows:
Dr 211,
213, 217, 1557
Dr 133 –
Deductible VAT (if any)
Dr 111,
112, 152, 153
Cr 136 –
Intra-company receivables
Cr 331,
333, etc (receiving liabilities, if any).
- When
receiving the non-settled building work, the investor shall record the value of
building work to provisional value. When carry out the settlement, the value of
building work shall be adjusted according to the approved price:
+ If the
approved price is greater than the provisional price, the following accounts
shall be recorded:
Dr 211,
213, 217, 1557
Cr,
relevant accounts
+ If the
approved price is smaller than the provisional price, the following accounts
shall be recorded:
Dr,
relevant accounts
Cr 211,
213, 217, 1557.
b)
Accounting for project management board: comply with regulations of the
Circular No. 195/2012/TT-BTC dated November 15, 2012 of the Ministry of Finance
on guidelines for Accounting standards for investors and amended documents (if
any).
3.1.14.
If the project of investment is canceled or revoked, the liquidation of project
and revocation of investment expenses shall be accounted. The difference
between investment expenses and amounts of money collected from the liquidation
shall be recorded to other expenses or covered by the compensation of
organization or individual, and the following accounts shall be recorded:
Dr 111,
112, - Amounts of money collected from liquidation of project
Dr 138 –
Other receivables (compensation paid by organization or individual)
Dr 811 –
Other expenses (charged to expenses)
Cr 241 –
Construction in progress
3.2.
Accounting for repair of fixed assets
Repairs
of fixed assets of the enterprise may be carried out under contract awarding
method and or self-constructed method.
a) When
repair expenses are incurred, they shall be recorded to Dr 241 “Construction in
progress” (2413) and be kept records in details for every building work or each
fixed asset repair. According to documents on expenses:
- If the
input VAT is deductible, the following accounts shall be recorded:
Dr 241 –
Construction in progress (2413) (VAT-exclusive prices)
Dr 133 –
Deductible VAT (1332)
Cr 111,
112, 152, 214, etc. (total payment).
- If the
input VAT is not deductible, the expenses incurred from repairs of fixed assets
shall include VAT and the following accounts shall be recorded:
Dr 241 –
Construction in progress (2413) (total payment)
Cr 111,
112, 152, 214, 334, etc. (total payment).
b) When the repair is completed, if an increase in
historical cost of fixed asset may not be recorded:
Dr 623,
627, 641, 642
Dr 242 –
Financial expenses (if the expenses are great, they shall be gradually
allocated)
Dr 352 –
Provisions (if the periodical repair expenses are prepaid)
Cr 241 –
Construction in progress (2413).
- In
case upgrading of fixed assets is eligible to record an increase in historical
cost of fixed assets, the following accounts shall be recorded:
Dr 211 –
Tangible fixed asset
Cr 241 –
Construction in progress (2413).
Article
47. Account 242 – Prepaid expenses
1.
Rules for accounting
a) This account is used to record expenses
actually incurred but they are related to operation output of many accounting
period and the transfer of these expenses to operating expenses of subsequent
accounting periods.
b) Types
of prepaid expenses include:
-
Prepaid expenses of infrastructure lease or fixed assets operating lease (land
use rights, factories, warehouses, offices, shops and other fixed assets) to
serve operation in several accounting periods.
-
Enterprise foundation expenses or advertising expenses incurred in
before-operation stage shall be is allocated for within 3 years;
- Expenses incurred from insurance purchase
(conflagration and explosive insurance, owner’s transport facilities civil
liability insurance, car body insurance, assets insurance), and charges
which the enterprise buys and pays lump sum for many accounting periods.
- Tools
and supplies, reusable packaging materials or instruments for renting relating
to operation activities in many accounting periods;
-
Prepaid loan’s expenses, such as loan’s prepaid interests or prepaid bond’s
interest at issuance time;
- Fixed
assets major repairs expenses incurring one time which are not prepaid but
allocated gradually for within 3 years;
- Negative difference between selling price and
residual value of leased back fixed
assets which is financial lease;
- Negative difference between selling price and
residual value of leased back fixed
assets which operating lease;
- In
case business combination does not lead to parent company – subsidiaries
relationship which creates goodwill or equitization of state-owned enterprise
creates goodwill;
- Other prepaid expenses serving the operation of
many accounting periods.
Research
expenses and expenses incurred from development stage which is not recorded to
intangible fixed asset or prepaid expenses shall be recorded to operating
expenses.
c) The
calculation and allocation of prepaid expenses to operating expenses for each
accounting period must be based on nature and extent of each type of expenses
to select appropriate method and criteria.
d) Each
prepaid expense incurred shall be kept records in details, and allocated to
objects subject to expenses of each accounting period and residual expenses,
which have not been allocated to expenses.
dd) With
regard to prepaid expenses in foreign currencies, at the report-preparing time,
if it is evident that the seller is unable to provide goods or services and the
enterprise shall definitely receive prepaid expenses in foreign currencies,
they shall be considered accounts derived from foreign currencies and subject
to re-evaluation according to the actual exchange rates at the reporting time
(buying rate of the commercial bank where the enterprise regularly enters into
transactions).
2. Structure and contents of account 242 – Prepaid
expenses
Debit:
Prepaid expenses incurred during a period.
Credit:
Prepaid expenses included in operating expenses during a period.
Debit
balance: Prepaid expenses not included in operating expenses during a
period.
3.
Method of accounting for several major transactions
a) When
incurring prepaid expenses, which must be allocated gradually to operating
expenses for many accounting periods, the following accounts shall be recorded:
Dr 242 –
Prepaid expenses
Dr 133 –
Deductible VAT (if any)
Cr 111,
112, 153, 331, 334, 338, etc.
When allocating prepaid expenses to operating
expenses periodically, the following accounts shall be recorded:
Dr 623,
627, 635, 641, 642
Cr 242 –
Prepaid expenses.
b) When
prepaying fixed assets rent and infrastructure rent under operating lease,
which used for operation for many accounting periods, the following accounts shall
be recorded:
Dr 242 –
Prepaid expenses
Dr 133 –
Deductible VAT (if any)
Cr 111,
112, etc.
- If the
input VAT is not deductible, the prepaid expenses shall include VAT.
c) With
regard to tools and supplies, reusable packaging materials or instruments for
renting related to operation in many accounting periods, when dispatching them
for use or lease, the following accounts shall be recorded:
- When
dispatching them for use or lease, the following accounts shall be recorded:
Dr 242 –
Prepaid expenses
Cr
153—Tools and supplies.
-
Periodically, the value of tools and supplies, reusable packaging materials or
instruments for renting shall be dispatched from inventory according to
appropriate criteria. The expenses are allocated for every accounting period
according to useful life or volume of tools and supplies, reusable packaging
materials or instruments for renting put into operation in every accounting
period. When allocating, the following accounts shall be recorded:
Dr 623,
627, 641, 642, etc.
Cr 242 –
Prepaid expenses.
d)
Purchase of fixed assets and investment property under deferred or installment
payment:
- When
buying tangible or intangible fixed assets or investment property under
deferred payment or installment payment, and putting them into operation, or
held to capital appreciation or for operating lease, the following accounts
shall be recorded:
Dr 211, 213, 217 (historical cost – according to
cash price)
Dr 133 –
Deductible VAT (if any)
Dr 242 -
Prepaid expenses (deferred interests shall equal (=) total payment minus (-)
cash price minus (-) VAT (if any))
Cr 331 –
Trade payables (total payment)
-
Periodically, when paying to the seller, the following accounts shall be
recorded:
Dr 331 –
Trade payables
Cr 111,
112 (periodical payables include principal and interests paid under deferred or
instalment payment).
-
Periodically, deferred interests or installment interests payables are charged
to expenses as follows:
Dr 635 –
Financial expenses
Cr 242 –
Prepaid expenses.
dd) In
case expenses incur from major repairs of fixed assets and the enterprise does
not prepay such expenses, they shall be allocated gradually for many accounting
periods when the major repairs are completed:
- When
transferring expenses incurred from repair of fixed asset to prepaid expenses,
the following accounts shall be recorded:
Dr 242 –
Prepaid expenses.
Cr 241 –
Construction in progress (2413).
-
Periodically, when allocating expenses incurred from repair of fixed asset to
operating expenses during a period, the following accounts shall be recorded:
Dr 623,
627, 641, 642, etc.
Cr 242 –
Prepaid expenses.
e) The
enterprise prepays interests to the lender:
- When
prepaying interests, the following accounts shall be recorded:
Dr 242 –
Prepaid expenses
Cr 111,
112.
- Periodically,
when allocating interests under schedule to financial expenses or capitalizing
such interests to the value of assets in progress, the following accounts shall
be recorded:
Dr 635 – Financial expenses (if borrowings
expenses are recorded to operating expenses during a period).
Dr 241 –
Construction in progress (if borrowings expenses are capitalized to the value
of assets in progress)
Dr 627 –
Construction in progress (if borrowings expenses are capitalized to the value
of assets in progress)
Cr 242 –
Prepaid expenses.
g) When
the enterprise issues bond at par value to mobilize loan capital, if business
prepays bond’s interests on issue date, the borrowing expenses shall be
recorded to Dr 242 (prepaid bond interests in details), and allocated to
expenses accounts.
- On the
bond issue date, the following accounts shall be recorded:
Dr 111,
112 (total amounts of money collected)
Dr 242 –
Prepaid expenses (prepaid bond interests in details)
Cr 34311
– Par value of bonds.
-
Periodically, when allocating prepaid bond interests to borrowings expenses of
each accounting period, the following accounts shall be recorded:
Dr 635 –
Financial expenses (if borrowings expenses are recorded to financial expenses
during a period).
Dr 241 –
Construction in progress (if borrowings expenses are recorded to value of
construction in progress)
Dr 627 –
Factory overheads (if borrowings expenses are capitalized to assets in
progress)
Cr 242 –
Prepaid expenses (prepaid bond interests in details) (bond interests allocated
during a period).
h) With
regard to business combination does not lead to parent company – subsidiaries
relationship (buying net asset) and their goodwill is created on the purchase
date:
- If the
trading in business combination is paid in cash by or cash equivalents, the
following accounts shall be recorded:
Dr 131,
138, 152, 153, 155, 156, 211, 213, 217, etc (according to fair value of
purchased assets)
Dr 242 –
Prepaid expenses (goodwill in details)
Cr 331,
3411, etc (according to fair value of liabilities and potential debts)
Cr 111,
112, 121 (amounts of cash or cash equivalents paid by the purchaser).
- If the
trading in business combination is carried out by the bond issuance of the
buyer, the following accounts shall be recorded:
Dr 131,
138, 152, 153, 155, 156, 211, 213, 217, etc (according to fair value of
purchased assets)
Dr 242 –
Prepaid expenses (goodwill in details)
Dr 4112
– Capital surplus (the issue price is smaller than face price)
Cr 4111
– Owner's invested equity (according to face value)
Cr 331,
3411…, etc (according to fair value of liabilities and potential debts)
Cr 4112
– Capital surplus (the issue price is greater than the face price).
i) If
the exchange difference losses are not fully allocated in the before-operation
stage, the total accumulated losses shall be transferred from account 242 to
account 635 – Financial expenses to determine the operation output during a
period and the following accounts shall be recorded:
Dr 635 –
Financial expenses
Cr 242 –
Prepaid expenses.
k) When
the assets are undergone physical inventory count at the time in which the
enterprise is evaluated for equitization of wholly-state-owned enterprise, if
the prepaid land rents not meet recognition of intangible fixed asset criteria,
an increase in state capital shall be recorded as follows:
Dr 242 –
Prepaid expenses
Cr 411 –
Owner's invested equity.
l) When
the assets are undergone physical inventory count at the time in which the
enterprise is evaluated for equitization of wholly-state-owned enterprise, if
the actual value of state capital is greater than their book value, the
difference between them shall be recorded to goodwill as follows:
Dr 242 –
Prepaid expenses
Cr 411 –
Owner's invested equity.
m) The
goodwill creating when equitization of state-owned enterprise is carried out
shall be recorded to account 242 and allocated for within 3 years and the
following accounts shall be recorded:
Dr 642 –
General administration expenses
Cr 242 –
Prepaid expenses.
Article
48. Account 243 – Deferred tax assets
1.
Rules for accounting
a) This
account is used to record current value, and increases or decreases of deferred
tax assets.
Deferred
tax asset
|
=
|
Deductible
temporary difference
|
+
|
Deductible
value transferred to subsequent year of unused taxable losses or preferred
taxes
|
x
|
Enterprise
income tax rate (%)
|
When
recording a deferred tax asset, if the change in enterprise income tax rates in
the future has been known and the deferred tax asset is reverted when the new
tax rates have been taken effect, the new tax rates shall be applied to the
deferred tax assets.
b) Tax
basis of an asset or a liability and temporary difference:
- The
tax basis of assets is the value deducting from taxable income when recovering
the book value of the assets. If the income is not subject to taxes, the tax
basis of the asset shall equal book value of such asset. The tax basis of a
liability equals (=) its book value minus (-) value to-be deducted from taxable
income when the liability is paid in future periods. The tax basis of an
unearned revenue shall equal (=) its book value minus (-) value of non-taxable
revenue in the future periods.
-
Temporary difference equals (=) book value of the asset or liability in the
balance sheet minus (-) the tax basis of such asset or liability. Temporary
differences include: deductible temporary difference and taxable temporary
difference. Deductible temporary difference means an temporary difference
arising deductible amounts when determining taxable income in future when the
book value of asset items are recovered or liabilities are paid.
+
Temporary difference in time is a type of temporary difference, for example: if
the book profits recorded in this accounting period but the taxable income is
recorded in another accounting period.
+ A temporary
difference between book value of an asset or a liability and the tax basis of
such asset or liability cannot be a temporary difference in time, for example:
When an asset is re-evaluated, the book value of that asset changes but its tax
basis does not change, a temporary difference shall arise. However, the
recovering time of the book value and the tax basis does not change, so that
such temporary difference is not a temporary difference in time.
+
Because the time in which the asset or the liability must be recovered or such
asset or liability is offset against taxable income is limited, when
determining deferred tax, the term “Permanent difference” shall not be used to
distinguish temporary difference.
c) If
the enterprise estimates that it is definite to earn taxable future profits to
use the deductible temporary difference, taxable losses and unused preferential
tariff treatment, deferred tax assets shall be recorded relating to:
-
Deductible temporary differences (other than temporary difference arising from
initial recognition of the asset or liability paid for a transaction other than
business combination transactions; and do not affect to accounting profits and
taxable income (or taxable losses) at the transaction time).
- The
remaining taxable losses and unused preferential tariff treatment after
deduction shall be transferred to subsequent year.
d) At
year-end, the enterprise must prepare “Statement of deductible temporary
difference determination”, “Statement of deductible unused temporary difference
observation”, the deductible value transferred to subsequent year of unused
taxable losses and preferred taxes shall be the basis to prepare “Statement of
deferred tax asset determination”, to determine value of deferred tax assets
recognized or reverted during a year.
dd) The
recognition of deferred tax asset in a year shall be carried out by offsetting
deferred income tax assets arisen this year against business income tax assets
recognized in previous years, but they are reverted in this year according to
the following rules:
- If the
deferred tax assets arisen during a year are greater than deferred tax assets
reverted during the year, the difference between them shall be recognized as
deferred tax assets and a decrease in deferred tax expenses shall be recorded.
- If the
deferred tax assets arisen during a year are smaller than deferred tax assets
reverted during the year, the difference between them shall be recognized as a
decrease in deferred tax assets and an increase in deferred tax expenses shall
be recorded.
e) When
the taxable losses or preferential tariff treatment are used and deductible
temporary difference no longer have influence on taxable profits (when assets
are recovered or liabilities are paid partly or totally), the deferred tax
assets must be reverted.
g) When
preparing financial statements, if the enterprise estimates that it is definite
to earn taxable future profits, the deferred tax assets not recognized in the
previous years shall be recorded to a decrease in deferred tax expense.
h) The
offsetting between deferred tax assets and deferred tax payables shall be
carried out only if the balance sheet is prepared, not when the deferred tax
assets are recorded on the accounting records.
2.
Structure and contents of account 243 – Deferred tax assets
Debit:
Increases in value of deferred tax assets.
Credit:
Decreases in value of deferred tax assets.
Debit
balance: Balance of value of deferred tax assets at the end of period.
3.
Method of accounting for several major transactions
a) If
the deferred tax asset arisen during a year is greater than the deferred tax
asset reverted during the year, the positive difference between the deferred
tax asset arisen and the deferred tax asset reverted during a year shall be
recorded to value of deferred tax assets as follows:
Dr 243 -
Deferred tax assets
Cr 8212
– Deferred tax expenses.
b) If
the deferred tax asset arisen during a year is smaller than the deferred tax
asset reverted during the year, the negative difference between the deferred tax
asset arisen and the deferred tax asset reverted during a year shall be
recorded to a decrease in deferred tax assets as follows:
Dr 8212
– Deferred tax expenses.
Cr 243 -
Deferred tax assets
Article
49. Account 244 – Pledges, mortgages or deposits
1.
Rules for accounting
a) This
account is used to record a sum of money or something valuable that the
enterprise uses for pledge, mortgage or deposit purpose in other enterprises or
organizations in economic relation as prescribed.
b) The
amounts of money or assets which are used for pledge, mortgage and deposit
purpose shall be observed and promptly recovered after the agreement on pledge,
mortgage or deposit expires. In case deposits which the enterprise is paid back
are overdue to recover, the enterprise may create allowance for them similarly
to doubtful debts.
c) The
enterprise must keep track of pledges, mortgages or deposits according to each
type, entity, term or currency. When preparing a financial statement, the
amounts whose remaining term is less than 12 months shall be classified as
short-term assets; These amounts whose remaining term is above 12 months shall
be classified as long-term assets.
d) The
assets used for pledge, mortgage or deposit purpose shall be recorded to the
book value of the enterprise. The same price of a non-monetary asset used for
pledge, mortgage or deposit purpose shall be recorded when it is dispatched
from or delivered to inventory. If there are deposits in cash or cash
equivalents which are paid back in foreign currencies, they shall be
re-evaluated according to actual exchange rates on the date on which the
financial statement is prepared (buying rate of the commercial bank where the
enterprise regularly enters into transactions). Collaterals in the form of
Certificates of ownership (i.e. property) shall not be recorded to a decrease
in assets but they shall be kept records in the accounting records in details
(collaterals in details) and presented in the financial statement.
2.
Structure and contents of account 244 – Pledges, mortgages and deposits
Debit:
- Value
of collaterals or cash deposits.
-
Exchange rate differences due to re-evaluation of balance of deposits which are
paid back in foreign currency at the reporting time (if the foreign currency
rate rises against VND).
Credit:
- Value
of collaterals or cash deposits which are paid back or paid;
-
Deducted (fined) from cash deposits shall be charged to other expenses;
-
Exchange rate differences due to re-evaluation of balance of deposits which
paid back in foreign currency at the reporting time (if the foreign currency
rate falls against VND).
Debit
balance: Value of collaterals or cash deposits which are still under
pledge, mortgage or deposit agreement.
3.
Method of accounting for several major transactions
a) When
using cash or cash in bank for deposit purpose, the following accounts shall be
recorded:
Dr 244 –
Pledge, mortgages and deposits
Cr 111,
112.
b) When
using a fixed asset for pledge purpose, the following accounts shall be
recorded:
Dr 244 –
Pledge, mortgages and deposits (residual value)
Dr 214 –
Depreciation of fixed assets (depreciation value)
Cr 211,
213 (historical cost).
If
documents (certificate of ownership of land or property) are used for mortgage,
they shall not be recorded to this account but they are not kept records in
details.
c) When
using other assets for pledge or mortgage purpose, the following accounts shall
be recorded:
Dr 244 –
Pledge, mortgages and deposits (in details)
Cr 152,
155, 156, etc.
d)
Receiving collaterals or cash deposits:
- When
receiving cash deposits, the following accounts shall be recorded:
Dr 111,
112.
Cr 244 –
Pledge, mortgages and deposits.
- When
receiving collaterals which are fixed assets, the following accounts shall be
recorded:
Dr 211,
213 (historical cost of the fixed assets used for pledge purpose).
Cr 244 –
Pledge, mortgages and deposits (residual value)
Cr 214 –
Depreciation of fixed assets (depreciation value)
- When
receiving other assets used for pledge or mortgage purpose, the following
accounts shall be recorded:
Dr 152,
155, 156, etc.
Cr 244 –
Pledge, mortgages and deposits (in details)
dd) If
the enterprise fails to fulfill their commitment and faces fines for violations
against the contract which are deducted from their cash deposits, the following
accounts shall be recorded:
Dr 811 –
Other expenses (deducted amount)
Cr 244 –
Pledge, mortgages and deposits.
e) When
using cash deposits to pay for the seller, the following accounts shall be
recorded:
Dr 331 –
Trade payables
Cr 244 –
Pledge, mortgages and deposits.
g) When
preparing a financial statement, if the deposits which are paid back derived
from foreign currencies, they shall be evaluated according to actual exchange
rates on the date on which the financial statement is prepared:
- If the
foreign currency rate rises against VND, the following accounts shall be
recorded:
Dr 244 –
Pledge, mortgages and deposits
Cr 413 –
Exchange rate differences (4131).
- If the
foreign currency rate falls against VND, the following accounts shall be
recorded:
Dr 413 –
Exchange rate differences (4131).
Cr 244 –
Pledge, mortgages and deposits.
Article
50. Accounting rules for liabilities
1.
Liabilities of an enterprise must be kept records in details according to
payment schedule, creditor, type of currency and other factors according to
requirements of the enterprise.
2.
Liabilities shall be classified into trade payables, intra-company payables and
other payables according to following rules:
a) Trade
payables include commercial amounts payable arisen from purchase of goods,
services or asset and the seller is independent with the buyer, including
amounts payables between parent company and subsidiaries, joint ventures or
associates). Amounts payable include amounts payable when importing through the
trustee (in the import trust transaction);
b)
Intra-company payables include amounts payable between parent company and
dependent accounting subsidiaries having no legal status;
c) Other
payables include non-commercial amounts payable, or amounts payable relating to
trading in goods or services:
-
Payables relating to financial expenses, such as: interests payable, dividends
payable and profits payable, financial investment expenses payable;
-
Payables paid by another party; payables which the trustor receives from
relevant entities to pay for import-export trust transactions;
-
Non-commercial payables, such as: borrowings payable, fines payable,
compensation payable, assets in surplus awaiting resolution, payables related
to social insurance, health insurance, unemployment insurance, or union funds,
etc.
3. When
preparing a financial statement, the amounts payable shall be classified into
long-term payables or short-term payables according to their remaining terms.
4. If it
is evident that there is an unavoidable loss, an amount payable shall be
recorded according to cautious rules.
5. When
preparing the financial statement, these amounts payable meeting definition of
accounts derived from foreign currencies (refer to account 413 – Exchange rate
differences) for re-valuation at the ending of accounting period.