Circular 200/2014/TT-BTC guidance on enterprise accounting regime

CIRCULAR

Providing guidance on the enterprise accounting regime

Pursuant to the Accounting Law dated June 17, 2003;

Pursuant to Decree No. 129/2004/ND-CP dated May 31, 2004 of the Government on guidance for the Accounting Law in the business operation;

Pursuant to the Government's Decree No. 215/2013/ND-CP dated December 23, 2013 defining the functions, tasks, powers 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 hereby promulgates the Circular providing guidance on the enterprise accounting regime.

Chapter I

GENERAL PROVISIONS

Article 1. Subjects of application

This Circular promulgates accounting regime applicable to enterprises in every business line and every economic sector. Small and medium-sized enterprises applying the accounting regime for small and medium-sized enterprises may apply regulations in this Circular for accounting.

Article 2. Scope of regulation

This Circular promulgates accounting book recording, preparation and presentation of financial statements, not applicable to determination of tax liabilities of enterprises to state budget.

Article 3. Accounting currency unit

The “accounting currency unit” is the Vietnam Dong (national symbol: “đ”; international symbol: “VND”) used for recording accounting books and for preparing and presenting the financial statements of the enterprise. Where an accounting entity primarily collects and makes payments in a foreign currency and satisfies the criteria prescribed in Article 4 of this Circular, it may select a foreign currency as the accounting currency unit for recording accounting books.

Article 4. Selection of accounting currency unit

1. Any enterprise that mainly receive turnovers and pays expenses in foreign currencies shall, based on regulations of the Accounting Law, consider and decide on the selection of its accounting currency unit and shall be responsible for such decision before the law. Upon selection of the accounting currency unit, the enterprise shall notify the directly managing tax office.

2. The accounting currency unit means a currency that:

a) Is mainly used in transactions for sale of goods and provision of services of the entity, has a significant influence on the selling prices of goods and services, and is generally the currency used for price listing and settlement; and

b) Is mainly used in transactions for purchase of goods and services, has a significant influence on labor costs, material costs, and other production and business costs, and is generally the currency used for payment of such costs.

3. The following factors shall also be considered and provide evidence for determining the accounting currency unit of the entity:

a) The currency used to mobilize financial resources (such as issuance of shares and bonds);

b) The currency in which receipts from operating activities are regularly generated and retained.

4. The accounting currency unit reflects transactions, events, and conditions relating to the operations of the entity. Once the accounting currency unit has been determined, the entity shall not change it unless there are material changes in such transactions, events, and conditions.

Article 5. Conversion of financial statements prepared in a foreign currency accounting unit into Vietnam Dong

1. An enterprise using a foreign currency as its accounting currency unit shall, in addition to preparing financial statements in such accounting currency (foreign currency), convert the financial statements into Vietnam Dong when disclosing and submitting the financial statements to state management agencies.

2. Principles for conversion of financial statements prepared in a foreign currency accounting unit into Vietnam Dong, and presentation of comparative information, shall be implemented in accordance with the provisions of Chapter III of this Circular.

3. Upon conversion of financial statements prepared in a foreign currency into Vietnam Dong, the enterprise shall clearly disclose in the Notes to the Financial statements the impacts (if any) on the financial statements arising from such conversion.

Article 6. Audit of financial statements in cases where the accounting currency unit is a foreign currency

Financial statements having legal validity for public disclosure and submission to competent agencies in Vietnam are financial statements presented in Vietnam Dong and shall be audited.

Article 7. Change of accounting currency unit

Where there are significant changes in management and business operations resulting in the currency used in economic transactions no longer satisfying the criteria specified in Clauses 2 and 3 Article 4 of this Circular, the enterprise may change its accounting currency unit. The change from one accounting currency unit to another shall only be made at the beginning of a new accounting period. The enterprise shall notify the directly managing tax office of the change in accounting currency unit no later than 10 working days from the end of the accounting period.

Article 8. Rights and responsibilities of the enterprise with respect to organization of accounting at dependent units without legal personality (hereinafter referred to as dependent accounting units)

1. The enterprise shall be responsible for organizing the accounting apparatus and decentralizing accounting at dependent accounting units in a manner consistent with its operational characteristics and management requirements and in compliance with the provisions of law.

2. The enterprise shall decide whether accounting at dependent accounting units with a separate accounting apparatus shall be organized as follows:

a) Recognition of business capital allocated by the enterprise: the enterprise shall decide whether the dependent accounting unit records such capital as a liability or as equity;

b) For internal transactions involving purchase, sale, or transfer of products, goods, and services: turnover and cost of goods sold shall be recognized separately at each dependent accounting unit only if the movement of products, goods, and services between internal stages, in substance, generates added value in such products, goods, and services. Recognition of turnover from internal transactions for presentation in the financial statements of units shall not depend on the form of accounting documents (invoices or internal transfer documents);

c) Decentralization of accounting at dependent accounting units: depending on whether the accounting model is centralized or decentralized, the enterprise may assign dependent accounting units to record up to retained earnings after tax or only up to turnover and expenses.

Article 9. Registration for amending accounting regime

1. With respect to the chart of accounts

a) An enterprise shall, based on the chart of accounts of the enterprise accounting regime promulgated together with this Circular, apply and detail the chart of accounts in a manner consistent with the characteristics of its production and business activities and the management requirements of each sector and each entity, provided that such application is consistent with the contents, structure, and accounting methods of the corresponding general accounts.

b) Where an enterprise needs to add Level-1 or Level-2 accounts, or amend Level-1 or Level-2 accounts in terms of name, code, contents, and accounting methods for specific economic transactions, it shall obtain written approval from the Ministry of Finance prior to implementation.

c) An enterprise may open additional Level-2 and Level-3 accounts for those accounts for which Level-2 or Level-3 accounts are not prescribed in the Chart of Accounts for enterprises set out in Appendix 1 to this Circular in order to meet its management requirements without having to seek approval from the Ministry of Finance.

2. With respect to financial statements

a) An enterprise shall, based on the templates and contents of the line items of financial statements set out in Appendix 2 to this Circular, detail the existing line items of the financial statement system in a manner consistent with the characteristics of its production and business activities and the management requirements of each sector and each entity.

b) Where an enterprise needs to add or amend templates, names, or contents of line items of financial statements, it shall obtain written approval from the Ministry of Finance prior to implementation.

3. With respect to accounting documents and accounting books

a) Accounting documents are of a guiding (non-mandatory) nature. An enterprise may elect to apply the templates promulgated in Appendix 3 to this Circular or design its own templates in a manner consistent with its operational characteristics and management requirements, provided that the information required under the Accounting Law and its amending, supplementing, or replacing instruments is ensured.

b) All templates of accounting books (including General Ledger and journal books) are non-mandatory. An enterprise may apply the templates guided in Appendix 4 to this Circular or supplement or amend the templates of accounting books and cards in a manner consistent with its operational characteristics and management requirements, provided that information is presented fully, clearly, and in a manner that is easy to examine and control.

Article 10. Accounting regime applicable to foreign contractors

1. Foreign contractors having a permanent establishment or presence in Vietnam, where such permanent establishment or presence is not an independent entity with legal personality, shall implement the accounting regime in Vietnam as follows:

a) Contractors having specific characteristics shall apply the accounting regime promulgated separately by the Ministry of Finance for contractors;

b) Contractors without a separately promulgated accounting regime by the Ministry of Finance may elect to apply in full the Vietnamese enterprise accounting regime or to apply certain contents thereof in a manner consistent with their operational characteristics and management requirements;

c) Where a contractor elects to apply in full the Vietnamese enterprise accounting regime, such application shall be consistent throughout the entire accounting period;

d) A contractor shall notify the tax office of the applied accounting regime no later than 90 days from the date of commencement of official operations in Vietnam. In case any change in the application of the accounting regime, the contractor shall notify the tax office no later than 15 working days from the date of such change.

2. A foreign contractor shall maintain detailed accounting by each contract (each contractor’s permit) and each transaction as a basis for contract finalization and tax finalization.

3. Where a foreign contractor applies in full the Vietnamese enterprise accounting regime but has a need to supplement or amend such regime, it shall register in accordance with Article 9 of this Circular and may only implement such supplementation or amendment upon obtaining written approval from the Ministry of Finance. Within 15 working days from the date of receipt of a complete dossier, the Ministry of Finance shall respond in writing to the foreign contractor regarding the registration for supplementation or amendment of the accounting regime.

Chapter II

CHART OF ACCOUNTS

Article 11. Principles for accounting for cash

1. Accounting shall maintain accounting books to record on a continuous daily basis, in chronological order, all receipts, payments, inflows and outflows of cash and foreign currencies, and to determine the cash balance on hand and balances in each bank account at any time for purposes of inspection and reconciliation.

2. Amounts deposited or pledged by other enterprises and individuals with the enterprise shall be managed and accounted for as the enterprise’s cash.

3. All receipts and payments shall be supported by receipt vouchers and payment vouchers and shall bear all signatures as required under the accounting document regime.

4. Accounting shall track cash in detail by original currency. Upon occurrence of transactions in foreign currencies, accounting shall convert such foreign currencies into Vietnam Dong under the following principles:

- Debit entries to cash accounts shall be recorded using the actual transaction exchange rate;

- Credit entries to cash accounts shall be recorded using the weighted average book exchange rate;

5. At the time of preparation of financial statements in accordance with the law, the enterprise shall revalue foreign currency balances and monetary gold at the actual transaction exchange rate.

Article 12. Account 111 - Cash on hand

1. Accounting rules

a) The account shall be used to reflect receipts, payments, and cash balances at the enterprise’s cash fund, including: Vietnam Dong, foreign currencies, and monetary gold. Only actual cash, foreign currencies, and monetary gold received, paid, and held in the cash fund shall be recorded in Account 111 “Cash on hand”. Amounts collected and immediately remitted to the bank (without passing through the enterprise’s cash fund) shall not be recorded to Dr 111 “cash on hand”, but recorded to Dr 113 “cash in transit”.

b) Cash amounts deposited or pledged by other enterprises and individuals with the enterprise shall be managed and accounted for as monetary assets of the enterprise.

c) Cash receipts and disbursements shall be supported by receipt slips, payment slips and shall bear all required signatures of the recipient, the payer, and the person authorized to approve such receipts and disbursements in accordance with the accounting document regime. In certain special cases, cash receipt or disbursement orders shall be attached.

d) The cash accountant shall be responsible for maintaining the cash accounting books, recording on a continuous daily basis, in chronological order, all receipts, payments, inflows and outflows of cash and foreign currencies, and determining the cash balance at any time.

dd) The cashier shall be responsible for management and receipt and disbursement of cash. On a daily basis, the cashier shall conduct a physical count of the actual cash balance and reconcile it with the cash book and the cash accounting records. Any discrepancies shall be reviewed by the accountant and the cashier to determine the causes and propose measures for handling such discrepancies.

e) Upon occurrence of transactions in foreign currencies, accounting shall convert foreign currencies into Vietnam Dong under the following principles:

- Actual exchange rate shall be applicable to Dr 1112. In case the foreign currencies are withdrawn from banks to pay in the cash fund, the accounting book recording rate of account 1122 shall be applied;

- Weighted average rate shall be applicable to Cr 1112

The actual exchange rate shall be determined as prescribed in guidance for account 413 - Differences between exchange rates and relevant accounts.

g) Monetary gold reflected in the account refers to gold held for value storage purposes, excluding gold classified as inventories used as materials for production or as goods for sale. Management and use of monetary gold shall comply with the applicable law.

h) At all times of preparation of financial statements in accordance with the law, the enterprise shall revalue foreign currency balances and monetary gold under the following principles:

- The actual transaction exchange rate applied for revaluation of foreign currency cash balances shall be the buying rate of the commercial bank where the enterprise regularly conducts transactions (as selected by the enterprise) at the time of preparation of the financial statements.

- Monetary gold shall be revalued at the domestic market purchase price at the time of preparation of the financial statements. The domestic market purchase price is the purchase price announced by the State Bank of Vietnam. Where the State Bank of Vietnam does not announce a gold purchase price, it shall be determined based on the purchase price announced by entities licensed to trade in gold in accordance with law.

2. Structure and contents reflected in Account 111 - Cash on hand

Debit:

- Cash, foreign currencies, and monetary gold received into the cash fund;

- Cash, foreign currencies, and monetary gold surplus in the cash fund discovered upon physical count;

- Foreign exchange differences arising from revaluation of foreign currency balances at the reporting date (where the foreign exchange rate increases against Vietnam Dong);

- Increase in revaluation of monetary gold at the reporting date.

Credit:

- Cash, foreign currencies, and monetary gold disbursed from the cash fund;

- Cash, foreign currencies, and monetary gold shortages in the cash fund discovered upon physical count;

- Foreign exchange differences arising from revaluation of foreign currency balances at the reporting date (where the foreign exchange rate decreases against Vietnam Dong);

- Decrease in revaluation of monetary gold at the reporting date.

Debit balance:

Cash, foreign currencies, and monetary gold remaining in the cash fund at the reporting date;

Account 111 – Cash on hand, has three Level-2 accounts:

- Account 1111 - Vietnam dong: reflects receipts, payments, and balances of Vietnam Dong in the cash fund;

- Account 1112 - Foreign currencies: reflects receipts, payments, foreign exchange differences, and balances of foreign currencies in the cash fund, translated into Vietnam Dong;

- Account 1113 - Monetary gold: reflects movements and value of monetary gold in the enterprise’s cash fund.

3. Accounting methods for certain major economic transactions

3.1. Upon sale of products, goods, or provision of services with immediate cash collection, accounting shall recognize turnover as follows:

a) For products, goods, services, and investment property subject to value-added tax, excise tax, export duty, and environmental protection tax, accounting shall recognize revenue from sale of goods and rendering of services at prices exclusive of tax; such indirect taxes payable shall be separately identified by each type at the time of turnover recognition (including value-added tax payable under the direct method), as follows:

Dr 111 - Cash on hand (total payment)

Cr 511 - Revenue from sale of goods and rendering of services (amount exclusive of tax)

Cr 333 - Taxes and other payables to the State Budget.

b) Where the taxes payable cannot be separately identified at the time of recognition, turnover shall be recognized inclusive of taxes payable. On a periodic basis, accounting shall determine the tax obligations payable and record a reduction of turnover, as follows:

Dr 511 - Turnovers

Cr 333 - Taxes and other payables to the State Budget.

3.2 Upon receiving payments of allowance or subsidy in cash from state budget, to recognize the following accounts as below:

Dr 111 - Cash on hand

Cr 333 - Taxes and other payables to the State Budget (3339).

3.3. Upon generating financial income or other incomes in cash, to recognize the following accounts as below:

Dr 111 - Cash on hand (total payment)

Cr 515 - Financial income (prices excluding VAT)

Cr 711 - Other incomes (prices excluding VAT)

Cr 3331 - VAT payable (33311).

3.4. Upon withdrawing cash in banks to pay in cash fund; applying for long-term or short-term loans in cash (VND or Foreign currencies according to actual exchange rates), to recognize the following accounts as below:

Dr 111 - Cash on hand (1111, 1112)

Cr 112 - Cash in banks (1121, 1122)

Cr 341 - Financial loan and financial leased liabilities (3411).

3.5. Upon recovering amounts receivables, providing loans, making deposits in cash; receiving deposits in cash from other enterprises, to recognize the following accounts as below:

Dr 111 - Cash on hand (1111, 1112)

Cr 128, 131, 136, 138, 141, 244, 344.

3.6. Upon 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, to recognize the following accounts as below:

Dr 111 - Cash on hand (1111, 1112)

Dr 635 - Financial expenses

Cr 121 - Trading securities (cost price)

Cr 221, 222, 228 (cost price)

Cr 515 - Financial income.

3.7. Upon receiving stakes in cash of owners, to recognize the following accounts as below:

Dr 111 - Cash on hand

Cr 411 - Owner's invested equity.

3.8. Upon receiving money of contracting parties of Business Cooperation Contract (BCC) without establishment of legal entity to cover general operation, to recognize the following accounts as below:

Dr 111 - Cash on hand

Cr 338 - Other payables.

3.9. Upon dispatching cash fund then crediting to bank’s accounts or depositing, to recognize the following accounts as below:

Dr 112 - Cash in banks

Dr 244 - Mortgage, collaterals and deposits

Cr 111 - Cash on hand.

3.10. Upon dispatching cash fund to buy securities, providing loans or investing in subsidiary companies or joint-venture companies, to recognize the following accounts as below:

Dr 121, 128, 221, 222, 228

Cr 111 - Cash on hand.

3.11. Upon dispatching cash fund to buy inventory (using regularly declared method), buying fixed assets, spending on capital investment, to recognize the following accounts as below:

- In case 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 - Value-added tax deductible (1331)

Cr 111 - Cash on hand.

- In case input VAT is ineligible for deduction, the buying price including VAT shall be recorded as follow:

3.12. Upon dispatching cash fund to buy inventory (using periodically declared method), in case input VAT is eligible for deduction, to recognize the following accounts as below:

Dr 611 - Good purchase (6111, 6112)

Dr 133 - Value-added tax deductible (1331)

Cr 111 - Cash on hand.

In case input VAT is ineligible for deduction, the buying price including VAT shall be recorded as follows:

3.13. Upon buying raw materials immediately used in business in cash, in case input VAT is eligible for deduction, to recognize the following accounts as below:

Dr 621, 623, 627, 641, 642, ...

Dr 133 - Value-added tax deductible (1331)

Cr 111 - Cash on hand.

In case input VAT is ineligible for deduction, the costs including VAT shall be recorded.

3.14. Upon dispatching cash fund to pay amounts payable, to recognize the following accounts as below:

Dr 331, 333, 334, 335, 336, 338, 341

Cr 111 - Cash on hand.

3.15. Upon dispatching cash fund for financing activities or other activities, to recognize the following accounts as below:

Dr 635, 811, ...

Dr 133 - Value-added tax deductible (if any)

Cr 111 - Cash on hand.

3.16. In case of detecting the cash deficit under verification without reasons, to recognize the following accounts as below:

Dr 138 - Other receivables (1381)

Cr 111 - Cash on hand.

3.17. In case of detecting the cash excess under verification without reasons, to recognize the following accounts as below:

Dr 111 - Cash on hand

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 currencies related-transactions in cash.

a) In case of buying goods or services in foreign currencies in cash.

- In case losses on exchange rates are generated, to recognize the following accounts as below:

Dr 151,152,153,156,157,211,213,241, 623, 627, 641, 642, 133, ... (according to actual exchange rates on the transaction date)

Dr 635 - Financial expenses (losses on exchange rates)

Cr 111 (1112) (according to accounting book recording rates).

- In case profits on exchange rates are generated, to recognize the following accounts as below: 0}

Dr 151,152,153,156,157,211,213,241, 623, 627, 641, 642, 133, ... (according to actual exchange rates on the transaction date)

Cr 111 (1112) (according to accounting book recording rates).

Cr 515 - Financial income (profits on exchange rates).

b) Upon paying debts payable in foreign currencies:

- In case losses on exchange rates are generated, to recognize the following accounts as below:

Dr 331, 335, 336, 338, 341, ... (according to accounting book recording rates).

Dr 635 - Financial expenses (loss of exchange rate)

Cr 111 (1112) (according to accounting book recording rates).

- In case profits on exchange rates are generated, to recognize the following accounts as below:

Dr 331, 336, 341, ... (according to accounting book recording rates).

Cr 515 - Financial income (profits on exchange rates).

Cr 111 (1112) (according to accounting book recording rates).

- Upon paying advances in foreign currencies to sellers, the Debit account - Trade payables shall apply actual exchange rates at the prepayment time, to recognize the following accounts as below:

Dr 331 - Trade payables (actual exchange rates)

Dr 635 - Financial expenses (losses on exchange rates)

Cr 111 (1112) (according to accounting book recording rates).

Cr 515 - Financial income (profits on exchange rates).

c) When generating turnovers or other incomes in foreign currencies in cash, to recognize the following accounts as below:

Dr 111 (1112) (actual exchange rates)

Cr 511, 515, 711, ... (actual exchange rates).

d) Upon collecting debts receivables in foreign currencies:

- In case losses on exchange rates are generated, to recognize the following accounts as below:

Dr 111 (1112) (according to actual exchange rates on the transaction dates)

Dr 635 - Financial expenses (losses on exchange rates)

Cr 131, 136, 138, ... (according to accounting book recording rates).

- In case profits on exchange rates are generated, to recognize the following accounts as below:

Dr 111 (1112) (according to actual exchange rates on the transaction dates)

Cr 515 - Financial income (profits on exchange rates).

Cr 131, 136, 138, ... (according to accounting book recording rates).

- Upon paying advances in Foreign currencies to sellers, the Credit account - Trade receivables shall apply actual exchange rates at the pre-receipt time, to recognize the following accounts as below:

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:

- In case the Foreign currencies rate rises against VND, the profits on exchange rate shall be recorded as follows:

Dr 111 (1112)

Cr 413 - Exchange rate differences (4131).

- In case the Foreign currencies rate falls against VND, the losses on exchange rates shall be recorded as follows:

Dr 413 - Exchange rate 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 (in case profits are larger than losses) or to financial expenses (in case profits are smaller than losses).

3.21. Re-evaluation of monetary gold

- In case 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.

- In case 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 banks

1. Accounting rules

The 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, ...) shall be recorded to Account 112 "Cash in banks".

a) Upon receiving documents sent from the bank, the accountant shall collate them with enclosed original documents. In case of any difference between figures in enterprise's ledger, in original documents and in the bank’s documents, the enterprise shall notify the bank to collate, verify and promptly handle. At the end of the month, in case of failure 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) (in case the accountant’s figures are larger than the bank’s figures) or recorded to Cr 338 “Other payables” (3388) (in case 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) Regarding 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 shall 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. In case the cash fund is withdrawn to send to banks, they shall be converted into VND according to accounting book recording rates of account 1112.

- Cr 1122 applies weighted average rates.

The actual exchange rate shall be determined as prescribed in guidance for account 413 - Differentials between exchange rates and relevant accounts.

e) Monetary gold recorded in the account is the gold used for value storage, not including the gold recorded to inventory account used as raw materials for goods production for sale. The management and use of monetary gold shall comply with applicable laws.

g) Whenever preparing financial statements as prescribed, the enterprise shall re-evaluate the balance of Foreign currencies and monetary gold following the rules below:

- The actual exchange rates applied when re-evaluating the balance of cash in banks in Foreign currencies is the Foreign currencies-buying rate of the commercial bank where the enterprise opens Foreign currencies account at the time in which the financial statement is prepared. In case the enterprise has multiple Foreign currencies 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 reflected in Account 112 - Cash in banks

Debit:

- Deposited VND, foreign currencies or monetary gold;

- Exchange rate differences due to re-evaluation of Foreign currencies balance at the reporting time (in case Foreign currencies 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 currencies balance at the end of accounting period (in case Foreign currencies 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 banks, comprises 3 level-2 accounts:

- Account 1121 - Vietnam dong: reflecting deposits, withdrawals and balance in the bank in VND.

- Account 1122 - Foreign currencies: 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. Accounting methods for certain major economic transactions

3.1. Upon selling products, goods or providing services for immediate cash using cash in banks, to recognize the following accounts as below as follow:

a) Regarding products, goods, investment property subject to indirect taxes (VAT, excise tax, import duty, environmental protection tax), the turnovers according to the tax-exclusive selling prices shall be recorded as follows (indirect taxes payable shall be separated, including VAT payable using subtraction method):

Dr 112 - Cash in banks (total payment)

Cr 511 - Turnovers (tax-exclusive prices)

Cr 333 - Taxes and other payables to the State Budget.

b) In case of failure to separate the taxes payable, the accountant shall record the turnover including the taxes payable.

Tax liabilities and the decrease in turnovers shall be recorded as follows:

Dr 511 - Turnovers

Cr 333 - Taxes and other payables to the State Budget.

3.2. Upon receiving payments of allowance or subsidy by cash in banks from state budget, to recognize the following accounts as below:

Dr 112 - Cash in banks

Cr 333 - Taxes and other payables to the State Budget (3339).

3.3. Upon generating financial income or other incomes in cash in banks, to recognize the following accounts as below:

Dr 112 - Cash in banks (total payment)

Cr 515 - Financial income (prices excluding VAT)

Cr 711 - Other incomes (prices excluding VAT)

Cr 3331 - VAT payable (33311).

3.4. Upon dispatching cash fund to deposit in bank’s accounts, to recognize the following accounts as below:

Dr 112 - Cash in banks

Cr 111 - Cash on hand

3.5. Upon receiving an advance or any client pays debts using wire transfer, according to the credit note of the bank, to recognize the following accounts as below:

Dr 112 - Cash in banks

Cr 131 - Trade receivables

Cr 113 - Cash in transit

3.6. Upon recovering amounts receivables, providing loans, making deposits by cash in banks; receiving deposits in cash from other enterprises, to recognize the following accounts as below:

Dr 112 - Cash in banks (1121, 1122)

Cr 128, 131, 136, 141, 244, 344.

3.7. Upon selling short-term or long-term investment by cash in banks, 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 banks (1121, 1122)

Dr 635 - Financial expenses

Cr 121 - Trading securities (cost price)

Cr 221, 222, 228 (cost price)

Cr 515 - Financial income.

3.8. Upon receiving stakes in cash of owners, to recognize the following accounts as below:

Dr 112 - Cash in banks

Cr 411 - Owner's invested equity.

3.9. Upon receiving money of contracting parties of Business Cooperation Contract (BCC) without establishment of legal entity to cover general operation, to recognize the following accounts as below:

Dr 112 - Cash in banks

Cr 338 - Others payable.

3.10. Upon withdrawing cash in banks to pay in cash fund then crediting to bank’s accounts or depositing, to recognize the following accounts as below:

Cr 111 - Cash on hand

Dr 244 - Mortgage, collaterals and deposits.

Cr 112 - Cash in banks.

3.11. Upon buying securities, providing loans or investing in subsidiary companies or joint-venture companies by cash in banks, to recognize the following accounts as below:

Dr 121, 128, 221, 222, 228

Cr 112 - Cash in banks.

3.12. Upon buying inventory (using regularly declared method), buying fixed assets, spending on capital investment by cash in banks, to recognize the following accounts as below:

- In case 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 - Value-added tax deductible (1331)

Cr 112 - Cash in banks.

- In case input VAT is ineligible for deduction, the buying price including VAT shall be recorded as follow:

3.13. Upon buying inventory by cash in banks (using periodically declared method), in case input VAT is eligible for deduction, to recognize the following accounts as below:

Dr 611 - Good purchases (6111, 6112)

Dr 133 - Value-added tax deductible (1331)

Cr 112 - Cash in banks.

In case input VAT is ineligible for deduction, the buying price including VAT shall be recorded.

3.14. Upon buying raw materials immediately used in business by cash in banks, in case input VAT is eligible for deduction, to recognize the following accounts as below:

Dr 621, 623, 627, 641, 642, ...

Dr 133 - Value-added tax deductible (1331)

Cr 112 - Cash in banks.

In case input VAT is ineligible for deduction, the cost including VAT shall be recorded.

3.15. Upon paying amounts payable, to recognize the following accounts as below:

Dr 331, 333, 334, 335, 336, 338, 341

Cr 112 - Cash in banks.

3.14. Upon paying financial expenses or other expenses, to recognize the following accounts as below:

Dr 635, 811, ...

Dr 133 - Value-added tax deductible (if any)

Cr 112 - Cash in banks.

3.17. Upon paying stakes or dividends or profits to contributing partners, paying welfare fund by cash in banks, to recognize the following accounts as below:

Dr 411 - Owner’s equity.

Dr 421 - Unallocated after-tax profits

Dr 353 - Bonus and welfare fund

Cr 112 - Cash in banks.

3.18. Upon paying commercial discounts, sales rebates or sales returns accounts, to recognize the following accounts as below:

Dr 521 - Revenue deductions

Dr 3331- - VAT payable (33311).

Cr 112 - Cash in banks.

3.19. Accounting contract of resale of Government bonds: in accordance with Account 171 - Trading in Government bonds.

3.20. Foreign currencies related-transactions: the accounting methods applicable to Foreign currencies-related transactions by cash in banks shall be carried out similarly to those in cash (refer to account 111).

3.21. Accounting for re-evaluation of monetary gold

- In case the re-evaluation price of monetary gold generates profits, to recognize the following accounts as below:

Dr 1123 - Monetary gold (according to domestic buying prices)

Cr 515 - Financial income.

- In case the re-evaluation price of monetary gold generates losses, to recognize the following accounts as below:

Dr 635 - Financial expenses

Cr 1123 - Monetary gold (according to domestic buying prices).

Article 14. Account 113 - Cash in transit

1. Accounting rules

The 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 the cases below:

- Collecting cash or checks then paying directly in a bank;

- Making postal remittance in order to pay other enterprises;

- Collecting turnovers 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 reflected in 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 currencies balance at the reporting time.

Credit:

- The amounts of money transferred to account 112 - Cash in banks, or relevant accounts;

- Exchange rate differences due to re-evaluation of Foreign currencies balance at the reporting time.

Debit balance:

The amounts of money in transit at the reporting time.

Account 113 - Cash in transit, comprises 2 level-2 accounts:

- Account 1131 - Vietnam dong: to record amounts in VND in transit.

- Account 1132 - Foreign currencies: to record foreign currencies in transit.

3. Accounting methods for certain major economic transactions:

a) Upon collecting money from good sales or clients’ 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, to recognize the following accounts as below:

Dr 113 - Cash in transit (1131, 1132)

Cr 131 - Trade receivables (of clients’ debts)

Cr 511 - Turnovers

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, to recognize the following accounts as below:

Dr 113 - Cash in transit (1131, 1132)

Cr 111 - Cash on hand (1111, 1112).

c) Completing wire transfer from bank’s accounts to pay creditors, but the debit note of the bank has not been received; to recognize the following accounts as below:

Dr 113 - Cash in transit (1131, 1132)

Cr 112 - Cash in banks (1121, 1122).

d) When a client 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, to recognize the following accounts as below:

Dr 113 - Cash in transit (1131, 1132)

Cr 131 - Trade receivables.

dd) When the cash in transit has been credited in the deposit account of the enterprise and the credit note is received; to recognize the following accounts as below:

Dr 112 - Cash in banks (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, to recognize the following accounts as below:

Dr 331 - Trade payables

Cr 113 - Cash in transit (1131, 1132).

g) The re-evaluation of Foreign currencies balance in transit shall be carried out similarly to Foreign currencies balance in cash (refer to account 111)

Article 15. Account 121 - Trading securities

1. Accounting rules

a) The account shall be 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.

The account shall not be used to record the held to maturity investment, such as: loans under agreements, cash in banks, bonds, commercial papers, treasury bills, exchange bills, ... held to maturity date.

b) Trading securities shall 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 par 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 by law.

c) At the end of the fiscal year, in case the market prices of trading securities devalue against their original prices, the provisions for devaluation shall be made.

d) The enterprise shall 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. In case the investor receives additional shares without paying money to joint stock companies using share premium, the funds belong to owners’ equity and unallocated after-tax profits (dividends are allocated by shares) to issue additional shares, the investor shall only observe the quantity of additional shares according to the presentation of financial statement, not record the received share value, not record financial income and not record the investment value in joint stock companies.

Regarding enterprises whose charter capital is wholly held by the state, the accounting for dividends allocated by shares shall comply with regulations on enterprises wholly owned by the State.

dd) Before any share is exchanged, its value shall be determined according to par value on the exchanging date. The determination of par value of shares shall follow the regulations below:

- Regarding shares of listed companies, par value of their shares is closing prices listed on the securities market on the exchange date. In case the securities market closes transaction on the exchange date, the par value of shares is closing prices of the session preceding the exchange date.

- Regarding unlisted shares permitted to transact on the UPCOM, the par value of shares is closing prices of UPCOM on the exchange date. In case the UPCOM closes transactions on the exchange date, the par value of shares is closing prices of the session preceding the exchange date.

- Regarding other unlisted shares, the par value of shares is prices dealt by contracting parties or book value at the exchange date.

e) The accountant shall 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, ...).

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 reflected in 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 level-2 accounts:

- Account 1211 - Shares: to record the purchases or sales of shares for profits.

- Account 1212 - Bonds: to record the purchases, sales and payments of bonds for profits.

- Account 1218 - Securities and other financial instruments: to record 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, ... The account also records the purchases or sales of other valuable papers including commercial papers or bill of exchange for profits.

3. Accounting methods for certain major economic transactions:

a) In case of buying trading securities, according to buying costs (buying prices plus (+) costs of brokerage, transaction, information, bank fees or charges, ...), to recognize the following accounts as below:

Dr 121 - Trading securities

Cr 111, 112, 331

Cr 141 - Advances

Cr 244 - Mortgage, collaterals and deposits.

b) Upon collecting interests of bonds and other securities periodically:

- In case the received interests are used for purchases of additional bonds or treasury bills, to recognize the following accounts as below:

Dr 121 - Trading securities

Cr 515 - Financial income.

- Upon receiving interests in cash, to recognize the following accounts as below:

Dr 111, 112, 138, ...

Cr 515 - Financial income.

- Upon receiving investment interests including the investment interests accrued before re-buy that investment, that interests shall 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, ... (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:

- In case the dividends are received after the investment date, to recognize the following accounts as below:

Dr 111, 112, ...

Dr 138 - Others receivable (deferred payments)

Cr 515 - Financial income.

- In case the dividends are received before the investment date, to recognize the following accounts as below:

Dr 111, 112, 138, ... (total collected interests)

Cr 121 - Trading securities (interests accrued before the enterprise re-buys the investment)

- Upon 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, to recognize the following accounts as below:

Dr 112, 138

Cr 121 - Trading securities.

d) Upon transferring trading securities, according to securities sale prices:

- In case the profits generate, to recognize the following accounts as below:

Dr 111, 112, 131, ... (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).

- In case the losses generate, to recognize the following accounts as below:

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)

- For expenditures on security sales, to recognize the following accounts as below:

Dr 635 - Financial expenses

Cr 111, 112, 331, ...

dd) Upon withdrawing or paying matured trading securities, to recognize the following accounts as below:

Dr 111, 112, 131

Cr 121 - Trading securities.

Cr 515 - Financial income.

e) In case the enterprise transfers the trading securities in the form of share exchange, the enterprise shall determine the par value of shares received at the exchange time. The difference (if any) between par 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).

- In case the share exchange generates profits, to recognize the following accounts as below:

Dr 121 - Trading securities (par 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 par value of shares received and the book value of shares used for exchange)

- In case the share exchange generates losses, to recognize the following accounts as below:

Dr 121 - Trading securities (par value of shares received)

Dr 635 - Financial income (negative difference between the par 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, ...).

- In case the profits generate, to recognize the following accounts as below:

Dr 121 - Trading securities (1212, 1218)

Cr 413 - Exchange rate differences.

- In case the losses generate, to recognize the following accounts as below:

Dr 413 - Exchange rate differences.

Cr 121 - Trading securities (1212, 1218).

Article 16. Account 128 - Held-to-maturity investments

1. Accounting rules

a) The account shall be used to record current amounts and increases and decreases in held-to-maturity investments (other than trading securities), such as: time 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.

The account shall not record bonds and debt securities held for sales (recorded to account 121 - Trading securities)

b) The accountant shall keep records of every held to maturity investment in details according to every term, entity, type of currency or quantity, ... Upon preparing financial statements, the accountant shall base on remaining term (under 12 months or from 12 months and more from the reporting time) to record those to current assets or non-current assets.

c) The enterprise shall record deposit interests, loan interests, profits or losses on liquidation or transfer of held-to-maturity investments to financial income sufficiently and promptly.

d) Regarding held-to-maturity investments, where an allowance for doubtful receivables has not been established in accordance with the provisions of law, accounting shall assess recoverability. Where there is reliable evidence that part or all of the investment may not be recoverable, the loss shall be recognized in finance expenses for the period. Where the amount of loss cannot be determined reliably, the investment may not be written down; however, the recoverability of the investment shall be disclosed in the financial statements.

dd) When the financial statement is prepared, the accountant shall re-evaluate investment classified as accounts derived from foreign currencies according to actual exchange rates at the end of the accounting period:

- Exchange rates applicable to deposits in foreign currencies are buying-exchange rates of the bank where the enterprise opens its deposit account;

- Exchange rates applicable 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 reflected in 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 level-2 accounts:

- Account 1281 - Time deposits: to record the increases, decreases and balance of time deposits.

- Account 1282 - Bonds: to record the increases, decreases and balance of bonds which it intends to hold till maturity.

- Account 1283 - Loans: to record the increases, decreases and balance of loans under agreements which are not transacted on the market similarly to securities. Pursuant to every contract, loans under agreements may be recovered fully on the maturity date or recovered periodically.

- Account 1288 - Other held-to-maturity investments: to record 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 certain major economic transactions:

3.1. Upon making time deposits, providing loans, buying held-to-maturity investments, to recognize the following accounts as below:

Dr 128 - Held-to-maturity investments

Cr 111, 112.

3.2. Upon collecting deposit interests, bond interests or loan interests on a periodic basis, to recognize the following accounts as below:

Dr 138 - Other receivables (1388)

Cr 128 - Held-to-maturity investments (interest included in principal)

Cr 515 - Financial income.

3.3. Upon recovering held-to-maturity investments, to recognize the following accounts as below:

Dr 111, 112, 131, 152, 156, 211, ... (according to par 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. Upon investing held-to-maturity investments in subsidiary companies, joint-venture companies, to recognize the following accounts as below:

Dr 221, 222 (according to par value)

Dr 635 - Financial expenses (in case of losses)

Cr 128 - Held-to-maturity investments (book value)

Cr relevant accounts (in case 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, to recognize the following accounts as below:

Dr 128 - Held-to-maturity investments (1282)

Cr 111, 112, ... (actual amounts of money)

Cr 3387 - Unearned turnovers (interests received in advance).

- In case of calculating and transferring interests of tax period according to interest receivable on a periodic basis, to recognize the following accounts as below:

Dr 3387 - Unearned turnovers

Cr 515 - Financial income.

- Upon recovering original prices of bonds on the maturity date, to recognize the following accounts as below:

Cr 111, 112, ...

Cr 128 - Held-to-maturity investments (1282).

b) Buying bonds and receiving interests periodically:

- When buying bonds, to recognize the following accounts as below:

Dr 128 - Held-to-maturity investments (1282)

Cr 111, 112, ...

- Upon receiving bond interests on a periodic basis, to recognize the following accounts as below:

Dr 111, 112, 138, ...

Cr 515 - Financial income.

- Upon recovering original prices of bonds on the maturity date, to recognize the following accounts as below:

Cr 111, 112, ...

Cr 128 - Held-to-maturity investments (1282).

c) Buying bonds and receiving deferred interests:

- When buying bonds, to recognize the following accounts as below:

Dr 128 - Held-to-maturity investments (1282)

Cr 111, 112, ...

- When calculating interests and recording turnovers according to the interests receivable on a periodic basis, to recognize the following accounts as below:

Dr 138 - Other receivables (1388)

Cr 515 - Financial income.

- Upon recovering principal and interests of bonds on the maturity date, to recognize the following accounts as below:

Cr 111, 112, ...

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;

In case it is evident that a part or all of investment are unable to recover (the issuer is insolvent or goes into bankruptcy. In case 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, in case 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. Upon re-evaluating balance of held-to-maturity investments which are classified accounts derived from foreign currencies, to recognize the following accounts as below:

- In case of profits, to recognize the following accounts as below:

Dr 128 - Held-to-maturity investments

Cr 413 - Exchange rate differences.

- In case of losses, to recognize the following accounts as below:

Dr 413 - Exchange rate differences.

Cr 128 - Held-to-maturity investments.

Article 17. Accounting rules 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, internal 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) Internal 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, shortage of assets waiting for resolution, ...

3. Upon preparing financial statements, the receivables shall be classified into current receivables or non-current 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, ... The provisions for doubtful debts shall be determined according to the items which are classified into current receivables and non-current receivables of the balance sheet.

4. The receivables conformable to definition of accounts derived from foreign currencies (refer to account 413 - Exchange rate differences) shall be re-evaluated at the closing tax period when preparing financial statements.

Article 18. Account 131 - Trade receivables

1. Accounting rules

a) The account shall be used to record receivables and payments of receivables of clients from goods, investment properties, fixed assets, financial investment or services. The account is also used to record receivables from contractors and contract awarder related to finished infrastructure development. The account shall not be used to record immediate cash.

b) The client receivables shall 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 clients entering into transactions in purchase of goods, provision 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) In case of recording the 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) In case the goods, investment property or services are provided unconformity with agreements between the enterprise and clients, the clients may request the enterprise to discount the goods or they may return the received goods.

e) The enterprise shall monitor debts receivable of clients 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 clients repays the debts). Regarding the advance received from the buyers, when criteria for recognition of turnovers are met, the Dr 131 shall apply the specific identification accounting book recording rate.

- Where recovering trade receivables (Cr 131), the accountant shall convert them into VND according to actual accounting book recording rate for every type of debtors (in case the debtors enter into multiple transactions, the actual accounting book recording rate shall equal weight average rate applicable to those transactions). Regarding 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 shall re-evaluate trade receivables derived from foreign currencies at the times in which the financial statements are prepared as prescribed. The actual exchange rates applicable to revaluation of trade receivables are Foreign currencies-buying rates of the commercial bank where the clients 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 reflected in 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 clients.

- Revaluation of receivables in foreign currencies (in case the Foreign currencies rates rise against VND).

Credit:

- Clients’ repayment;

- Advances received from clients.

- Discounts offered to clients after clients 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 (in case the Foreign currencies rates fall against VND).

Debit balance:

Remaining trade receivables.

The 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. Upon preparing balance sheet, it is required to record specific balance according to every receivable of the account to items "Asset" and "Equity".

3. Accounting methods for certain major economic transactions:

3.1. Upon selling goods or providing services without collecting immediate cash (including receivables from sales of exported goods of trustors), to recognize the following accounts as below:

a) Regarding goods, services, investment property subject to VAT, Excise tax, import duty or environmental protection tax, the turnovers from goods and services without taxes shall be recorded as follows (above indirect taxes shall be separated when recording, including VAT payable using subtraction method):

Dr 131 - Trade receivables (total payment)

Cr 511 - Turnovers (tax-exclusive prices)

Cr 333 - Taxes and other payables to the State Budget.

b) In case of failure to separate the taxes payable, the taxes payable shall be included in the turnovers. Tax liabilities and the decrease in turnovers shall be recorded as follows:

Dr 511 - Turnovers

Cr 333 - Taxes and other payables to the State Budget.

3.2. Accounting for returned goods.

Dr 5213 - Returned goods (prices without taxes)

Dr 333 - Taxes and other payables to the State Budget (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 turnovers) 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 clients are ineligible for those discounts, the turnovers shall be recorded the prices including discounts (gross turnovers) After recording turnovers, in case the clients are eligible for above discounts, these discounts shall be recorded separately so that a decrease in turnover shall be recorded periodically as follows:

Dr 521 - Revenue deductions (5211, 5212) (tax-exclusive prices)

Dr 333 - Taxes and other payables to the State Budget (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, to recognize the following accounts as below:

Dr 111 - Cash on hand

Dr 112 - Cash in banks

Dr 635 - Financial expenses (amounts of payment discounts)

Cr 131 - Trade receivables.

3.5. Upon receiving payment of clients (including interests of debts - if any) or receiving advance of clients according to agreements on sale of goods or provision of services, to recognize the following accounts as below:

Dr 111, 112, ...

Cr 131 - Trade receivables.

Cr 515 - Financial income (profits).

Upon 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 clients related to construction contract:

a) In case the contractor may make payment following the schedule under the construction contract:

- In case the result of performance of construction contract is estimated reliably, to recognize the following accounts as below according to documents on turnovers in proportion to finished work (other than invoices) determined by the contractor:

Dr 337 - Payment under schedule of construction contract

Cr 511 - Turnovers.

- According to the invoices issued following the schedule, the amounts which are paid by clients 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 clients, the finished work shall be stated in the invoices and certified, to recognize the following accounts as below:

Cr 131 - Trade receivables.

Cr 511 - Turnovers.

Cr 3331 - VAT payable (33311).

c) Upon collecting the bonus paid to the contractor by client because the performance of construction contract reaches or overshoots the specific targets mentioned in the contract, to recognize the following accounts as below:

Dr 131- - Trade receivables.

Cr 511 - Turnovers.

Cr 3331 - VAT payable (33311).

d) Upon collecting the compensation paid by clients or other contracting parties to cover the costs not including in the value of contract (the delay or mistakes of clients and disputes about changes in contract performance), to recognize the following accounts as below:

Cr 131 - Trade receivables.

Cr 511 - Turnovers.

Cr 3331 - VAT payable (33311).

dd) Upon collecting payment for finished works or advance from clients, to recognize the following accounts as below:

Cr 111, 112, ...

Cr 131 - Trade receivables.

3.7. In case the client makes payment in goods instead of cash (in the form of barter), according to the value of materials or exchanged goods (according to par value stated in the VAT invoice or sales invoice of clients) which is deducted from clients’ debt receivables, and to recognize the following accounts as below:

Dr 152 - Materials

Dr 153 - Tools & supplies

Dr 156 - Merchandise goods

Dr 611 - Good purchases (inventory accounted by periodical verification method)

Dr 133 - Value-added tax deductible (if any)

Cr 131 - Trade receivables.

3.8. Upon eliminating doubtful debts unable to recover according to the report on debt relief, to recognize the following accounts as below:

Dr 229 - Allowance for impairment of assets (2293) (amounts of provision)

Dr 642 - Enterprise administrative expenses (amounts of non-provision)

Cr 131 - Trade receivables.

3.9. Upon collecting entrustment fees from the export/import trustees, to recognize the following accounts as below:

Cr 131 - Trade receivables.

Cr 511 - Turnovers (5113)

Cr 3331 - VAT payable (33311).

3.10. Upon preparing financial statements, the outstanding debt in foreign currencies of clients shall be evaluated according to actual exchange rates at the time in which the financial statements are prepared:

- In case the Foreign currencies rates rise against VND rates, to recognize the following accounts as below:

Cr 131 - Trade receivables.

Cr 413 - Exchange rate differences (4131).

- In case the Foreign currencies rates fall against VND rates, to recognize the following accounts as below:

Dr 413 - Exchange rate differences (4131).

Cr 131 - Trade receivables.

Article 19. Account 133 - Value-added tax deductible

1. Accounting rules

a) The account shall be 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 shall 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 the VAT law.

c) The non-deductible input VAT shall be recorded to value of assets, costs of goods sold or production or operation costs on case by case basis.

d) The input VAT eligible for deduction, declaration or tax payment shall be determined in accordance with the VAT law.

2. Structure and contents reflected in Account 133 - Value-added tax deductible

Debit:

Value-added tax deductible.

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 state budget.

Account 133 - Value-added tax deductible, comprises 2 level-2 accounts:

- Account 1331 - Value-added tax deductible of goods or services: to record deductible input VAT of materials, goods or services bought to used in goods production or provision of services subject to VAT using credit-invoice method.

- Account 1332 - Value-added tax deductible of fixed assets: to record deductible input VAT of fixed assets bought to use in goods production or provision of services subject to VAT using credit-invoice method, or of the purchase of investment property.

3. Accounting methods for certain major economic transactions:

3.1. Upon buying inventory, fixed assets, investment property, in case the input VAT is deductible, to recognize the following accounts as below:

Dr 152, 153, 156, 211, 213, 217, 611 (prices excluding VAT)

Dr 133 - Value-added tax deductible (1331, 1332)

Cr 111, 112, 331, ... (total payment).

3.2. Upon buying materials, goods or tools, in case the input VAT is deductible, to recognize the following accounts as below:

Dr 621, 623, 627, 641, 642, 241, 241, ... (VAT-exclusive prices)

Dr 133 - Value-added tax deductible (1331)

Cr 111, 112, 331, ... (total payment).

3.3. Upon buying goods and buying them to clients immediately (without inventory), in case the input VAT is deductible, to recognize the following accounts as below:

Dr 632 - Costs of goods sold (prices excluding VAT)

Dr 133 - Value-added tax deductible (1331)

Cr 111, 112, 331, ... (total payment).

3.4. Upon 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 duty, excise tax, environmental protection tax payable (if any), transport expenses, to recognize the following accounts as below:

Dr 152, 153, 156, 211, ...

Cr 331 - Trade payables

Cr 3331 - VAT payable (33312) (in case the input VAT of imported goods are non-deductible)

Cr 3332 - Excise tax.

Cr 3333 - Export and import duty (specific import duty)

Cr 33381 - Environmental protection tax

Cr 111, 112, ...

- In case the input VAT of imported goods is non-deductible, to recognize the following accounts as below:

Dr 133 - Value-added tax deductible (1331, 1332)

Cr 333 - Taxes and other payables to the State Budget (33312).

3.5. Regarding 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 - Value-added tax deductible (input VAT of returned goods or discounted goods)

Cr 152, 153, 156, 211, ... (prices excluding VAT).

3.6. Regarding deductible input VAT unable to record separately:

a) In case of buying materials, goods or fixed assets, to recognize the following accounts as below:

Dr 152, 153, 156, 211, 213 (prices excluding VAT)

Dr 133 - Value-added tax deductible (input VAT)

Cr 111, 112, 331, ...

b) At the end of the tax period, the deductible input VAT and non-deductible input VAT shall be determined in accordance with the VAT law. The non-deductible input VAT shall be recorded to costs of goods sold in the accounting period, to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 133 - Value-added tax deductible (1331)

3.7. Regarding input materials, goods or fixed assets which are damaged by natural disasters, conflagration, lost and covered by an organization or individual, in case the input VAT of those goods are non-deductible:

- In case of failure to uncover the reason for damages, to recognize the following accounts as below:

Dr 138 - Other receivables (1381)

Cr 133 - Value-added tax deductible (1331, 1332)

- In case of decision on compensation issued by the competent agency, to recognize the following accounts as below:

Cr 111, 334, ... (amounts of compensation)

Dr 632 - Costs of goods sold (in case they are recorded to costs)

Cr 138 - Other receivables (1381)

Cr 133 - Value-added tax deductible (in case 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, to recognize the following accounts as below:

Dr 3331 - VAT payable (33311).

Cr 133 - Value-added tax deductible.

3.9. In case the input VAT of goods or services are refunded, to recognize the following accounts as below:

Dr 111, 112, ...

Cr 133 - Value-added tax deductible (1331)

Article 20. Account 136 - Internal receivables

1. Accounting rules

a) The account shall be used to record receivables and payments of receivables between the parent company and attached units or between attached units. The attached units are dependent accounting units which have no legal status, but they have accounting divisions, such as branches, plants, or project management board, ...

b) The transactions between the enterprise and dependent accounting units (members, plants) which have legal status shall not be recorded in the account, but they shall be recorded similarly to subsidiaries.

c) Content of internal receivables recorded to account 136:

- In the superior enterprise:

+ Capital, funds or funding allocated to attached units;

+ Amounts payable to superior enterprise by attached units as prescribed;

+ Amounts collected by attached units;

+ Amounts of expenses paid on behalf of attached units;

+ Amounts allocated to attached 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 attached units for sale; turnovers from goods or services provided for the attached units;

+ Amounts collected by superior enterprise or other attached units;

+ Amounts paid for superior enterprise or other attached units;

+ Other current receivables.

d) Account 136 shall be kept records of every inferior unit in details and every internal receivable shall be separately monitored. The enterprise shall take measure for internal 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 “Internal receivables”, account 336 “Internal receivables” with attached units in the payment relationship shall be verified, collated and certified. Offsetting for every account of each subsidiary in relationship, and offsetting account 136 "Internal receivables" against 336 "Internal payable" (for every entity). Upon comparing, in case of any difference, it is required to uncover reasons and adjust promptly.

2. Structure and contents reflected in Account 136 - Internal receivables

Debit:

- Operating capital provided for attached 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 attached units;

- Amounts receivables collected by superior enterprise or amounts payable made by attached units;

- Amounts receivables collected by attached units, amounts payable provided by superior enterprise;

- Amounts receivables of goods or services between attached units.

- Other internal receivables.

Credit:

- Capital or fund recovery of attached units;

- Settlement of public funding allocated and used by attached 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 internal receivables.

- Offsetting internal receivables against Internal payables of an entity.

Debit balance: Outstanding receivables from subsidiaries.

Account 136 - Internal receivables, comprises 4 level-2 accounts:

- Account 1361 - Working capital provided to sub-units: The account shall be opened only by the superior enterprise to record current business capital of dependent accounting units allocated by the superior enterprise.

The 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 - Internal receivables on foreign exchange difference: The account shall be opened only in enterprises which are investors establishing project management boards, used to record foreign exchange differences transferred by the project management board.

- Account 1363 - Internal receivables on borrowing cost eligible for capitalization: The account shall be opened only in enterprises which are investors establishing project management board, used to record capitalized borrowing costs incurring in project management board.

- Account 1368 - Other internal receivables: to record other receivables between attached units.

3. Accounting methods for certain major economic transactions:

3.1. In dependent accounting units:

a) Upon paying on behalf of the superior enterprise and other attached units, to recognize the following accounts as below:

Dr 136 - Internal receivables (1368)

Cr 111, 112.

b) According to notification of welfare fund allocated by superior enterprise, to recognize the following accounts as below:

Dr 136 - Internal receivables (1368)

Cr 353 - Bonus and welfare fund.

c) Upon 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 turnovers, to recognize the following accounts as below:

Dr 136 - Internal receivables (1368)

Cr 511 - Turnovers (specific internal sale)

Cr 333 - Taxes and other payables to the State Budget.

Concurrently, the cost prices shall be recorded as follow:

Dr 632 - Costs of goods sold

Cr 154, 155, 156, ...

- In case the dependent accounting unit is not in charge of recording turnovers, value of goods or services provided for subsidiaries shall be recorded to internal receivables:

Dr 136 - Internal receivables (1368)

Cr 154, 155, 156

Cr 333 - Taxes and other payables to the State Budget.

dd) Upon receiving money, materials or assets from superior enterprise or other internal enterprises for amounts receivables, to recognize the following accounts as below:

Dr 111, 112, 152, 153, ...

Cr 136 - Internal receivables (1368).

e) Upon offsetting internal receivables against internal payables of the same entity, to recognize the following accounts as below:

Dr 336 - Internal payables (3368)

Cr 136 - Internal receivables (1368).

3.2. In superior enterprise

a) When a superior enterprise provides operating capital for inferior dependent accounting units having no legal status:

- In case the business capital is in money, to recognize the following accounts as below:

Dr 1361 - Working capital provided to sub-units

Cr 111, 112.

- In case the business capital is fixed assets, to recognize the following accounts as below:

Dr 136 - Internal 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 state budget according to the authorization of superior enterprise, when the attached units receive capital, the superior enterprise shall record as follow:

Dr 136 - Internal receivables (1361)

Cr 411 - Owner’s invested equity.

c) When the superior enterprise provides public funding or projects to attached units, to recognize the following accounts as below:

Dr 136 - Internal receivables (1368)

Cr 111, 112, 461, ...

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, to recognize the following accounts as below:

Dr 111, 112, ...

Cr 136 - Internal receivables (1361).

dd) According to report on operating capital paid to state budget by the dependent accounting unit under authorization of superior enterprise, to recognize the following accounts as below:

Dr 411 - Owner’s invested equity.

Cr 136 - Internal receivables (1361).

e) Upon selling goods or providing services for attached units in the enterprise, according to operation and gradation in every unit, the turnover may be recorded either at the time in which the goods or services shall be transferred to dependent accounting units or at the time in which the dependent accounting units sell goods or services:

- In case the turnover shall be recorded when the goods or services shall be transferred to dependent accounting units, to recognize the following accounts as below:

Dr 136 - Internal receivables (1368)

Cr 511 - Turnovers (specific internal sale)

Cr 333 - Taxes and other payables to the State Budget.

- In case the turnover is not recorded when the goods or services shall be transferred to dependent accounting units, to recognize the following accounts as below:

+ Upon transferring goods or services:

Dr 136 - Internal receivables (1368)

Cr 154, 155, 156

Cr 333 - Taxes and other payables to the State Budget (if any).

+ When the dependent accounting unit notifies that it has sold their goods or services to a third party outside the enterprise, to recognize the following accounts as below:

Dr 136 - Internal receivables (1368)

Cr 511 - Turnovers.

Concurrently, the cost prices shall be recorded as follow:

Dr 632 - Costs of goods sold

Cr 136 - Internal receivables (1368).

g) Upon collecting interest receivables arising from business or other operation of subsidiaries, to recognize the following accounts as below:

Dr 136 - Internal receivables (1368)

Cr 421 - Unallocated profits.

h) Upon paying for dependent accounting units, to recognize the following accounts as below:

Dr 136 - Internal receivables (1368)

Cr 111, 112, ...

i) Upon receiving the business interests from attached units or repayment of amounts paid on behalf of the attached units, to recognize the following accounts as below:

Cr 111, 112, ...

Cr 136 - Internal receivables (1368).

k) Upon offsetting internal receivables against internal payable of the same entity, to recognize the following accounts as below:

Dr 336 - Internal payables (3368)

Cr 136 - Internal receivables (1368).

3.3. Accounting regarding 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, to recognize the following accounts as below:

Dr 136 - Internal 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, to recognize the following accounts as below:

Dr 136 - Internal receivables (1368)

Cr 515 - Financial income.

c) When the investor transfers the capitalized borrowings costs to project management board to the construction costs, to recognize the following accounts as below:

Dr 136 - Internal receivables (1363)

Cr 111, 112, 242, 335.

d) When turnovers, financial income or other incomes submitted by project management boards are received, to recognize the following accounts as below:

Dr 136 - Internal 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, to recognize the following accounts as below:

Dr 133 - Value-added tax deductible

Cr 136 - Internal receivables (1368).

e) Upon receiving cost prices for services, financial expenses or other expenses transferred by project management boards, to recognize the following accounts as below:

Dr 632, 635, 811, ...

Cr 136 - Internal receivables (1362, 1368).

g) When the project is finished and received, to recognize the following accounts as below:

- Upon 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 - Value-added tax deductible (if any)

Cr 136 - Internal receivables (1361)

Cr 331, 333, ... (debts payable, if any).

- Upon receiving building work which is not settled, the investor shall record the value of the building work to estimated price. In case the building work is settled, the value of the building work shall be adjusted to the settled price.

+ In case the settled price is greater than the estimated price, to recognize the following accounts as below:

Dr 211, 213, 217, 1557

Cr, relevant accounts.

+ In case the settled price is smaller than the estimated price, to recognize the following accounts as below:

Dr, relevant accounts.

Cr 211, 213, 217, 1557.

Article 21. Account 138 - Other receivables

1. Accounting rules

The account shall be 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, ... caused by individuals or groups (inside or outside enterprise);

- Non-monetary assets borrowed by other entities (in case 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, ...

- Receivables arising from equitization of state enterprises, such as: equitization costs, allowance for unemployed, support for re-training provided for employees in the equalized enterprises, ...

- Loan interests, dividends, profits receivables from financial investment;

- Other receivables.

2. Structure and contents reflected in Account 138 - Other receivables

Debit:

- Value of shortage of assets waiting for 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 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 (in case the Foreign currencies rates rise against VND).

Credit:

- Transfer value of assets in shortage to relevant accounts according to resolution decision;

- Transfer receivables to equitization of state enterprises;

- Collected amounts of other debts receivables.

- Revaluation of receivables in foreign currencies (in case the Foreign currencies rates fall against VND).

Debit balance:

Non-collected amounts of other debts receivables.

The 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 level-2 accounts:

- Account 1381 - Shortage of assets waiting for resolution: to record value of shortage of assets waiting for resolution.

In principle, whenever asset deficiency is detected, the reasons and the person in charge shall be uncovered. The asset deficiency is only recorded to account 1381 in case reasons for deficiency, losses or damage of shortage of assets waiting for 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 - Receivables from equitization: to record receivables from equitization which the enterprise spends, such as: equitization costs, unemployment allowances, support for re-training of employees in the equitized enterprises, ...

- Account 1388 - Other receivables: to record 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; ...

3. Accounting methods for certain major economic transactions:

3.1. In case the deficiency of tangible fixed assets for business are detected without reasons and pending settlement, to recognize the following accounts as below:

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. In case 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 shortage of assets waiting for resolution shall be recorded as follows:

Dr 138 - Other receivables (1381)

Cr 353 - Bonus and welfare fund (3532)

Cr 338 - Others payable (fixed assets for public or projects).

3.3. In case the deficiency of cash balance, materials, goods, ... is detected:

a) In case the reasons for deficiency are not uncovered and pending settlement, to recognize the following accounts as below:

Dr 138 - Other receivables (1381)

Cr 111, 152, 153, 155, 156.

b) In case of a written settlement of asset deficiency issued by the competent agency, to recognize the following accounts as below:

Dr 111 - Cash on hand (individual or organization paying compensation)

Dr 1388 - Others receivables (individual or organization paying compensation)

Dr 334 - Payables 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 - Shortage of assets waiting for resolution.

c) In case the reasons and persons in charge of asset deficiency are uncovered, to recognize the following accounts as below according to the reasons or persons in charge:

Dr 1388 - Others receivables (1388 - Others receivables) (amounts of compensation)

Dr 334 - Payables 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, ...

3.5. Expenditures on behalf of a third party subject to recovery, other receivables, and to recognize the following accounts as below 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, to recognize the following accounts as below:

Dr 138 - Other receivables (1388) (in case the trustor has not paid advance)

Dr 3388 - Other receivables (offsetting against payment of trustor)

Cr 111, 112, ...

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, excise tax, import duty carried out by the trustee and the trustor shall be accounted similarly to account 333 - Taxes and other payables to the State Budget.

3.7. Upon determining loan interests, deposit interests, dividends or profits receivables, to recognize the following accounts as below:

Dr 111, 112, ... (collected amounts)

Dr 138 - Other receivables (1388)

Cr 515 - Financial income.

3.8. Upon collecting other debt receivables, to recognize the following accounts as below:

Dr 111 - Cash on hand

Dr 112 - Cash in banks

Cr 138 - Other receivables (1388)

3.9. Upon receiving decision on solutions for other debt receivables unable to recover:

Dr 111 - Cash on hand (compensation paid by individuals or groups)

Dr 334 - Payables to employees (compensation offsetting against salaries)

Dr 229 - Allowance for impairment of assets (2293) (using provision for doubtful debts, in case applicable)

Dr 642 - Administrative expenses (recording to costs)

Cr 138 - Other receivables (1388 - Other receivables).

3.10. Upon enterprises have sold other receivables (recording in balance sheet) to debt trading company, to recognize the following accounts as below:

Dr 111, 112, ... (Collected amounts of sale of debts receivables)

Dr 229 - Allowance for impairment of assets (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. Upon incurring costs of equitization of state enterprises, to recognize the following accounts as below:

Dr 1385- Receivables from equitization (detail costs of equitization)

Cr 111, 112, 152, 331, ...

3.12. Upon finishing equitization, the enterprise shall 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, ... shall be deducted (-) from collected amounts of sale of state-owned stocks collected from equitization of state enterprises, to recognize the following accounts as below:

Dr 3385 - Equitization payable (collected amounts of sale of state-owned stocks)

Cr 1385 - Receivables from equitization.

3.13. Regarding expenditures on public activities, projects, investment in capital investment or business which is not approved by competent agency and subject to recovery, to recognize the following accounts as below:

Dr 138 - Other receivables

Cr 161, 241, 641, 642, ...

3.14. Upon preparing financial statements, other outstanding debts receivables derived from foreign currencies shall apply actual exchange rates:

- In case foreign currencies rates rise against VND rates, to recognize the following accounts as below:

Dr 138 - Other receivables

Cr 413 - Exchange rate differences (4131).

- In case Foreign currencies rates fall against VND rates, to recognize the following accounts as below:

Dr 413 - Exchange rate differences (4131)

Cr 138 - Other receivables

Article 22. Account 141 - Advances

1. Accounting rules

a) The account shall be 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 shall be employees working at the enterprise. The regular receivers (working in department of material provision, administration) shall be appointed by Director in writing.

c) The receiver (individual or group) shall bear responsibility for received advance and use the advance for proper purposes and approved tasks. In case the received advance is unused or remained, it is required to repay to the fund. The receiver shall not transfer the advance to others.

Upon finishing the tasks, the receiver shall 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). In case the unused advance is not repaid to the fund, the receiver's salary shall be deducted. In case 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 in case the advance of previous tax period is settled. The accountant shall keep records of receivers, receiving and payment of advances.

2. Structure and contents reflected in 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 certain major economic transactions:

a) When advancing amounts of money or materials to employees of the enterprise, to recognize the following accounts as below:

Dr 141 - Advances

Cr 111, 112, 152, ...

b) When finishing assignment, the receiver shall make the advance payment sheet enclosed with approved original documents for settlement of the advance; to recognize the following accounts as below:

Dr 152, 153, 156, 241, 331, 621, 623, 627, 642, ...

Cr 141 - Advances.

c) Unused advances which are repaid to the fund, re-stored or deducted from the receiver’s salary, to recognize the following accounts as below:

Dr 111 - Cash on hand

Dr 152 - Raw materials

Dr 334 - Payables to employees

Cr 141 - Advances.

d) In case the approved actual expenditure is greater than received advance, the accountant shall make additional payment to the receiver; to recognize the following accounts as below:

Dr 152, 153, 156, 241, 621, 622, 627, ...

Cr 111 - Cash on hand.

Article 23. Accounting rules for inventory

1. Group of inventory accounts is used to record existing value and changes in inventory of the enterprise (in case the enterprise accounts for inventory using regular declaration method) or record value of inventory in the opening or closing tax period (in case 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 products;

- Commercial products, goods; consignments;

- Goods stored in tax-suspension warehouse of the enterprise.

Regarding unfinished products, in case 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 non-current assets.

Regarding 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 non-current 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 shall comply with the 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 for devaluation of inventories 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, Excise tax, import duty, environmental protection tax payable when buying inventory.

7. Upon buying inventory, in case goods, equipment or spare parts for replacement are attached (provision for breakdown), the changeable goods, equipment or accessories shall be recorded according to par 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. Upon selling inventory, the original prices of sold inventory shall be recorded to production cost within a tax period in conformity with relevant turnovers which are recorded and in conformity with their nature of transactions. Upon releasing inventory for promotion or advertisement, the rules below shall be followed:

a) In case the inventory is released for promotion or advertisement without collecting money, providing additional conditions (compulsory purchase of goods, ...), the value of inventory shall be recorded to selling expenses (goods for promotion or advertisement for detail);

b) In case the inventory is released for promotion or advertisement with additional conditions that the clients are required to buy goods (e.g. buy two, get one free, ...) The collected amounts shall be allocated to turnovers from complimentary products, the value of complimentary products shall be included in their cost (nature of transaction is sale rebates).

9. Upon 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 applicable 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. Pursuant 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 (in case 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 office as prescribed. Accounting for foreign exchange differences shall comply with Article 69 - Guidance for accounting method for exchange rate differences.

11. At the end of the accounting period, in case 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 production costs 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 the accounting period shall 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 the accounting period shall 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 shall 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 books. In case 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 shall conform to inventory data in ledger. In case of any difference, it is required to uncover reasons and provide solutions. The perpetual inventory system is usually applicable to manufacturing enterprise (industry, construction, ...) And commercial enterprises dealing in high value items such as machinery, equipment, engineering goods, high quality, ...

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:

- 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”. In case of applying periodic inventory system, inventory accounts shall only be used at the beginning of the accounting period (for transfer of beginning balance) and at the ending of the accounting period (for recording actual ending inventory).

- This method is usually applicable 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, ...). 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. Accounting rules

a) The account shall be 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) On a daily basis, upon 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, in case 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) In case 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 shall keep specific records of goods in transit according to every type of goods, materials, consignment or economic contracts.

2. Structure and contents reflected in 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 (in case the enterprise accounts for inventories using periodic inventory system)

Credit:

- Value of goods or materials purchased in transit which are stored or delivered to clients;

- Transfer of actual value of goods or materials purchased in transit at the begin of the accounting period (in case 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 certain major economic 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, in case the input VAT is deductible, to recognize the following accounts as below:

Dr 151 - Goods in transit (prices without VAT)

Dr 133 - Value-added tax deductible

Cr 331 - Trade payables; or

Cr 111, 112, 141, ...

- In case the input VAT is non-deductible, value of goods purchased shall include VAT

- Next month, when goods are stored in warehouse, according to invoices and warehouse receipts, to recognize the following accounts as below:

Dr 152 - Raw materials

Dr 153 - Tools & supplies

Dr 156 - Merchandise goods

Cr 151 - Goods in transit.

- Next month, in case the goods or materials purchased in transit which are not stored in warehouses but delivered to clients under economic contract at the seller's vehicle or warehouses, at ports, depot or delivered directly to clients, deposited at the agencies, to recognize the following accounts as below:

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 - Shortage of assets waiting for resolution.

Cr 151 - Goods in transit.

b) In case the enterprise accounts for inventories using periodic inventory system.

- At the ending inventory, according to actual value of goods or material in transit which shall be transferred at the ending inventory before transferred actual value of goods or materials in transit at the beginning inventory, to recognize the following accounts as below:

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), to recognize the following accounts as below:

Dr 151 - Goods in transit.

Cr 611 - Purchase of goods.

Article 25. Account 152 - Raw materials inventory

1. Accounting rules

a) The account shall be 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 the 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 products purchased for incorporation into the finished products.

- 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, ...

- 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, Excise tax, import VAT, environmental protection tax payable (if any), cost of delivery, material handling, preservation, classification, insurance, ...; 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):

+ In case the VAT on imported goods is deductible, cost of raw materials purchased shall not include VAT. In case the input VAT is non-deductible, cost of raw materials purchased shall include VAT.

+ Accounting for raw materials purchased in foreign currencies shall comply with Article 69 - Guidance 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 shall 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 using the following formula:

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, ...) shall not be recorded to the account.

2. Structure and contents reflected in 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 (in case 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 (in case the enterprise uses periodic inventory system)

Debit balance:

Actual cost of ending raw materials inventory.

3. Accounting methods for certain major economic transactions:

3.1. Enterprise using perpetual inventory system.

a) In case of buying raw materials to add to inventory, according to invoices, warehouse receipt and relevant documents recording received raw materials cost:

- In case input VAT is deductible, to recognize the following accounts as below:

Dr 152 - Raw materials (cost without VAT)

Dr 133 - Value-added tax deductible (1331)

Cr 111, 112, 141, 331, ... (total payment)

- In case the input VAT is non-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, to recognize the following accounts as below:

Cr 331 - Trade payables

Cr 152 - Raw materials

Cr 133 - Value-added tax deductible

- 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, ...

Cr 152 - Raw materials (in case raw materials are still inventoried)

Cr 621, 623, 627, 154 (in case raw materials are dispatched for production)

Cr 241 - Works-in-progress (in case raw materials are dispatched for construction investment)

Cr 632 - Cost price of goods (in case 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 - Value-added tax deductible (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, in case 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, in case 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 - Value-added tax deductible (1331)

Cr 331 - Trade payables; or

Cr 111, 112, 141, ...

- Next month, in case the raw materials have been received in the enterprise’s stock, to recognize the following accounts as below according to sales invoices and warehouse receipt:

Dr 152 - Raw materials

Cr 151 - Goods in transit

d) When make payments to sellers, in case 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, to recognize the following accounts as below:

Dr 152 - Raw materials

Cr 331 - Trade payables

Cr 3331 - Value-added tax deductible (33312) (in case input VAT on imported goods are non-deductible)

Cr 3332 - Excise tax (if any).

Cr 3333 - Export and import duty (detail).

Cr 33381 - Environmental protection tax.

- In case input VAT on imported goods is deductible, to recognize the following accounts as below:

Dr 133 - Value-added tax deductible

Cr 3331 - Value-added tax deductible (33312).

- When buying raw materials, in case 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 - Value-added tax deductible (1331)

Cr 111, 112, 141, 331, ...

g) Regarding raw materials processed under outsourcing agreement which is received in the enterprise’s stock:

- When dispatching raw materials to process, to recognize the following accounts as below:

Dr 154 - Cost for work in process

Cr 152 - Raw materials.

- When incurring cost of outsourcing, to recognize the following accounts as below:

Dr 154 - Cost for work in process

Dr 133 - Value-added tax deductible (1331) (if any).

Cr 111, 112, 131, 141, ...

- When re-receiving the out-sourced raw materials, to recognize the following accounts as below:

Dr 152 - Raw materials

Cr 154 - Cost for work in process

h) Hand-made raw materials which are received in stock:

- When dispatching raw materials for self-processing, to recognize the following accounts as below:

Dr 154 - Cost for work in process

Cr 152 - Raw materials.

- Upon receiving handmade raw materials, to recognize the following accounts as below:

Dr 152 - Raw materials

Cr 154 - Cost for work in process.

i) Regarding excess of raw materials detected under physical inventory count, in case the reasons for excess are uncovered, it shall be the basis for accounting, in case 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).

- In case of a decision on settlement of raw materials in excess detected under physical inventory count, to recognize the following accounts as below:

Dr 338 - Other payable or receivables (3381)

Cr, relevant accounts.

- In case 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, to recognize the following accounts as below:

Dr 621, 623, 627, 641, 642, ...

Cr 152 - Raw materials.

l) When dispatching raw materials for capital investment or major repair of fixed assets, to recognize the following accounts as below:

Dr 241 - Construction in progress

Cr 152 - Raw materials.

m) In case of contributing raw materials to subsidiaries, joint-venture companies, to recognize the following accounts as below:

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, to recognize the following accounts as below:

- The turnovers from sale of raw materials and investment in subsidiaries, joint-venture companies, and to recognize the following accounts as below:

Dr 221, 222 (according to par value)

Cr 511 - Turnovers 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 shall be make reports and uncover the reasons and offenders. Pursuant to reports on physical inventory count and decision of competent agency, the accounting shall be recorded as follow:

- In case figures on ledger are error or are not updated, they are required to be additionally provided or adjusted;

- In case the cost of raw materials in deficiency is under deficiency quotas, to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 152 - Raw materials.

- In case the reasons for the deficiency or losses are uncovered pending settlement, to recognize the following accounts as below:

Dr 138 - Other payable (1381- Shortage of assets waiting for resolution)

Cr 152 - Raw materials.

- In case of a decision on settlement, to recognize the following accounts as below:

Dr 111 - Cash on hand (compensation of offenders)

Dr 138 - Other receivables (1388) (compensation of offenders)

Dr 334 - Payables to staff (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-Shortage of assets waiting for 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.

- Turnovers from sale of raw materials or waste shall be recorded as follows:

Dr 111, 112, 131.

Cr 511 - Turnovers from sale of merchandises and services rendered (5118)

Cr 333 - Taxes and other payables to the State Budget.

3.2. Enterprises using periodic inventory system.

a) At the beginning of accounting period, upon transferring cost of beginning raw materials inventory, to recognize the following accounts as below:

Dr 611 - Purchases

Cr 152 - Raw materials.

b) At the ending of accounting period, according to physical inventory count for ending raw materials inventory, to recognize the following accounts as below:

Dr 152 - Raw materials

Dr 611 - Purchases

Article 26. Account 153 - Tools & supplies

1. Accounting rules

a) The account shall be used to record current value and fluctuation of tools and supplies of the enterprise. Tools and supplies are labor materials not satisfying requirements regarding 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. Pursuant to regulations in force, the following labor materials shall be recorded tools and supplies in case 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, ...

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 shall 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 shall be preserved specially.

dd) Regarding 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 Article 69 - Guidance for accounting method for exchange rate differences.

2. Structure and contents reflected in Account 153 - Tools & 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 (in case 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 (in case the enterprise uses periodic inventory system)

Debit balance: Actual cost of tools and supplies inventory.

Account 153 - Tools & supplies, comprises 4 level-2 accounts:

- Account 1531 - Tools and supplies: to record current cost and decrease or increase in tools and supplies.

- Account 1532 - Reusable packaging materials: to record 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: to record current cost and decrease or increase in tools and supplies for renting. Only tools and supplies purchased for renting are recorded to the account, in case not, they shall be recorded to account 1531. In case those are used for enterprise’ operation, they shall be both recorded to an account and a level-2 account.

- Account 1534 - Equipment and spare parts for replacement: to record current cost and decrease and increase in equipment and spare parts for replacement not meeting requirements regarding 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 in case they are used as tools and supplies.

3. Accounting methods for certain major economic transactions:

3.1. Enterprise using perpetual inventory system.

a) In case of buying tools and supplies to add to stock, in case the input VAT is deductible, the cost of tools and supplies shall be recorded according to the VAT-exclusive prices, to recognize the following accounts as below according to invoices, warehouse receipts and relevant documents:

Dr 153 - Tools & supplies (VAT-exclusive prices)

Dr 133 - Value-added tax deductible (input VAT) (1331)

Cr 111, 112, 141, 331, ... (total payment).

In case the input VAT is non-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, ...

Cr 153 - Tools & supplies (in case those tools and supplies are still inventoried)

Cr 154 - Cost for work in process (in case those tools and supplies are dispatched for operation)

Cr 641, 642 (in case those tools and supplies are dispatched for sale or enterprise management)

Cr 242 - Prepaid expenses (in case they are gradually allocated)

Cr 632 - Costs of goods sold (in case the product in which those raw materials are incorporated is determined in an accounting period)

Cr 133 - Value-added tax deductible (1331) (if any).

c) When returning tools and supplies sold to sellers, to recognize the following accounts as below:

Cr 331 - Trade payables

Cr 153 - Tools & supplies (cost of returned tools and supplies)

Cr 133 - Value-added tax deductible (if any) (input VAT on tools and supplies returned to sellers).

d) When accounting for payment discounts (if any), to recognize the following accounts as below:

Cr 331 - Trade payables

Cr 515 - Financial income.

dd) When dispatching tools and supplies for operation:

- In case 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 & supplies (1531, 1532).

- In case 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, to recognize the following accounts as below:

Dr 242 - Prepaid expenses

Cr 153 - Tools & supplies.

+ When distributing to costs of operation for every accounting period, to recognize the following accounts as below:

Dr 623, 627, 641,642, ...

Cr 242 - Prepaid expenses.

- Turnovers from tools and supplies for renting shall be recorded as follows:

Dr 111, 112, 131, ...

Cr 511 - Turnovers from sale of merchandises and services rendered (5113)

Cr 3331 - Value-added tax deductible (33311).

- Upon receiving tools and supplies for renting, to recognize the following accounts as below:

Dr 153 - Tools & supplies (1533)

Cr 242 - Prepaid expenses (residual value not recorded to expenses)

g) Imported tools and supplies:

- Upon importing tools and supplies, to recognize the following accounts as below:

Dr 153 - Tools & supplies

Cr 331 - Trade payables

Cr 3331 - Value-added tax deductible (33312) (in case input VAT on imported goods are non-deductible)

Cr 3332 - Excise tax (if any).

Cr 3333 - Export and import duty (detail on import duty).

Cr 33381 - Environmental protection tax.

- In case input VAT on imported goods is deductible, to recognize the following accounts as below:

Dr 133 - Value-added tax deductible

Cr 3331 - Value-added tax deductible (33312).

- When buying tools and supplies, in case 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, in case 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 & supplies.

- Turnovers from sale of tools and supplies shall be recorded as follows:

Dr 111, 112, 131.

Cr 511 - Turnovers from sale of merchandises and services rendered (5118)

Cr 333 - Taxes and other payables to the State Budget.

3.2. Enterprises using periodic inventory system.

a) At the beginning of accounting period, upon transferring actual costs of beginning tools and supplies inventory, to recognize the following accounts as below:

Dr 611 - Purchases

Cr 153 - Tools & supplies.

b) At the ending of accounting period, according to physical inventory count for ending tools and supplies inventory, to recognize the following accounts as below:

Dr 153 - Tools & supplies

Cr 611 - Purchases.

Article 27. Account 154 - Cost for work in process

1. Accounting rules

a) The account shall be 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 products 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. The 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, ...); 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). In case 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” applicable 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” applicable to industry is used to collect total production costs and calculate prime cost of cultivation, processing of agricultural products or services. The account shall be specifically recorded according to agricultural lines of business (cultivation, animal husbandry, processing, ...), places in which costs incurred (workshops, production divisions, ...), 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, in case 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, ...);

- Multi-harvesting single plant (pineapples, bananas, ...);

- Perennial plants (teas, coffees, rubbers, peppers, fruit plants, ...).

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, financing 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), ...

e) On the same acreage, in case 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 shall be taken:

- The expenses incurred from animal husbandry shall be kept records in details for every type of husbandry (cattle farming, pig farming, ...), 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, ...

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, ... The account shall be used to record total cost (direct raw materials, direct labor, and factory overheads) and prime cost of the service rendered.

b) Regarding transport industry, the account shall be used to record cost related to road transport (motorcars, trams, other non-motorized vehicle, ... rail transport, waterway, aerial transport, pipeline transport, ... Account 154 applicable to transport sector shall be kept records in details for every operation (passenger transport, freight transport, ...) 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, the account shall be used to record every activity, such as: guided tours, hotel, tourism transport, ...

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, ...).

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) The account (in the construction industry) comprises 4 level-2 accounts:

- Account 1541 - Construction contracts: 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 products, structural elements, ...);

- Account 1543 - Services: records costs, prime cost of services and record cost of service in progress at the end of the period;

- Account 1544 - 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 shall 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 contracts”: 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 “Statement of Income” and included in the prime cost of the construction product and sold during a period.

dd) The investor of the property construction shall use the account to record expenses incurred from construction of finished property. In case the property is constructed for multiple purposes (office, lease or sale, for example mix-used buildings), it is required to follow rules below:

- In case of 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.

- In case 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. In case 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 reflected in Account 154 - Cost for work in process

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 (in case 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 clients;

- 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 shall 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 shall be transferred to account 154 every accounting period. Upon 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. Accounting methods for certain major economic transactions in Industry sector

7.1. Accounting for inventory using perpetual inventory system

a) At the end of period, upon transferring direct raw material expenses according to every expense object, to recognize the following accounts as below:

Dr 154 - Cost for work in process

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, upon transferring direct labor costs according to every expense object, to recognize the following accounts as below:

Dr 154 - Cost for work in process

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 to recognize the following accounts as below:

Dr 154 - Cost for work in process

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 production costs shall not be charged to prime production costs) shall be recorded to costs of goods sold during a period as follows:

Dr 154 - Cost for work in process

Dr 632 - Costs of goods sold (portion of fixed factory overheads unallocated to prime production costs)

Cr 627- - Factory overheads.

dd) Value of raw materials, materials outsourced for processing and returned to warehouse, to recognize the following accounts as below:

Dr 152 - Raw materials

Cr 154 - Cost for work in process

e) Value of unrepairable damaged products which was compensated by offender, to recognize the following accounts as below:

Dr 138 - Other receivables (1388)

Dr 334 - Payables to staff.

Cr 154 - Cost for work in process

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 production costs (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 - Cost for work in process (when expenses shall be 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 products

Cr 154 - Cost for work in process

i) In case finished products are not stored but delivered for internal use or capital investment, to recognize the following accounts as below:

Dr 641, 642, 241

Cr 154 - Cost for work in process

k) After dispatching raw materials to production, in case 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 regarding to trade discount or sales rebate corresponding to dispatched raw materials shall be recorded as follows:

Dr 111, 112, 331, ...

Cr 154 - Cost for work in process (trade discounts or sales obtained equivalently to dispatched raw materials)

Cr 133 - Value-added tax deductible (1331) (if any).

l) Accounting for experimental products:

- Production cost of experimental products shall be recorded to account 154 similarly to other products. Upon recovering (sale or liquidation) experimental products, to recognize the following accounts as below:

Dr 111, 112, 131

Cr 154 - Cost for work in process

Cr 3331 - VAT payables (if any).

- Transferring difference between experimental production cost and amounts collected from sale or liquidation of experimental products:

+ In case 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 - Cost for work in process

+ In case 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 - Cost for work in process

Cr 241 - Construction in progress

m) In case finished products are not stored but delivered directly to purchaser (water, electricity products), to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 154 - Cost for work in process

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 - Cost for work in process

Cr 631 - Production costs

b) At the beginning of accounting period, upon transferring actual work in progress, to recognize the following accounts as below:

Dr 631 - Production costs

Cr 154 - Cost for work in process

8. Accounting methods for certain major economic 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 - Cost for work in process

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 - Cost for work in process

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 - Cost for work in process

Dr 632 - Costs of goods sold (portion of fixed factory overheads unallocated to prime production costs)

Cr 627 - Factory overheads.

d) Value of returned subsidiary products shall be recorded as follows:

Dr 152 - Raw materials

Cr 154 - Cost for work in process

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 - Cost for work in process

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 - Cost for work in process

g) Actual production cost of output products, stored or immediately consumed shall be recorded as follows:

Dr 155 - Finished products

Dr 632 - Costs of goods sold

Cr 154 - Cost for work in process

h) Output products which are internally consumed without inventory shall be recorded as follows:

Dr 641, 642, 241

Cr 154 - Cost for work in process

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. Accounting methods for certain major economic 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 - Cost for work in process

b) When using internal consumes service, to recognize the following accounts as below:

Dr 641, 642.

Cr 154 - Cost for work in process

10. Accounting methods for certain major economic transactions in Construction sector

10.1. Accounting method for collecting construction expenses (Dr 1541 “Construction contracts”):

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 shall 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.

- In case 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, ...).

- According to Table of materials allocated for each building work or work item, to recognize the following accounts as below:

Dr 154 - Cost for work in process (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, ... (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, ...; 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, ...); 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, ...) which are ineligible 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 shall 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 shall 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, to recognize the following accounts as below:

Dr 154 - Cost for work in process

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, ...

Where these expenses incur during a period, to recognize the following accounts as below:

Dr 627 - Factory overheads.

Dr 133 - Value-added tax deductible (if any).

Cr 111, 112, 152, 153, 214, 242, 334, 338, ...

- When determining provisions for construction warranty, to recognize the following accounts as below:

Dr 627 - Factory overheads.

Cr 352 - Provisions.

- Where 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, to recognize the following accounts as below:

Dr 621 - Direct raw materials.

Dr 622 - Direct labor costs.

Dr 623 - Costs of construction machinery.

Dr 627 - Factory overheads.

Dr 133 - Value-added tax deductible (if any).

Cr 111, 112, 152, 153, 214, 242, 334, 338, ...

- 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, to recognize the following accounts as below:

Dr 154 - Cost for work in process

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 clients, to recognize the following accounts as below:

Dr 352 - Provisions.

Cr 154 - Cost for work in process

- Where warranty on construction works expires, in case the works are not warranted or the provisions for construction work warranty are greater than the actual costs incurred, the difference shall be reverted, and then to recognize the following accounts as below:

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); to recognize the following accounts as below:

Dr 154 - Cost for work in process

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 contracts”):

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 clients cannot fulfill their obligations ...) shall be recorded to expenses during the period as follows:

Dr 632 - Costs of goods sold

Cr 154 - Cost for work in process

b) Expenses directly related to every contract may be eligible for deduction in case other receipts not including in the turnover 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, to recognize the following accounts as below:

Dr 152 - Direct raw materials (according to original cost)

Cr 154 - Cost for work in process.

- Upon recovering scrap then delivering them to inventory, to recognize the following accounts as below:

Dr 152 - Direct raw materials (according to recoverable cost)

Cr 154 - Cost for work in process.

- In case 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, ... (total payment)

Cr 3331 - VAT payable (33311)

Cr 154 - Cost for work in process.

- 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, ...

Cr 3331 - VAT payable (33311)

Cr 154 - Cost for work in process.

+ The expenses incurred from disposal of machinery or equipment (if any) shall be recorded as follows:

Dr 154 - Cost for work in process

Dr 133 - Value-added tax deductible (1331).

Cr 111, 112, ...

+ 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, in case contract unit has separate account division), to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 154 - Cost for work in process (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, to recognize the following accounts as below:

Dr 155 - Finished products

Cr 154 - Cost for work in process (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), to recognize the following accounts as below:

Dr 352 - Internal receivables (3368)

Cr 154 - Cost for work in process (1541).

Article 28. Account 155 - Finished products inventory

1. Accounting rules

a) The account shall be used to record current cost and decrease or increase in finished products of the enterprise. Finished products 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, the account is only used by trustor, not by trustee

b) The finished products manufactured by direct production divisions and indirect production divisions of the enterprise shall 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 & equipment. Common capacity means common volume of products manufactured in the normal manufacturing condition.

- In case the actual capacity is greater than common capacity, the fixed factory overhead shall be allocated to each unit according to actual costs incurred.

- In case 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 products:

- 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 products 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 products 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 products 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 products shall be calculated and difference between actual prime cost and accounting cost of finished products (including the difference of beginning finished products) which is the basis for calculation of actual prime cost of received or dispatched finished products within an accounting period (using the formula prescribed in account 152 “Raw materials”).

g) The finished products shall be specifically accounted according to every inventory, type, group, finished good items.

2. Structure and contents reflected in Account 155 - Finished products

Debit:

- Cost of inventoried finished products;

- Cost of finished products in surplus under physical inventory count;

- Transfer of cost of ending finished products inventory (in case the enterprise uses periodic inventory system)

Credit:

- Actual cost of dispatched finished products;

- Cost of finished products in shortage under physical inventory count;

- Transfer of actual cost of beginning finished products inventory (in case the enterprise uses periodic inventory system)

Debit balance: Actual cost of ending finished products inventory.

Account 155 - Finished products, comprises 2 level-2 accounts:

- Account 1551 - Finished products - inventory: to record current cost and decrease or increase in inventoried finished products (other than finished products which are real estate);

- Account 1557 - Finished products - real estate: to record current cost and decrease or increase in Finished products - real estate of the enterprise. Finished products - real estate include: land use rights; housing; or housing and land use rights; infrastructure invested for the ordinary course of business

3. Accounting methods for certain major economic transactions:

3.1. Enterprise using perpetual inventory system.

3.1.1. Upon receiving finished products manufactured by the enterprise or under outsourcing agreement, to recognize the following accounts as below:

Dr 155 - Finished products

Cr 154 - Cost for work in process.

3.1.2. Upon dispatching finished products for sale to clients, the costs of finished products sold shall be recorded as follows:

a) Finished products - non-real estate

Dr 632 - Costs of goods sold

Cr 155 - Finished products

b) Finished products - real estate (for building work invested by the enterprise)

b1) Original prices of Finished products - real estate 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 shall 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 turnovers from sale of the real estate generated, the enterprise may extract a portion of the cost to provisionally calculate costs of goods sold. In case the documents are sufficiently compiled or the real estate is constructed wholly, the enterprise shall 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 products - real estate shall 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 turnovers 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 products - real estate sold.

- When selling the portion of finished products, to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 155 - Finished products

- When extracting costs to provisionally calculate costs of Finished products - real estate sold within an accounting period, to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 335 - Payable expenses.

- 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, to recognize the following accounts as below:

Dr 154 - Cost for work in process

Dr 133 - Value-added tax deductible

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 - Payable expenses.

Cr 154 - Cost for work in process.

- When the whole project for real estate finishes, the final settlement shall be made and a decrease in remaining prepaid expenses (if any) shall be recorded as follows:

Dr 335 - Payable expenses.

Cr 154 - Cost for work in process.

Cr 632 - Costs of goods sold (the remaining prepaid expenses shall be greater than actual expenses incurred).

3.1.3. Upon dispatching finished products for sale or agencies, to recognize the following accounts as below:

Dr 157 - Consignment goods (through agencies)

Cr 155 - Finished products

3.1.4. In case a buyer returns finished products sold: In case the returned goods subject to VAT using credit-invoice method, turnovers from goods returned (VAT-exclusive prices), and to recognize the following accounts as below:

Dr 521 - Revenue deductions (5213)

Dr 3331 - VAT payable (33311).

Cr 111, 112, 131, ... (total cost of goods returned).

And the costs of finished products sold which are delivered to inventory shall be recorded as follows:

Dr 155 - Finished products

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 products

3.1.6. Dispatching finished products and transferring to dependent accounting units of the enterprise:

- In case the dependent accounting units are in charge of recording turnovers, costs of goods, the costs of finished products sold shall be recorded as follows:

Dr 632 - Costs of goods sold

Cr 155 - Finished products

- In case the dependent accounting unit is not in charge of recording turnovers, costs of goods, the costs of products circulated intra-company shall be internal receivables and be recorded as follows:

Dr 136 - Internal receivables

Cr 155 - Finished products

Cr 333 - Taxes and other payables to the State Budget (in detail).

3.1.7 In case of contributing finished products to subsidiaries, joint-venture companies as capital, to recognize the following accounts as below:

Dr 221, 22 (according to re-evaluated value)

Dr 811 - Other expenses (re-evaluated value is smaller than book value of finished products)

Cr 155 - Finished products

Cr 711 - Other incomes (re-evaluated value is greater than book value of finished products)

3.1.8 When dispatching finished products to sell capital holding in subsidiaries, joint-venture companies, to recognize the following accounts as below:

- The turnovers from sale of raw materials and investment in subsidiaries, joint-venture companies, and to recognize the following accounts as below:

Dr 221, 222 (according to par value)

Cr 511- - Turnovers

Cr 3331 - Output VAT payable.

- The costs of finished products to sell capital holding in subsidiaries, joint-venture companies shall be recorded as follows:

Dr 632 - Costs of goods sold

Cr 155- - Finished products

3.1.9 Whenever the surplus or shortage of finished products is detected under physical inventory count, it is required to make report and uncover reasons and look for offender(s). Pursuant to reports on physical inventory count and decision of competent agency, the accounting shall be recorded as follow:

- In case the surplus or shortage of finished products caused by errors or are not updated, they are required to be additionally provided or adjusted on the accounting books;

- In case of failure to uncover reasons for surplus or shortage, it shall be pending for settlement:

+ In case the finished products are surplus, to recognize the following accounts as below:

Dr 155 - Finished products (according to par value)

Cr 338 - Other payables or receivables (3381).

In case of a decision of settlement made by the competent agency, to recognize the following accounts as below:

Dr 338 - Other payables or receivables.

Cr, relevant accounts.

+ In case the finished products are deficient, to recognize the following accounts as below:

Dr 138 - Other payables (1381 - Shortage of assets waiting for resolution)

Cr 155 - Finished products

- In case of a decision on settlement made by the competent agency, to recognize the following accounts as below:

Dr 111, 112, ... (in case the offender pays compensation in cash)

Dr 334 - Payables to staff (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) In case the products are manufactured for giving, promotion or advertisement without collecting money or any additional conditions (compulsory purchase of goods, ...), 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 products (production costs).

b) In case the products are manufactured for promotion or advertisement with additional conditions that the clients are required to buy goods (e.g. buy two, get one free, ...) The collected amounts of moneys shall be recorded to turnovers (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 products

- Upon receiving turnovers from promotion goods shall be recorded to goods sold and promotion goods as follows:

Dr 111, 112, 131, ...

Cr 511 - Turnovers

Cr 3331 - Value-added tax deductible (33311) (if any).

c) In case products manufactured for giving staff using welfare fund, the turnovers 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 products

- Products for giving using welfare fund shall be recorded to turnovers as follows:

Cr 353 - Bonus and welfare fund (total payment)

Cr 511 - Turnovers

Cr 3331 - Value-added tax deductible (33311) (if any).

3.1.11. Paying salaries to employees by products

- The turnovers from products for paying salaries to employees shall be recorded as follows:

Dr 334 - Payables to staff (total costs)

Cr 511 - Turnovers

Cr 3331 - VAT payable (33311).

Cr 3335 - Value-added tax deductible (if any).

- The production costs for paying salaries to employees shall be recorded to costs of goods sold as follows:

Dr 632 - Costs of goods sold

Cr 155 - Finished products

3.1.12. Upon liquidating or selling unused finished products, their costs shall be recorded as follows:

Dr 632 - Costs of goods sold

Cr 155 - Finished products

3.2. Enterprises using periodic inventory system.

a) At the beginning inventory, according to the physical inventory count of finished products which shall be transferred from previous ending inventory, the beginning finished products inventory shall be recorded to account 632 “Costs of goods sold” as follows:

Dr 632 - Costs of goods sold

Cr 155 - Finished products

b) At the ending of accounting period, according to physical inventory count for finished products inventory, the ending finished products inventory shall be transferred as follows:

Dr 155 - Finished products

Cr 632 - Costs of goods sold.

Article 29. Account 156 - Merchandise goods

1. Accounting rules

a) The account shall be used to record current value and increase or decrease in merchandise inventory of an enterprise, including merchandise in inventories, real estates. Merchandise inventory is goods that have been purchased by an enterprise, with the intent of selling the goods to third parties (wholesale or retail). In case the merchandise purchased for both sale and operation, it shall still be recorded to account 156 “Merchandise inventory”

In the import-export entrustment transaction, the account is only used by the trustor not by the trustee. Trading in merchandise inventory related to transactions in foreign currencies shall comply with Article 69 - Guidance 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", ...).

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 expense (transport, material handling, preservation of merchandise from suppliers to the enterprise’s warehouse, insurance cost, ...), import duty, excise tax, environmental protection tax (if any), VAT on imported goods (in case they are non-deductible). In case the enterprise purchases merchandise for resale, but they shall 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) In case of buying merchandise, in case 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 reflected in Account 156 - Merchandise goods

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 (in case 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 (in case 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 goods, comprises 2 level-2 accounts:

- Account 1561 - Purchase costs: to record current cost and decrease or increase in merchandise purchased and inventoried (according to purchase costs);

- Account 1562 - Incidental expense: to record incidental expense incurred relating to amounts of received merchandise during a period and the distribution of current incidental expense 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 expense recorded in the account only include the costs directly related to the processing of purchasing merchandise, such as: insurance cost of merchandise, depot rents, ..., 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 - Real estate: to record current cost and decrease or increase in real estates of the enterprise. Real estates 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 reflected in Account 1561 - Purchase costs

Debit:

- Purchased merchandise cost according to sales invoice (inventoried);

- Import duty or excise tax on imported goods or VAT on imported goods, input VAT - in case they are non-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 (in case 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 (in case the enterprises use periodic inventory system);

Debit balance: Actual cost of ending merchandise inventory.

b) Structure and contents reflected in Account 1562 - Incidental expense

Debit: Actual incidental expense incurred relating to amounts of merchandise purchased and received in a period.

Credit: Incidental expense of amounts of merchandise consumed during a period.

Debit balance: Ending incidental purchase cost balances.

c) Structure and contents reflected in Account 1567 - Real estate

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 shall be recorded as an increase in original cost of real estates

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 real estates balances.

3. Accounting methods for certain major economic 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) Upon purchasing merchandise, in case input VAT on merchandise is deductible, to recognize the following accounts as below:

Dr 156 - Merchandise goods (1561) (detail in merchandise purchased and merchandise used as substitute provisional for damage)

Dr 1534 - Equipment and spare parts for replacement (par value)

Dr 133 - Value-added tax deductible (1331) (input VAT)

Cr 111, 112, 141, 331, ... (total payment).

In case the input VAT is non-deductible, value of merchandise purchased shall include VAT

b) Importing merchandise:

- When importing merchandise, to recognize the following accounts as below:

Dr 156 - Merchandise goods

Cr 331 - Trade payables

Cr 3331 - Value-added tax deductible (33312) (in case input VAT on imported goods are non-deductible)

Cr 3332 - Excise tax (if any).

Cr 3333 - Export and import duty (detail on import duty).

Cr 33381 - Environmental protection tax.

- In case input VAT on imported goods is deductible, to recognize the following accounts as below:

Dr 133 - Value-added tax deductible

Cr 3331 - Value-added tax deductible (33312).

- When buying merchandise and prepaying the seller an advance in Foreign currencies, 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 currencies 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, in case the sales invoice sent by the seller is received but the merchandise has not been received, to recognize the following accounts as below:

Cr 151 - Goods in transit

Dr 133 - Value-added tax deductible (if any)

Cr 111, 112, 331, ...

- Next accounting period, when the merchandise purchase in transit, to recognize the following accounts as below:

Dr 156 - Merchandise goods (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, ...

Cr 156 - Merchandise goods (in case merchandise are still inventoried)

Cr 632 - Costs of goods sold (in case they are consumed during a period)

Cr 133 - Value-added tax deductible (1331) (if any).

3.1.4 Cost of merchandise purchased which is returned to sellers due to failure of specifications under economic contract, to recognize the following accounts as below:

Cr 111, 112, ...

Cr 331 - Trade payables

Cr 156 - Merchandise goods (1561)

Cr 133 - Value-added tax deductible (1331) (if any).

3.1.5 Purchase costs of merchandise inventory shall be recorded as follows:

Dr 156 - Merchandise goods (1562)

Dr 133 - Value-added tax deductible (if any)

Cr 111, 112, 141, 331, ...

3.1.6 Upon purchasing merchandise making deferred payment, to recognize the following accounts as below:

Dr 156 - Merchandise goods (cash prices)

Dr 133 - Value-added tax deductible (if any)

Dr 242 - Prepaid expenses {interest on deferred payment is difference between total payment minus (-) cash prices deducted from VAT (in case 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. Upon purchasing real estates, the purchase costs and incidental expense of real estates shall be recorded as follows:

Dr 1567 - Real estate (VAT-exclusive prices)

Dr 133 - Value-added tax deductible (1332)

Cr 111, 112, 331, ...

3.1.8. In case 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, to recognize the following accounts as below:

Dr 156 - Merchandise goods (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, to recognize the following accounts as below:

Dr 154 - Cost for work in process

Dr 133 - Value-added tax deductible

Cr 111, 112, 152, 334, 331, ...

- When finishing the repair, innovation or upgrade of investment properties for sale, total cost shall be transferred and an increase in real estates shall be recorded:

Dr 156 - Merchandise goods (1567)

Cr 154 - Cost for work in process.

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 goods (1561)

Concurrently, sales turnovers shall be recorded as follows:

- In case indirect taxes are separable, the turnovers shall be recorded follows:

Dr 111, 112, 131, ... (total payment).

Cr 511 - Turnovers

Cr 333 - Taxes and other payables to the State Budget.

- In case indirect taxes are not separable, the turnovers including taxes shall be recorded. Tax liabilities and the decrease in turnovers shall be periodically recorded as follows:

Dr 511 - Turnovers (total payment)

Cr 333 - Taxes and other payables to the State Budget.

3.1.10. Outsourcing agreement

- When dispatching merchandise inventory to process, to recognize the following accounts as below:

Dr 154 - Cost for work in process

Cr 156 - Merchandise goods (1561)

- When costs of processing incurred, to recognize the following accounts as below:

Dr 154 - Cost for work in process

Dr 133 - Value-added tax deductible (if any)

Cr 111, 112, 331, ...

- When the processing is finished, the merchandise shall be received in inventory and to recognize the following accounts as below:

Dr 156 - Merchandise goods (1561)

Cr 154 - Cost for work in process.

3.1.11. Upon dispatching merchandise to clients or agencies consigning companies, ..., to recognize the following accounts as below:

Dr 157 - Goods on consignment

Cr 156 - Merchandise goods (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 turnovers, costs of goods, the costs of merchandise sold shall be recorded as follows:

Dr 632 - Costs of goods sold

Cr 156 - Merchandise goods.

Concurrently, sales turnovers shall be recorded as follows:

Dr 111, 112, 131, ... (total payment).

Cr 511 - Turnovers

Cr 333 - Taxes and other payables to the State Budget.

- In case the dependent accounting unit is not in charge of recording turnovers, costs of goods, the costs of products circulated intra-company shall be internal receivables, to recognize the following accounts as below:

Dr 136 - Internal receivables

Cr 156 - Merchandise goods.

Cr 333 - Taxes and other payables to the State Budget.

3.1.13. Upon dispatching merchandise for internal use, to recognize the following accounts as below:

Dr 641, 642, 241, 211

Cr 156 - Merchandise goods.

3.1.14. In case the enterprise uses products for giving, promotion or advertisement (under law on commerce):

a) In case the merchandise inventory is released for promotion or advertisement without collecting money, not providing additional conditions (compulsory purchase of goods, ...), the cost of merchandise inventory shall be recorded to selling expenses (detail in promotion or advertisement);

Dr 641- - Selling expenses

Cr 156 - Merchandise goods (cost prices).

b) In case the merchandise is released for promotion or advertisement with additional conditions that the clients are required to buy goods (e.g. buy two, get one free, ...) The collected amounts of moneys shall be recorded to turnovers (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 goods.

- Upon receiving turnovers from promotion merchandise, the collected amounts shall be recorded to goods sold and promotion goods as follows:

Dr 111, 112, 131, ...

Cr 511 - Turnovers

Cr 3331 - Value-added tax deductible (33311) (if any).

c) In case merchandise purchased for giving staff using welfare fund, the turnovers 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 goods.

- Merchandise for giving using welfare fund shall be recorded to turnovers as follows:

Cr 353 - Bonus and welfare fund (total payment)

Cr 511 - Turnovers

Cr 3331 - Value-added tax deductible (33311) (if any).

d) In case the enterprise is a commercial distributor receiving merchandise (non-payment) from manufacturers for promotion or advertisement given to clients of the manufacturer or distributor

- Upon receiving merchandise from manufacturer (non-payment) for promotion or advertisement given to clients, the distributor shall 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, in case 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 goods (according to par value)

Cr 711 - Other income.

3.1.15. Paying salaries to employees by merchandise

- Turnovers shall be recorded as follows:

Dr 334 - Payables to staff (total costs)

Cr 511 - Turnovers

Cr 333 - Taxes and other payables to the State Budget.

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 goods.

3.1.16 In case of contributing merchandise to subsidiaries, joint-venture companies as capital, and to recognize the following accounts as below:

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 goods.

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 expense of merchandise sold during a period, to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 156 - Merchandise goods (1562)

3.1.18. In case the surplus of merchandise is detected in any process of business, it is required to make a report and uncover reasons. Pursuant to the reasons uncovered, the surplus of merchandise shall be settled and accounted for as follows:

- In case the reasons are mistakes in measuring or counting, failure to keep records, ..., the accounting record shall be adjusted.

- In case the merchandise in surplus belong to other enterprises, the value of merchandise in surplus in the presentation of financial statements.

- In case of failure to uncover reasons for surplus, it shall be pending for settlement:

Dr 156 - Merchandise goods

Cr 338 - Other payables or receivables (3381).

- In case of a decision of settlement made by the competent agency, to recognize the following accounts as below:

Dr 338 - Other payable or receivables (3381)

Cr, relevant accounts.

3.1.19. In case the shortage of merchandise is detected in any process of business, it is required to make a report and uncover reasons. Pursuant to decision of competent agency, the shortage of merchandise shall be settled and accounted for as follows:

- In case of failure to uncover reasons for surplus, it shall be pending for settlement:

Dr 138 - Other payables (1381- - Shortage of assets waiting for resolution)

Cr 156 - Merchandise goods.

- In case of a decision of settlement made by the competent agency, to recognize the following accounts as below:

Cr 111, 112, ... (the compensation is required in case the offender is an individual)

Dr 334 - Payables to staff (the deducting in salaries is required in case 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. In case the real estates are sold in a period, according to VAT invoice or sales invoice, transfer note of real estates, to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 156 - Merchandise goods (1567 - Real estate)

Concurrently, turnovers from sale of real estates shall be recorded as follows:

Dr 111, 112, 131, ...

Cr 511 - Turnovers from sale of merchandises and services rendered (5117)

Cr 3331 - Value-added tax deductible (33311) (if any).

3.1.21. Upon liquidating or selling unused merchandise, their costs shall be recorded as follows:

Dr 632 - Costs of goods sold

Cr 156 - Merchandise goods.

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 shall be transferred to value of beginning inventory of current accounting period, to recognize the following accounts as below:

Dr 611 - Purchases

Cr 156 - Merchandise goods.

b) At the ending of accounting period:

- Conducting physical inventory count on quantity and cost of ending merchandise inventory. Pursuant to total cost of ending merchandise inventory, to recognize the following accounts as below:

Dr 156 - Merchandise goods

Cr 611 - Purchases.

- According to total cost of merchandise sold, to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 611 - Purchases.

Article 30. Account 157 - Goods on consignment

1. Accounting rules

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 products sent to clients or agents (consignees), services rendered transferred to clients 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 turnovers during a period).

b) The goods or finished products recorded to the account are still under ownership of the consignor, they shall be recorded in the accounting record in every consignment until they are sold.

c) The cost of transport, material handling, payment on behalf of clients, ... shall not be recorded to the account. The account 157 may record every type of goods, finished products or services rendered on consignment to every client or consignee.

2. Structure and contents reflected in Account 157 - Goods on consignment

Debit:

- Cost of goods or finished products on consignment sent to clients, consignees; or dependent accounting units;

- Cost of services rendered to clients, but they are not sold;

- Ending cost of goods or finished products on consignment but they are not sold (in case the consignor uses periodic inventory system).

Credit:

- Cost of goods, finished products, services rendered on consignment which are sold;

- Cost of goods, finished products or services on consignment which are returned;

- At the beginning of accounting period, cost of goods, finished products, services rendered which are not sold and transferred (in case the consignor uses periodic inventory system).

Debit balance:

Cost of goods, finished products, services rendered on consignment which are sold during a period;

3. Accounting methods for certain major economic transactions:

3.1. Enterprise using perpetual inventory system.

a) When consigning goods or finished products to clients, consignees under economic contracts, according to delivery order, to recognize the following accounts as below:

Dr 157 - Goods on consignment

Cr 156 - Merchandise goods.

Cr 155 - Finished products

b) Cost of services rendered to clients, but they are not sold during a period, to recognize the following accounts as below:

Dr 157 - Goods on consignment

Cr 154 - Cost for work in process.

c) When consigning goods or services to clients and they are sold during a period:

- In case the indirect taxes are not separable at the time in which the turnovers are recorded, the turnovers from sale of goods, finished products or services (tax-exclusive prices) shall be recorded:

Cr 131 - Trade receivables

Cr 511 - Turnovers

Cr 333 - Taxes and other payables to the State Budget.

- In case indirect taxes are not separable, the turnovers including taxes shall be recorded. Upon paying indirect taxes, a decrease in turnovers shall be periodically recorded as follows:

Dr 511 - Turnovers

Cr 333 - Taxes and other payables to the State Budget.

- And the costs of finished products sold which are delivered to inventory shall be recorded as follows:

Dr 632 - Costs of goods sold

Cr 157 - Goods on consignment.

d) In case goods or finished products are consigned for sale but they are returned;

- In case those goods or finished products are still merchantable or repairable, to recognize the following accounts as below:

Dr 156 - Merchandise goods; or

Dr 155 - Finished products

Cr 157 - Goods on consignment.

- In case those goods or finished products are not merchantable or repairable, to recognize the following accounts as below:

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, in case cost of goods or finished products sent to clients shall be transferred but they are not sold during a period, or cost of goods or services consigned to client but they are not sold during a period, to recognize the following accounts as below:

Dr 611 - Purchases (for goods)

Dr 632 - Costs of goods sold (for finished products 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 products or semi-finished products) or services rendered to clients; or consigned to consignees which are not sold at the ending accounting period:

- Cost of goods sent to clients 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 products provided for clients or goods on consignment; cost of services rendered to clients 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. Accounting rules

a) The account shall be used to record current value and increase or decrease in goods delivered to bonded warehouse. Bonded warehouses are only applicable 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 shall keep records of quantity and value of every raw material and good whenever they are received or dispatched.

2. Structure and contents reflected in Account 158 - Goods in bonded warehouses

Debit: Costs of raw materials, finished products or goods delivered to bonded warehouse during a period.

Credit: Costs of raw materials, finished products or goods dispatched from bonded warehouse during a period.

Debit balance: Costs of ending raw materials, finished products or goods inventory balances in the bonded warehouse.

3. Accounting methods for certain major economic transactions:

a) When importing raw materials for production of exported products, or processing of exported goods, in case they are stored in a bonded warehouse, they shall be released from payment of import duty and VAT on imported goods and to recognize the following accounts as below:

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, to recognize the following accounts as below:

Dr 621 - Direct material costs

Cr 158 - Goods in bonded warehouses.

c) When delivering finished products, exported goods or outward processing goods into bonded warehouse (if any), to recognize the following accounts as below:

Dr 158 - Goods in bonded warehouses

Cr 156, 155, ...

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 turnovers from sale of exported goods in bonded warehouse shall be recorded as follows:

Dr 111, 112, 131, ...

Cr 511 - Turnovers.

dd) In case export rate is lower than deferred tax rate of the enterprise subject to import duty and VAT on imported goods (if any) regarding to difference between amounts of to-be-exported products and amounts of actually-exported products, the enterprise shall pay import duty and VAT on imported goods (if any):

- When determining import duty payables (if any), to recognize the following accounts as below:

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), to recognize the following accounts as below:

Dr 133 - Value-added tax deductible (1331)

Cr 333 - Taxes and amounts payable to the State (33312).

- Upon paying import duty and VAT on imported goods payables (if any), to recognize the following accounts as below:

Dr 333 - Taxes and amounts payable to the State (3333, 33312).

Cr 111, 112, ...

e) In case the enterprise is permitted to sell goods in bonded warehouses on Vietnam market by the competent agency, the enterprise shall 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 to recognize the following accounts as below:

Dr 155, 156

Cr 158 - Goods in bonded warehouses.

- When determining import duty payables (if any), to recognize the following accounts as below:

Dr 155, 156

Cr 333 - Taxes and amounts payable to the State (3333).

- When determining VAT on imported goods payables (if any), to recognize the following accounts as below:

Dr 155, 156 (in case they are non-deductible)

Dr 133 - Value-added tax deductible (1331)

Cr 333 - Taxes and amounts payable to the State (33312).

- Upon paying import duty and VAT on imported goods, to recognize the following accounts as below:

Dr 333 - Taxes and amounts payable to the State (33312, 3333).

Cr 111, 112, ...

g) Upon 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 regarding to those products, goods or raw materials shall be recorded.

- The turnovers from sale of exported goods in bonded warehouse on domestic market shall be recorded as follows:

Dr 111, 112, 131, ...

Cr 511 - Turnovers 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 shall be re-imported or destroyed:

- In case of re-import, to recognize the following accounts as below:

Dr 155, 156, ...

Cr 158 - Goods in bonded warehouses.

- Concurrently, paying the import duty and VAT on imported goods payables regarding to those products, goods or raw materials, the taxes payable shall be recorded in accounting entry (e); upon paying taxes, to recognize the following accounts as below:

Dr 333 - Taxes and amounts payable to the State (33312, 3333).

Cr 111, 112, ...

- In case of re-export (returns to sellers), to recognize the following accounts as below:

Dr 331 - Trade payables

Cr 158 - Goods in bonded warehouses

- In case of destruction of goods or raw materials in bonded warehouses, to recognize the following accounts as below:

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. Accounting rules

a) The account shall be 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 state budget or superior enterprise, or non-refundable grants. The account is used in enterprises having non-business activities or project activities (hereinafter referred to as non-business activities) which are covered by state 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 shall be recorded in conformity with budget estimates and between accounting books and documents and financial statements.

d) The 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, in case the balance sheet is not approved, total non-business expenditures within the year shall be transferred from Cr 1612 "Expenditure of current year” to Dr 1611 “Expenditure brought forward” for observation until the balance sheet is approved.

2. Structure and contents reflected in 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 level-2 accounts:

- Account 1611 - Expenditure brought forward: to record non-business expenditures which are covered by non-business funds of the preceding year and not recorded.

- Account 1612 - Expenditure of current year: to record non-business expenditures of current year.

3. Accounting methods for certain major economic transactions:

a) When providing non-business expenditures uncovered by non-business funds, to recognize the following accounts as below:

Dr 161 - Non-business expenditures (1612)

Cr 111, 112, ...

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 staff

Cr 331 - Trade payables.

c) When dispatching raw materials, tools or supplies inventory for non-business activities, to recognize the following accounts as below:

Dr 161 - Non-business expenditures (1612)

Cr 152 - Raw materials

Cr 153 - Tools & supplies

d) Upon receiving funding from superior enterprises or withdrawing non-business expenditure estimates to pay for non-business activities, to recognize the following accounts as below:

Dr 161 - Non-business expenditures (1612)

Cr 461 - Non-business funds source.

In case the non-business expenditure estimates are withdrawn, the enterprise shall keep track of those expenditures in conformity with characteristics of the enterprise, ...

dd) Upon transferring major repairs of fixed assets for non-business activities, to recognize the following accounts as below:

Dr 161 - Non-business expenditures (1612)

Cr 241 - Construction in progress (2413 - Major repairs of fixed assets).

e) Upon 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, to recognize the following accounts as below:

Dr 211 - Tangible fixed assets

Cr 111, 112, 331, 241, 461, ...

- And to recognize the following accounts as below:

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 shall keep appropriate records.

g) When deducting social insurance, health insurance, unemployment insurance or union funds for non-business activities of the enterprise, to recognize the following accounts as below:

Dr 161 - Non-business expenditures (1612)

Cr 338 - Other payables or receivables (3382, 3383, 3384, 3386).

h) At the end of fiscal year, in case the financial report is not approved, the debit balances 1612 "Expenditure of current year” shall be transferred to “Expenditure brought forward”; to recognize the following accounts as below:

Dr 1611 - Expenditure brought forward

Cr 1612 - Expenditure of current year.

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 - Expenditure brought forward).

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 - Expenditure brought forward).

Article 33. Account 171 - Government bonds purchased for resale

1. Accounting rules

a) The account shall be used to record transactions in government bonds purchased for resale incurred during a period. The 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 shall comply with regulations on types of transactions, deadlines for transactions and turnovers 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 turnovers account at the times during the term of repurchase agreement but record to other payables or receivables account.

2. Structure and contents reflected in Account 171 - Government bonds purchased for resales (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 bonds purchased for resale 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 bonds purchased for resale 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. Accounting methods for certain major economic transactions:

3.1. Accounting for government bonds’ sellers under repo

a) When the Government bonds purchased for resale takes effect, to recognize the following accounts as below:

Dr 111, 112 (sale price)

Cr 171 - Government bonds purchased for resales.

b) On a periodic basis, 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 bonds purchased for resales (distributing time in conformity with time of agreement)

c) On the maturity date of the Government bonds purchased for resale, the seller shall make payment specified in the Government bonds purchased for resale and receive those securities, and then to recognize the following accounts as below:

Dr 171 - Government bonds purchased for resales

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, to recognize the following accounts as below:

Dr 171 - Government bonds purchased for resale

Cr 111, 112 (purchase price)

b) On a periodic basis, the purchaser shall distribute the difference between original purchase price and resale price of government bonds to turnovers as follows:

Dr 171 - Government bonds purchased for resale

Cr 515 - Financial incomes (other than securities company) (allocated according to duration of agreement).

c) Upon receiving coupon payments of bonds from the seller at the times during the term of the repo, to recognize the following accounts as below:

Dr 111, 112, ...

Cr 338 - Other payables or receivables (3388).

d) When the agreement expires, to recognize the following accounts as below:

Dr 111, 112, 138

Cr 171 - Government bonds purchased for resale.

Concurrently, when repaying coupons of bonds which the purchaser keeps on behalf of the seller at the times during the term of repo, to recognize the following accounts as below:

Dr 338 - Other payables or receivables.

Cr 111, 112, ...

Article 34. Accounting rules for fixed assets, investment properties and construction in progress

1. Fixed assets, investment properties and construction in progress shall be kept track, recorded, managed and used in accordance with applicable laws.

2. The source acquiring fixed assets shall be kept track to distribute depreciation costs following the rules below:

- In case the fixed assets are acquired from loan capital or owner's equity for operation, their depreciation costs shall be allocated to operating costs;

- In case 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. In case of an asset used for multiple purposes, e.g. a mixed-use building for offices, lease and sale, their par value (every part) shall be estimated in conformity with their use purposes.

- In case 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;

- In case of any change in function of parts of the asset, the asset shall be re-classified according to use purposes prescribed in relevant VAS.

4. Upon buying fixed assets, in case 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 par value. In case equipment or spare parts for replacement meet requirements for fixed assets, they shall be recorded to fixed assets account, in case 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. Accounting rules

a) The account shall be 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, in case every part is managed and used separately and meets all four recognition criteria, they shall be treated as independent tangible fixed assets.

Regarding working animals or producing animals for production of commodities, in case each animal species meets all four recognition criteria for fixed assets, they shall be treated as tangible fixed assets.

Regarding perennial gardens, in case 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 shall be kept 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.

- Upon purchasing fixed assets, in case they are bundled with equipment or spare parts for replacement, such equipment or spare parts shall be determined and recorded separately according to their par 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). Regarding 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. In case 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 par value of the received tangible fixed assets, or the par 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 shall be 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 books 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), ... 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 books according to the historical cost, accumulated depreciation, residual value stated in the accounting books 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), ... 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 the cases below:

- 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 shall be prepared exchange reports, liquidation reports on fixed assets and following procedures as prescribed. The accountant is responsible for preparation and completion of accounting books 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. Regarding those fixed assets subject to periodical repair or maintenance (power plants’ turbines, aircraft engines, ...), 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 shall 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 reflected in 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:

- A decrease in historical cost of the tangible fixed assets due to transfer to other enterprises, liquidation or contribution into joint venture, ...

- 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 level-2 accounts:

- Account 2111 - Buildings & 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, ...

- Account 2112 - Machinery & 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 transmission: records costs of means of transport, including roads, rail, waterborne, waterway, air, pipes and transmitters.

- Account 2114 - Office equipment: records costs of equipment and furniture used in management, business and administrative management.

- Account 2115 - Perennial plants, working animals and farm livestocks: records costs of fixed assets such as Perennial plants, working animals and farm livestocks.

- Account 2118 - Other fixed assets: records costs of other fixed assets not recorded to above level-2 accounts.

3. Accounting methods for certain major economic transactions

3.1. Accounting for increases in tangible fixed assets

a) Upon receiving owner’s equity or capital in form of tangible fixed assets, to recognize the following accounts as below:

Dr 211 - Tangible fixed assets (negotiable prices)

Cr 411 - Owner’s invested equity.

b) Purchased fixed assets:

- Upon 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 books and receipt slip of fixed asset shall be prepared and to recognize the following accounts as below:

Dr 211 - Tangible fixed assets (VAT-exclusive prices)

Dr 133 - Value-added tax deductible (1332)

Cr 111, 112, ...

Cr 331 - Trade payables

Cr 341 - Borrowings and financial lease liabilities (3411).

- Upon purchasing tangible fixed assets bundled with equipment or spare parts for replacement, to recognize the following accounts as below:

Dr 211 - Tangible fixed assets (fixed asset purchased and equipment or spare parts for replacement treated as fixed assets in details)

Dr 153 - Tools & supplies (1534) (equipment or spare parts for replacement)

Dr 133 - Value-added tax deductible (1332)

Cr 111, 112, ...

Cr 331 - Trade payables

Cr 341 - Borrowings and financial lease liabilities (3411).

- In case the input VAT is non-deductible, the historical cost of the fixed asset includes VAT.

- In case the fixed asset is purchased by capital expenditure used for operation, in case 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 for constructions

Cr 411 - Owner’s invested equity.

c) Upon purchasing tangible fixed assets in deferred payment or instalment:

- Upon purchasing tangible fixed assets in deferred payment or instalment and put them into use, to recognize the following accounts as below:

Dr 211 - Tangible fixed assets (historical cost - cash prices)

Dr 133 - Value-added tax deductible (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, to recognize the following accounts as below:

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, to recognize the following accounts as below:

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, ...

dd) Self-made tangible fixed assets:

When converting self-made products of the enterprise to tangible fixed assets, to recognize the following accounts as below:

Dr 211 - Tangible fixed assets

Cr 155 - Finished products (dispatched from inventories)

Cr 154 - Cost for work in process (put into use).

e) Upon purchasing tangible fixed assets in the form of exchange:

- Exchange between two similar tangible fixed assets: Upon receiving similar tangible fixed assets in exchange and put into use, to recognize the following accounts as below:

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:

+ Upon transferring the tangible fixed asset to exchanging entity, to recognize the following accounts as below:

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)

+ Upon receiving the fixed asset in exchange, to recognize the following accounts as below:

Dr 211 - Tangible fixed assets (residual value of received fixed asset)

Dr 133 - Value-added tax deductible (1332) (if any)

Cr 131 - Trade receivables (total payment)

+ In case it is required to collect additional payment because the cost of exchanged fixed asset is greater than the received fixed asset, to recognize the following accounts as below when the additional payment is received:

Dr 111, 112 (additional payment)

Cr 131 - Trade receivables.

+ In case it is required to collect additional payment because the residual value of exchanged fixed asset is smaller than the received fixed asset, to recognize the following accounts as below when the additional payment is received:

Dr 131 - Trade receivables.

Cr 111, 112, ...

g) Upon purchasing fixed assets which are buildings, structures associated with land use rights put into use, to recognize the following accounts as below:

Dr 211 - Tangible fixed assets (historical cost - buildings, structures in details).

Dr 213 - Intangible fixed assets (historical cost - land use rights).

Dr 133 - Value-added tax deductible (if any)

Cr 111, 112, 331, ...

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, in case of 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 shall be recorded in the same accounting book system of the enterprise:

+ Upon the completion of the construction and putting assets into use, to recognize the following accounts as below:

Dr 211 - Intangible fixed assets (historical cost).

Cr 241 - Construction in progress.

+ In case the self-constructed assets documents not meet all recognition criteria for tangible fixed assets as prescribed in the accounting standard on tangible fixed assets, to recognize the following accounts as below:

Dr 152, 153 (in case 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): Upon receiving construction, the investor shall record as follows:

Dr 111, 112, 152, 153, 211, 213

Cr 136 - Internal receivables

Cr 331, 333, ... (accept receivables, if any)

- In case 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 for constructions

Cr 411 - Owner’s invested equity.

- Once the settlement is approved, in case of 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) Upon receiving fixed assets from internal General company (without payment), to recognize the following accounts as below:

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, to recognize the following accounts as below:

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 Welfare funds forming fixed assets.

Where withdrawing estimates to purchase fixed assets, the enterprise shall keep records of them in the presentation of financial statements.

l) Where putting fixed assets purchased by welfare funds into use in cultural and welfare fund, to recognize the following accounts as below:

Dr 211 - Tangible fixed assets (total payment)

Cr 111, 112, 331, 3411, ...

- And, to recognize the following accounts as below:

Dr 3532 - Welfare fund

Cr 3533 - Welfare funds forming fixed assets.

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 - Value-added tax deductible (1332)

Cr 112, 152, 331, 334, ...

- Completion of repair, innovation or upgrade of fixed assets put into use:

+ In case of an increase in historical cost of tangible fixed assets, to recognize the following accounts as below:

Dr 211 - Tangible fixed assets

Cr 241 - Construction in progress.

+ In case there is not an increase in historical cost of tangible fixed assets, to recognize the following accounts as below:

Dr 623, 627, 641, 642 (in case their value is small)

Cr 242 - Prepaid expenses. (in case their value is great, they shall be allocated gradually)

Cr 241 - Construction in progress.

3.2. Accounting for decreases in tangible fixed assets

A 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, ... Any case of decrease in tangible fixed assets shall be followed procedures and exactly determined the losses and income (if any). Pursuant to relevant documents, every specific case shall be kept 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 shall be purchase following procedures prescribed in regulations of law. Pursuant to receipt slip of the fixed asset and documents on sale of the fixed asset:

a) Upon selling fixed assets used for business, to recognize the following accounts as below:

Dr 111, 112, 131, ...

Cr 711 - Other income (VAT-exclusive prices)

Cr 3331 - VAT payables (33311).

In case 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 - Welfare funds forming fixed assets (residual value)

Dr 214 - Depreciation of fixed assets (depreciated value)

Cr 211 - Tangible fixed assets (historical cost).

-Turnovers 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 - Bonus and 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, ...

Cr 353 - Bonus and welfare fund (3532)

Cr 333 - Taxes and other payables to the State Budget (3331) (if any)

- Expenditures on sale of the fixed asset shall be recorded as follows:

Dr 353 - Bonus and welfare fund (3532)

Cr 111, 112, ...

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 shall 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 turnovers and expenses incurred from liquidation of fixed assets, ... the liquidation of fixed asset shall be recorded similarly to sale of fixed assets.

3.2.3. Upon contributing tangible fixed assets as capital to subsidiaries, joint-venture companies, to recognize the following accounts as below:

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 shall be uncovered. The shortage or surplus shall 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:

- In case 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, ...

- In case 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, to recognize the following accounts as below:

Dr, operating costs (fixed assets used for business)

Dr 3533 - Welfare funds forming fixed assets (used for welfare)

Dr 466 - Non-business Welfare funds forming fixed assets.

Cr 214 - Depreciation of fixed assets (2141).

- In case the fixed assets in surplus are fixed assets of other enterprises, the owner of such fixed assets shall be notified. In case of failure to determine the owner of such fixed assets, the superior agency and finance agency shall be notified for handling (regarding state 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 of a decision on handling of shortage: the historical cost and depreciated value of such asset shall be accurately determined according to approved “Report on handling of shortage of fixed assets” and dossier on fixed assets, then record a decrease in fixed assets and handle the residual value of the fixed assets. Pursuant to the decision on handling of shortage, to recognize the following accounts as below:

+ 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) (in case the offender is required to make compensation)

Dr 411 - Owner’s invested equity (in case the decrease in equity is permitted to be recorded)

Dr 811 - Other expenses (in case 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 - Welfare funds forming fixed assets (residual value)

Cr 211 - Tangible fixed assets (historical cost).

The residual value of the shortage of fixed assets shall be recovered according to the decision on handling of shortage and to recognize the following accounts as below:

Dr 111, 112 (in case collecting money)

Dr 334 - Payables to staff (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 - Welfare funds forming fixed assets (residual value)

Cr 211 - Tangible fixed assets (historical cost).

The residual value of the shortage of fixed assets shall be recovered according to the decision on handling of shortage and to recognize the following accounts as below:

Dr 111, 112 (in case collecting money)

Dr 334 - Payables to staff (deducted from salaries of employees)

Cr 3532 - Welfare fund

- In case 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).

In case of a decision on handling of residual value of shortage of fixed assets, to recognize the following accounts as below:

Dr 111, 112 (compensation)

Dr 138 - Other receivables (1388) (in case the offender is required to make compensation)

Dr 334 - Payables to staff (deducted from salaries of employees)

Dr 411 - Owner’s invested equity (in case the decrease in equity is permitted to be recorded)

Dr 811 - Other expenses (in case 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 - Welfare funds forming fixed assets (residual value)

Cr 211 - Tangible fixed assets (historical cost).

The residual value of the shortage of fixed assets shall be recorded to account 1381 “Shortage of assets waiting for resolution” as follows:

Dr 1381 - Shortage of assets waiting for resolution

Cr 138 - Other payables or receivables.

In case of a decision on compensation for residual value of the shortage of fixed assets, to recognize the following accounts as below:

Dr 111, 334, ...

Cr 1381 - Shortage of assets waiting for 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, ...).

+ 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 - Welfare funds forming fixed assets (residual value)

Cr 211 - Tangible fixed assets (historical cost).

The residual value of the shortage of fixed assets shall be recorded to account 1381 “Shortage of assets waiting for resolution” as follows:

Dr 1381 - Shortage of assets waiting for resolution

Cr 3532 - Welfare fund

In case of a decision on compensation for residual value of the shortage of fixed assets, to recognize the following accounts as below:

Dr 111, 334, ...

Cr 1381 - Shortage of assets waiting for resolution

3.2.5. Regarding tools and supplies not meeting all recognition criteria of tangible fixed assets used for business, to recognize the following accounts as below:

Dr 623, 627, 641, 642 (in case their residual value is small)

Dr 242 - Prepaid expenses. (in case their value is great, they shall 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 enterprises wholly owned by the State

a) Reports on physical inventory count: Upon receiving notification or decision on equitization of the competent agency, the equitized enterprise shall 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, to recognize the following accounts as below:

Dr 1381 - Shortage of assets waiting for 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 shall 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.

- Regarding shortage of assets detected under physical inventory count, according to “Report on resolution to shortage or surplus of assets under physical inventory count”, to recognize the following accounts as below:

Dr 111 - Cash on hand (individual or organization paying compensation)

Dr 1388 - Other receivables (individual or organization paying compensation)

Dr 334 - Payables to staff (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 - Shortage of assets waiting for resolution.

- Regarding surplus of assets detected under physical inventory count, according to “Report on resolution to shortage or surplus of assets under physical inventory count”, to recognize the following accounts as below:

Dr 3381 - Surplus of assets awaiting resolution.

Cr 331 - Trade payables (in case 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 turnovers, expenses and decreases in assets shall be recorded as follows:

- Turnovers 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 - Value-added tax deductible (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, to recognize the following accounts as below:

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

- Upon transferring housing of officials or employees of the enterprise invested by the welfare funds to real estate agency of the local government to manage, to recognize the following accounts as below:

Dr 3533 - Welfare funds forming fixed assets (residual value)

Dr 214 - Depreciation of fixed assets (depreciated value)

Cr 211 - Tangible fixed assets (historical cost).

- In case the equitized enterprise uses the welfare constructions invested by state capital for business, to recognize the following accounts as below:

Dr 466 - Non-business Welfare funds forming fixed assets.

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 shall be recorded to Cr 412 - Differences upon asset revaluation; Decrease in residual value of fixed asset which shall be recorded to Dr 412 - Differences upon asset revaluation and such differences shall 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, to recognize the following accounts as below:

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, to recognize the following accounts as below:

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

Regarding 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 books 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 companies, groups, general companies, parent companies, or independent accounting companies of the general companies.

Upon 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 books 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 leased fixed assets

1. Accounting rules

a) The account shall be used to record current value and increase and decrease in total financial leased fixed assets of an enterprise. The account shall be used to record historical costs of financial leased 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 leased shall satisfy at least one of five criteria below:

- Ownership of the asset shall be 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 in case 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 par 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 leased in case it meets at least one of three criteria below:

- In case 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 par 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 leased fixed asset shall equal par value of the lease or present value of minimum lease payments amounts (in case the par value is greater than present value of minimum lease payments amounts) plus (+) initial direct costs incurred in connection with financial leasing activities.

 In case 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:

- In case 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;

- In case 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 leased assets.

g) Operating lease fixed assets shall not be recorded to the account.

h) The lessee shall calculate, depreciate the fixed asset and charge to operating costs periodically in conformity with the depreciation policy applicable to its owned-fixed assets in kind. In case 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 in case 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 reflected in Account 212 - Financial leased fixed assets

Debit: Increases in historical costs of the financial leased fixed assets.

Credit: Decreases in historical costs of financial leased 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 leased fixed assets.

Account 212 - Financial leased fixed assets comprises 2 level-2 accounts

- Account 2121 - Financial leased tangible fixed assets: records current value and increases and decreases in total financial leased tangible fixed assets of the enterprise;

- Account 2122 - Financial leased intangible fixed assets: records current value and increases and decreases in total financial leased intangible fixed assets of the enterprise.

3. Accounting methods for certain major economic transactions

3.1. Upon incurring initial direct cost in connection with the financial leased asset before receiving the leased asset, such as: commission fees, legal fees, ..., to recognize the following accounts as below:

Dr 242 - Prepaid expenses

Cr 111, 112, ...

3.2. Upon paying an advance of the financial leased rent or deposit to secure the lease, to recognize the following accounts as below:

Dr 341 - Borrowings and financial lease liabilities (3412) (prepaid lease payments)

Dr 244 - Mortgage, collaterals and deposits

Cr 111, 112, ...

3.3. Upon receiving a financial leased fixed asset, the value of the financial leased fixed assets (input VAT-exclusive prices) shall be recorded according to the lease and related documents, to recognize the following accounts as below:

Dr 212 - Financial leased fixed assets (VAT-exclusive prices)

Cr 341 - Borrowings and financial lease liabilities (3412) (present value of minimum lease payments amounts or par value of the leased asset, excluding refundable taxes).

Initial direct costs in connection with financial leased activities shall be recorded to the historical cost of the financial leased fixed assets as follows:

Dr 212 - Financial leased fixed assets

Cr 242 - Prepaid expenses, or

Cr 111, 112, ... (Direct costs in connection with financial leased activities incurred upon receiving the financial leased asset).

3.4. On a periodic basis, upon the receipt of the financial leased invoices:

Upon paying the principal and lease interest to the lessor, to recognize the following accounts as below:

Dr 635 - Financial expenses (lease interest of current period)

Dr 341 - Borrowings and financial lease liabilities (3412) (lease principal of current period)

Cr 111, 112, ...

3.5. Upon receiving an invoice for input VAT sent by the lessor who is paid by the lessee:

a) In case the VAT is deductible, to recognize the following accounts as below:

Dr 133 - Value-added tax deductible (1332)

Cr 112 - Cash in banks (lump sum payment)

Cr 338 - Other payables (input VAT payables to the lessor).

b) In case the VAT is non-deductible, to recognize the following accounts as below:

Dr 212 - Financial leased fixed assets (in case the input VAT is non-deductible and the VAT is paid lump sum when recording the financial leased fixed assets)

Dr 627, 641, 642 (in case the non-deductible input VAT is paid whenever the invoice is received)

Cr 112 - Cash in banks (lump sum payment)

Cr 338 - Other payables (input VAT payables to the lessor).

3.6. Upon paying the commitment fees to the lessor, to recognize the following accounts as below:

Dr 635 - Financial expenses.

Cr 111, 112, ...

3.7. Upon returning the financial leased fixed assets as mentioned in the lease to the lessor, a decrease in the value of the financial leased fixed assets shall be recorded as follows:

Dr 214 - Depreciation of fixed assets (2142)

Cr 212 - Financial leased fixed assets.

3.8. In case 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 leased fixed assets and an increase in tangible fixed assets under ownership of the enterprise shall be recorded. Upon converting the financial leased asset to the asset under ownership of the enterprise, to recognize the following accounts as below:

Dr 211 - Tangible fixed assets

Cr 212 - Financial leased fixed assets (residual value of the financial leased fixed asset)

Cr 111, 112, ... (additional payables).

And, upon transferring depreciated value, to recognize the following accounts as below:

Dr 2142 - Depreciation of financial leased fixed assets

Cr 2141 - Depreciation of tangible fixed assets

3.9. Accounting for sale and leaseback of financial leased fixed assets:

a) In case the sale and leaseback give the price which is greater than the residual value of the fixed asset:

- Accounting for the sale transaction (refer to account 711)

- Accounting 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.

- On a periodic basis, the depreciation of the financial leased fixed asset shall be calculated, deducted and recorded to operating costs as follows:

Dr 623, 627, 641, 642, ...

Cr 2142 - Depreciation of financial leased fixed assets

- On a periodic basis, upon 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, to recognize the following accounts as below:

Dr 3387 - Unearned turnover

Cr 623, 627, 641, 642, ...

b) In case the sale and leaseback give the price which is smaller than the residual value of the fixed asset:

- Accounting for the sale transaction (refer to account 711)

- Accounting 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.

- On a periodic basis, upon 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, to recognize the following accounts as below:

Dr 623, 627, 641, 642, ...

Dr 242 - Prepaid expenses

Article 37. Account 213 - Intangible fixed assets

1. Accounting rules

a) The account shall be 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;

- In case 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 shall be recorded to the historical cost of the intangible fixed assets (capitalization) as prescribed in VAS “Borrowing costs";

- In case an intangible fixed asset is purchased in the form of exchange with another dissimilar intangible fixed asset, their value shall equal the par value of the received asset or the par value of the exchanged asset after adjustment. In case the exchange and payment against documents is related to the capital ownership of the enterprise, the historical cost shall equal the par 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, ...) or an amount agreed by contracting parties In case of 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 par 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 books 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. In case 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 shall 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. Regarding 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, shall be recognized as operating costs in the period; in case 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 preceding period, shall not be re-recorded to the historical cost of intangible fixed assets.

h) Trademarks, brand names, distribution right, clients’ 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 reflected in 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 level-2 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 (in case the land use rights are acquired separately from any investment in Buildings & structures on land), property transfer taxes (if any), ... The 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 brand 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 & franchises: records value of intangible fixed assets which are expenses incurred from Licenses & franchises, such as: development permits, permits for production of new products, ...

- Account 2138 - Other intangible fixed assets: records value of other intangible fixed assets which are not recorded to above accounts.

3. Accounting methods for certain major economic transactions

3.1. Purchase of intangible fixed assets:

- Upon purchasing intangible fixed assets used for business which are subject to VAT using credit-invoice method, to recognize the following accounts as below:

Dr 213 - Intangible fixed assets (VAT-exclusive prices)

Dr 133 - Value-added tax deductible (1332)

Cr 112 - Cash in banks

Cr 141 - Advances

Cr 331 - Trade payables

- Upon purchasing intangible fixed assets used for business which are not subject to VAT, to recognize the following accounts as below:

Dr 213 - Intangible fixed assets (total payments)

Cr 112, 331, ... (total payments)

3.2. Purchase of intangible fixed assets in instalment or deferred payment:

- Upon purchasing intangible fixed assets used for business which are subject to VAT using credit-invoice method, to recognize the following accounts as below:

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 - Value-added tax deductible (1332)

Cr 111, 112

Cr 331 - Trade payables

- Upon purchasing intangible fixed assets used for business which are not subject to or subject to VAT using subtraction method, to recognize the following accounts as below:

Dr 213 - Intangible fixed assets (VAT-inclusive cash prices)

Dr 242 - Prepaid expenses (deferred interest shall equal (=) difference between total payment minus (-) cash price)

Cr 331 - Trade payables (total payments).

- Upon paying the interest for purchase of intangible fixed assets in instalment or deferred payment on a periodic basis, to recognize the following accounts as below:

Dr 635 - Financial expenses.

Dr 242 - Prepaid expenses

- When making payment to the seller, to recognize the following accounts as below:

Dr 331 - Trade payables

Cr 111, 112, ...

3.3. Purchase of intangible fixed assets in the form of exchange

a) Exchange of two similar intangible fixed assets: Upon receiving an intangible fixed asset in exchange of a similar intangible fixed asset and putting into operation, to recognize the following accounts as below:

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 turnover from exchange of fixed assets shall be recorded as follows:

Dr 131- - Trade receivables (total payments)

Cr 711 - Other income (par 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 (par value of the received fixed asset)

Dr 133 - Value-added tax deductible (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, in case the results do not satisfy recognition criteria of intangible fixed assets, such expenses shall be recorded to operating costs within a period or prepaid expense, to recognize the following accounts as below:

Dr 242 - Prepaid expenses (for great value) or

Dr 642 - General administration expenses

Cr 111, 112, 152, 153, 331, ...

b) In case the result of development stage satisfies recognition criteria of intangible fixed assets:

- Upon collecting actual expenses incurring in the development stage to add to the historical cost of the intangible fixed assets, to recognize the following accounts as below:

Dr 241 - Construction in progress

Dr 133 - Value-added tax deductible (1332 - if any)

Cr 111, 112, 152, 153, 331, ...

- When completing development stage, total actual expenses incurring which shall be recorded to the historical cost of the intangible fixed asset, to recognize the following accounts as below:

Dr 213 - Intangible fixed assets

Cr 241 - Construction in progress

3.5. Upon 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 shall 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 - Value-added tax deductible (1332 - if any)

Cr 111, 112, 331, ...

3.6. In case 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 par value stated in those documents, and to recognize the following accounts as below:

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:

- Upon receiving a granted, donated or presented intangible fixed asset, to recognize the following accounts as below:

Dr 213 - Intangible fixed assets

Cr 711 - Other income

- When incurring expenses related to donated or presented intangible fixed assets, to recognize the following accounts as below:

Dr 213 - Intangible fixed assets

Cr 111, 112, ...

3.8. Upon receiving land use rights as capital, to recognize the following accounts as below according to dossiers on transfer of land use rights:

Dr 213 - Intangible fixed assets

Cr 411 - Owner's invested equity.

3.9. Upon converting use purposes of the investment properties which are land use rights to intangible fixed assets, to recognize the following accounts as below:

Dr 213 - Intangible fixed assets (2131)

Cr 217 - Investment properties.

And upon transferring cumulative depreciation of the investment properties to cumulative depreciation of the intangible fixed assets, to recognize the following accounts as below:

Dr 2147 - Depreciation of investment properties

Cr 2143 - Depreciation of tangible fixed assets

3.10. Upon 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, to recognize the following accounts as below:

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, to recognize the following accounts as below:

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. Accounting rules

a) The account shall be 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) shall 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. Regarding special cases not subject to depreciation (such as fixed assets for reservation or common use in society, ...), the enterprise shall comply with applicable laws. It is not required to depreciate fixed assets used for non-business activities or welfare, only depreciation of such fixed asset is 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 applicable to every fixed asset or investment property shall be conducted consistently and may be changed in case of any change in method of recovering economic benefits of the fixed asset or investment property.

d) The useful life and depreciation method shall be re-considered at least at the end of every fiscal year.

In case the estimated useful life of the asset is different significantly from previous estimated useful life, the useful life shall 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) In case 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. In case 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. In case 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. Regarding state 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. In case of failure to determine useful life, they shall be not depreciated.

g) Regarding financial leased fixed assets, during the period in which the assets are used; the lessee shall 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. In case an investment property is held for capital appreciation, the enterprise shall not depreciate but determine the loss due to depreciation.

2. Structure and contents reflected in 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 level-2 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 leased fixed assets: records the depreciation value of tangible fixed asset during the using period and other increases or decreases of financial leased 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. Accounting methods for certain major economic transactions

a) On a periodic basis, when calculating, deducting and recording fixed assets to operating costs, to recognize the following accounts as below:

Dr 623, 627, 641, 642, 811

Cr 214 - Depreciation of fixed assets (appropriate level-2 account)

b) Upon receiving used fixed assets which shall be transferred intra-company between dependent accounting units having no legal status, to recognize the following accounts as below:

Cr 211 - Tangible fixed assets (historical cost).

Cr 336, 411 (residual value)

Cr 214 - Depreciation of fixed assets (2141) (depreciation value)

c) On a periodic basis, when deducting depreciation of investment properties for operating lease, to recognize the following accounts as below:

Dr 632 - Costs of goods sold (investment property operating expenses)

Cr 214 - Depreciation of fixed assets (2147)

d) In case of 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) Where calculating depreciation value of fixed assets for non-business activities at the end of the fiscal year, to recognize the following accounts as below:

Dr 466 - Non-business Welfare funds forming fixed assets

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, to recognize the following accounts as below:

Dr 3533 - Welfare funds forming fixed assets

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, in case of any change in the depreciation rate, the depreciation recorded in the accounting books shall be adjusted as follows:

- In case 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, to recognize the following accounts as below:

Dr 623, 627, 641, 642 (increase in depreciation difference)

Cr 214 - Depreciation of fixed assets (appropriate level-2 account)

- In case 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, to recognize the following accounts as below:

Dr 214 - Depreciation of fixed assets (appropriate level-2 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 shall be recorded to Cr 412 - Differences upon asset revaluation; Decrease in residual value of fixed asset which shall be recorded to Dr 412 - Differences upon asset revaluation and such differences shall 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, to recognize the following accounts as below:

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, to recognize the following accounts as below:

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 companies, groups, general companies, parent companies, independent accounting units of the general companies:

Upon 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 books:

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. Accounting rules

1.1 The account shall be 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. The account shall be 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 the 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 the account according to their cost. Cost of an investment property means the amount of cash or cash equivalents paid or the par 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, ...

+ In case 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;

+ In case 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 shall 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 turnover from total advances from investment property lease, total estimated cost equivalent to the turnover 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 par 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 real estates).

1.7. Regarding purchased investment properties which shall 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”. In case the construction, innovation or upgrading completes, the cost of the investment property shall 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 in case of 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. In case 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 turnovers (VAT-exclusive prices regarding enterprises subject to VAT using credit-invoice method). In case 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 turnover.

1.11. A decrease in investment property shall be recorded in the cases below:

- 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 reflected in Account 217 - Investment properties

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. Accounting methods for certain major economic transactions

3.1. Purchase of investment properties:

a) In case the instalment payment is made and the input VAT is deductible, to recognize the following accounts as below:

Dr 217 - Investment properties

Dr 133 - Value-added tax deductible (1332)

Cr 111, 112.

In case the VAT is non-deductible, the historical cost of the investment property shall include VAT.

b) In case the deferred payment is made:

- And the input VAT is deductible; to recognize the following accounts as below:

Dr 217 - Investment properties (VAT-exclusive cash prices)

Dr 242 - Prepaid expenses (deferred interest shall equal (=) total payment minus (-) cash price minus (-) input VAT)

Dr 133 - Value-added tax deductible (1332)

Cr 331 - Trade payables

In case the VAT is non-deductible, the historical cost of the investment property shall include VAT.

- On a periodic basis, when calculating and allocating the interest payable of the purchased investment property in deferred payment, to recognize the following accounts as below:

Dr 635 - Financial expenses.

Dr 242 - Prepaid expenses

- When making payment to seller, to recognize the following accounts as below:

Dr 331 - Trade payables

Cr 515 - Financial income (discount obtained due to early payment, if any)

Cr 111, 112, ...

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, to recognize the following accounts as below according to the transferred documents:

Dr 217 - Investment properties

Cr 241 - Construction in progress.

3.3. Upon converting owner-occupied property or inventory to investment property, to recognize the following accounts as below according to documents on convert of use purposes:

a) When converting a fixed asset into an investment property:

Dr 217 - Investment properties

Cr 211 - Tangible fixed asset, or

Cr 213 - Intangible fixed assets.

And, upon transferring accumulated depreciation, to recognize the following accounts as below:

Dr 2141, 2143.

Cr 2147 - Depreciation of investment property (property for lease)

Cr 217 - Investment properties (property held for capital appreciation).

b) When converting from inventory into investment property, to recognize the following accounts as below according to the documents on convert of use purposes:

Dr 217 - Investment properties

Cr 1557, 1567.

In case the investment property is used for lease, it shall be depreciated as prescribed. In case the investment property is held for capital appreciation, it shall not be depreciated, but the decrease in the investment property shall be determined in case 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. Upon renting an asset under finance lease in order to lease them under one or multiple operating leases, in case such asset meets recognition criteria of investment property:

a) According to financial leased and relevant documents, to recognize the following accounts as below:

Dr 217 - Investment properties

Cr 111, 112, 3412.

(Lease payments shall be made upon the receipt of financial leased invoice as prescribed in account 212 “Financial leased fixed assets”).

b) When the finance lease expires

- When returning financial leased investment property which is classified as investment property, to recognize the following accounts as below:

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 properties (cost).

- Upon purchasing a financial leased investment property which is classified as an investment property, an increase in investment property (additional payables) shall be recorded as follows:

Dr 217 - Investment properties

Cr 111, 112, ...

- Upon purchasing a financial leased 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 to recognize the following accounts as below:

Dr 211 - Tangible fixed asset, or

Dr 213 - Intangible fixed assets

Cr 217 - Investment properties

Cr 111, 112, (additional payables).

And, upon transferring accumulated depreciation, to recognize the following accounts as below:

Dr 2147 - Depreciation of investment properties

Cr 2141, 2143.

3.5. Upon subsequent expenses relating to an investment property occur after initial recognition of investment property, in case 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 - Value-added tax deductible (1332)

Cr 111, 112, 152, 331, ...

- When completing upgrading, innovation, ... of investment property, an increase in the cost of the investment property shall be recorded as follows:

Dr 217 - Investment properties

Cr 241 - Construction in progress.

3.6. Accounting for sale or disposal of investment property;

a) Recognition of turnover from sale or disposal of investment property:

- In case the output VAT payable is separable when the investment property is sold or disposed, to recognize the following accounts as below:

Dr 111, 112, 131 (total payment)

Cr 511 - Turnovers (5117) (VAT-exclusive disposal prices)

Cr 3331 - VAT payables (33311).

- In case the output VAT payable is inseparable when the investment property is sold or disposed, the turnover shall include output VAT payable. On a periodic basis, the VAT payables shall be determined and decreases in turnovers shall be recorded as follows:

Dr 511 - Turnovers

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 properties (cost of investment property).

3.7. Accounting for investment property lease

a) Turnovers from investment property lease shall be recorded as follows:

Dr 111, 112, 131

Cr 511 - Turnovers (5117).

b) Recognition of the cost of investment property lease

- Upon collecting total cost of investment property, to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 214 - Accumulated depreciation (2147)

Cr 111, 112, 331, ...

- In case 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 applicable to sale of property.

3.7. Converting investment property into inventory or owner-occupied property:

a) In case the investment property is converted into inventory when the owner decides to repair, innovate or upgrade it for sale:

- In case of 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”, to recognize the following accounts as below:

Dr 156 - Merchandise goods (Account 1567 - Real estate)

Dr 214 - Depreciation of fixed assets (2147 - accumulated depreciation - if any)

Cr 217 - Investment properties (cost).

- When incurring expenses incurred from repair, innovation or upgrade for sale, to recognize the following accounts as below:

Dr 154 - Cost for work in process

Dr 133 - Value-added tax deductible (if any)

Cr 111, 112, 152, 334, 331, ...

- When the repairing, innovation and upgrading are completed for sale, all the expenses shall be added to the cost of the property for sale, to recognize the following accounts as below:

Dr 156 - Merchandise goods (1567)

Cr 154 - Cost for work in process.

b) When converting investment property into owner-occupied property, to recognize the following accounts as below:

Dr 211, 213.

Cr 217 - Investment properties.

And, to recognize the following accounts as below:

Dr 2147 - Depreciation of investment properties (if any)

Cr 2141, 2143.

3.8. In case 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 real estates). In case the loss is determined reliably, to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 217 - Investment properties.

Article 40. Accounting rules 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. Upon investing by non-monetary assets, the investor shall apply appropriate accounting method according to type of investment, in particular:

a) In case a non-monetary asset is used for capital contribution, the investor shall 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:

- In case 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 turnover and cost of the inventory used for exchange with purchased capital holding shall be recorded);

- In case 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 (turnover, other income or other expenses shall be recorded, ...);

- In case the non-monetary asset for payment is an equity instrument (shares) or a debt instrument (bonds, receivables, ...), 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, ... In case a non-monetary asset is invested, the cost of the investment shall be recorded according to the par 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 shall 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 par 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 par value but they shall be recorded as a decrease in value of investment.

c) When determining value of the enterprise for equitization, in case investments in equity of other entities are recorded as an increase equivalent to the portion of ownership of the equitized enterprise in the undistributed after-tax profits of the subsidiary, joint venture or associate, the equitized enterprise shall record the increase in state capital as prescribed. In case 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) In case the dividends are received in the form of shares, it is required to follow rules below:

- Non-companies wholly owned by the State 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.

- Companies wholly owned by the State shall comply with regulations of law on companies wholly owned by the State.

6. Upon 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 equity of other entities or trade securities, but not recorded to investments in subsidiary or joint venture or associate.

9. Upon preparing the financial statement, the enterprise shall determine value of investment loss to create allocation for investment loss.

Article 41. Account 221 - Investments in subsidiaries

1. Accounting rules

a) The account shall be 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 entities having legal status and doing independent accounting).

b) The account 221 “Investments in subsidiaries” is only recorded in case 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. In case 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 the 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” in case of 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) In case of buying an investment in a subsidiary in the business combination transaction, the buyer shall 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 shall 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 par 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 par 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 after-tax profits under ownership of the parent company on the consolidated financial statements. In case allocating profits in cash, the enterprise shall 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 in case the enterprise has intention of disposing the subsidiary in the future.

2. Structure and contents reflected in 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. Accounting methods for certain major economic transactions

3.1. Capital contribution

a) When a parent company invests money in subsidiaries, to recognize the following accounts as below according to amounts of investments and directly-attributable expenses:

Dr 221 - Investments in subsidiaries

Cr 111, 112, 3411, ...

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 shall 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; upon receiving the contributed asset, the subsidiary shall 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 par 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) In case the trading in business combination is paid in cash or cash equivalent by the acquirer, to recognize the following accounts as below:

Dr 221 - Investments in subsidiaries

Cr 111, 112, 121, ...

b) In case the trading in business combination is carried out by the acquirer ‘share issuance:

- And issue price (according to par value) of the share on the exchange date is greater than face value of the share; to recognize the following accounts as below:

Dr 221 - Investments in subsidiaries (according to par value)

Cr 4111 - Contributed capital (according to face value)

Cr 4112 - Capital surplus (positive difference between the par value and the face value of the share).

- And issue price (according to par value) of the shares on the exchange date are smaller than face value of the share, to recognize the following accounts as below:

Dr 221 - Investments in subsidiaries (according to par value)

Dr 4112 - Capital surplus (negative difference between the par 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, ...

c) In case 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, to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 155, 156, ...

And, an increase in investments in subsidiaries and turnovers shall be recorded as follows:

Dr 221 - Investments in subsidiaries

Cr 511 - Turnovers

Cr 333 - Taxes and other payables to the State Budget (33311).

d) In case the trading in business combination is carried out by the acquirer’s bond issuance:

- Upon paying by bonds at par value, to recognize the following accounts as below:

Dr 221 - Investments in subsidiaries (according to par value)

Cr 34311 - Par value of bonds.

- Upon paying by discount bonds, to recognize the following accounts as below:

Dr 221 - Investments in subsidiaries (according to par value)

Dr 34312 - Bond discounts (discount amount)

Cr 34311 - Par value of bonds

- Upon paying by premium bonds, to recognize the following accounts as below:

Dr 221 - Investments in subsidiaries (according to par 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, ..., to recognize the following accounts as below by the acquirer:

Dr 221 - Investments in subsidiaries

Cr 111, 112, 331, ...

3.3. Accounting for dividends or profits which are divided in cash or non-monetary assets (excluding receipt of dividends in shares):

a) Upon receiving notification of dividends or profits divided issued by the subsidiary after investment date, to recognize the following accounts as below:

Dr 138 - Other receivables (1388)

Cr 515 - Financial income.

Upon receiving dividends or profits divided, to recognize the following accounts as below:

Dr, relevant accounts (according to par value)

Cr 138 - Other receivables (1388)

b) Upon receiving notification of dividends or profits divided before the date on which investments in subsidiaries are made, to recognize the following accounts as below:

Dr 138 - Other receivables (1388)

Cr 221 - Investments in subsidiaries

c) Upon 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. Upon providing additional investment in order to convert investments in joint-venture companies or financial instruments into investments in subsidiaries, to recognize the following accounts as below:

Dr 221 - Investments in subsidiaries

Cr 121, 128, 222, 228

Cr, relevant accounts (par value of additional investment amounts)

3.5. Upon disposing a part or total investment in subsidiaries, to recognize the following accounts as below:

Dr, relevant accounts (par value of collected amounts from disposal)

Dr 222 - Investments in joint ventures and 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. Upon 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 par value on the merging date, to recognize the following accounts as below:

Dr, accounts recording assets (according to par value on the merging date)

Dr 635 - Financial expenses (positive difference between book value of the investment and the par value of merged assets or liabilities)

Cr, accounts recording liabilities (according to par 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 par value of merged assets or liabilities)

Article 42. Account 222 - Investments in joint ventures and associates

1. Accounting rules

a) The account shall be 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. The 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 shall do accounting separately as prescribed in regulations of Accounting Law in force, take responsibility for control of assets, liabilities, turnovers, 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 shall 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 and 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 par 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 reflected in Account 222 - Investments in joint ventures and associates

Debit: Increases in Investments in joint ventures and associates

Credit: Decreases in Investments in joint ventures and associates due to disposal, sale or recovery.

Debit balance: Closing balance of Investments in joint ventures and associates.

3. Accounting methods for certain major economic transactions

3.1. Upon contributing joint venture capital in cash to joint ventures or associates, to recognize the following accounts as below:

Dr 222 - Investments in joint ventures and associates Cr 111, 112.

3.2. Upon incurring directly-attributable expenses to Investments in joint ventures and associates (information, brokerage, transactions investment progress), to recognize the following accounts as below:

Dr 222 - Iopenvestments in joint ventures and 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; upon receiving the contributed assets, the joint venture or associate shall 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 and 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 and 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 par 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.

- In case the investments in the joint venture or associate are paid in cash or cash equivalent by the acquirer, to recognize the following accounts as below:

Dr 222 - Investments in joint ventures and associates

Cr 111, 112, 121, ...

- In case the investments in the joint venture or associate are carried out by the acquirer ‘share issuance:

+ And issue price (according to par value) of the share on the exchange date is greater than face value of the share; to recognize the following accounts as below:

Dr 222 - Investments in joint ventures and associates (according to par value)

Cr 4111 - Contributed capital (according to face value)

Cr 4112 - Capital surplus (positive difference between the par value and the face value of the shares).

+ And issue price (according to par value) of the share on the exchange date is smaller than face value of the share; to recognize the following accounts as below:

Dr 222 - Investments in joint ventures and associates (according to par value)

Dr 4112 - Capital surplus (negative difference between the par 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, ...

- In case 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 and associates due to exchange of fixed assets shall be recorded as follows:

Dr 222 - Investments in joint ventures and 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, to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 155, 156, ...

And, an increase in Investments in joint ventures and associates and turnovers shall be recorded as follows:

Dr 222 - Investments in joint ventures and associates

Cr 511 - Turnovers

Cr 333 - Taxes and other payables to the State Budget (33311).

- In case the Investments in joint ventures and associates are carried out by the acquirer ‘share issuance:

+ Upon paying by bonds at face value, to recognize the following accounts as below:

Dr 222 - Investments in joint ventures and associates (according to par value)

Cr 34311 - Par value of bonds.

+ Upon paying by discount bonds, to recognize the following accounts as below:

Dr 222 - Investments in joint ventures and associates (according to par value)

Dr 34312 - Bond discounts (discount amount)

Cr 34311 - Par value of bonds.

+ Upon paying by premium bonds, to recognize the following accounts as below:

Dr 222 - Investments in joint ventures and associates (according to par value)

Cr 34311 - Par value of bonds.

Cr 34313 - Bond premiums (premium amount).

+ Directly-attributable expenses to Investments in joint ventures and associates such as legal services, price appraisal, ..., to recognize the following accounts as below by the acquirer:

Dr 222 - Investments in joint ventures and associates

Cr 111, 112, 331, ...

3.5. Upon incurring attributable expenses to joint ventures or associates within a period, such as loan interests for capital contribution or other expenses, to recognize the following accounts as below:

Dr 635 - Financial expenses

Dr 133 - Value-added tax deductible (if any).

Cr 111, 112, 152, ...

3.6. Accounting for dividends or profits:

- Upon receiving notification of dividends or profits divided in cash from the joint venture or associate after the investment date, to recognize the following accounts as below:

Dr 138 - Other receivables (1388)

Cr 515 - Financial income.

- Upon 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 and associates in case of evaluation of the enterprise for equitization, to recognize the following accounts as below:

Dr 112, 138.

Cr 222 - Investments in joint ventures and associates

3.7. Accounting for disposal or sale of Investments in joint ventures and associates:

Dr 111, 112, 131, 152, 153, 156, 211, 213, ...

Dr 228 - Other investment (significant influence no longer exists)

Dr 635 - Financial expenses (for losses)

Cr 222 - Investments in joint ventures and associates

Cr 515 - Financial income (for gains).

3.8. Upon incurring expenses incurred from disposal or sale of Investments in joint ventures and associates, to recognize the following accounts as below:

Dr 635 - Financial expenses

Dr 133 - Value-added tax deductible

Cr 111, 112, 331, ...

3.9. Upon providing additional investment in order to the joint venture or associate becoming a subsidiary and hold control rights, to recognize the following accounts as below:

Dr 221 - Investments in subsidiaries

Cr 111, 112, ...

Cr 222 - Investments in joint ventures and 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, to recognize the following accounts as below:

Dr 222 - Investments in joint ventures and 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, upon transferring contributed capital:

+ Upon transferring joint venture capital to foreign parties and returning land use rights to the State, to recognize the following accounts as below:

Dr 411 - Owner's invested equity

Cr 222 - Investments in joint ventures and associates.

+ In case the party pays an asset other than land use rights to Vietnamese party (the joint venture changes to land lease), to recognize the following accounts as below:

Dr 111, 112, ...

Cr 515 - Financial income.

- In case the Vietnamese party transfers joint venture capital to the foreign party and returns land use rights and changes to land lease. The joint venture shall 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: similar to accounting for trading with ordinary clients (unless the owner's equity method is applied).

Article 43. Account 228 - Other investments

1. Accounting rules

a) The account shall be used to record current value and increases or decreases in other investments (other than investments in subsidiaries, Investments in joint ventures and 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 the 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 reflected in 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 level-2 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), ..., which are not put into normal operation but they are purchased to held for capital appreciation.

3. Accounting methods for certain major economic transactions

3.1. In case 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, ...)

Cr 111, 112.

b) In case of investment by non-monetary assets:

- In case of contributing a non-monetary asset as capital, to recognize the following accounts as below 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, ...

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, to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 155, 156, ...

And, an increase in other investments and turnovers shall be recorded as follows:

Dr 22 - Other investments (2281) (total payment)

Cr 511 - Turnovers (par value of received investment)

Cr 333 - Taxes and other payables to the State Budget (33311).

3.2. Accounting for dividends or profits which are divided in cash or non-monetary assets (excluding receipt of dividends in shares):

- Upon receiving notification of dividends or profits divided after the investment date, to recognize the following accounts as below:

Dr 138 - Other receivables (1388)

Cr 515 - Financial income.

- Upon receiving notification of dividends or profits divided before the investment date, to recognize the following accounts as below:

Dr 138 - Other receivables (1388)

Cr 228 - Other investments (2281)

- Upon 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. In case 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, to recognize the following accounts as below:

Dr 111, 112, 131, ...

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, to recognize the following accounts as below:

Dr 111, 112,131, ...

Cr 228 - Other investments (book value)

Cr 515 - Financial income (sale price is greater than book value).

- When incurring losses from sale or disposal, to recognize the following accounts as below:

Dr 111, 112,131, ...

Dr 635 - Financial expenses (sale price is smaller than book value)

Cr 228 - Other investments (book value).

3.5. In case the investor contributes additional capital and becomes parent company which has joint control or significant influence, to recognize the following accounts as below:

Dr 221, 222.

Cr 111, 112 (additional investment)

Cr 228 - Other investments

Article 44. Accounting for BCC

1. Accounting rules

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 turnovers, products or after-tax profits.

1.3. In any cases, upon 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 shall keep records in the same system of accounting books 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.

Regarding 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 books but keep records of the places of assets.

Regarding fixed asset or investment property which is contributed to BCC and the ownership of the contributor shall be transferred to the joint ownership; during construction of jointly controlled assets, the contributor shall include a decrease in assets in the accounting books 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 shall include in accounting books 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. In case 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 List of shares of products shall be made, certified quantity or specifications of shares of products from BCC and held by every venturer (original copy). Upon receiving products, the venturer shall 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 books and disposal of contracts.

d) In case any joint expenses or income borne or earned by venturers under BCC, the venturers shall comply with regulations on accounting similarly to jointly controlled operations.

1.6. BCC in the form of shares of after-tax profits

a) BCC in the form of shares of after-tax profits is usually in the form of jointly controlled operations or individually controlled operations. Upon giving shares of after-tax profits under BCC, all venturers shall appoint a venture to account for all transactions in BCC, record turnovers, expenses, separately keep records of Statement of Income of BCC and make tax declaration. In case the venturers decide to enter into BCC in above form, they shall 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 office 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 office 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 shall generate profits. In this case, the enterprise is still be required to pay corporate income tax on BCC instead of offsetting BCC profits against other activities’ losses; in case 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;

+ In case 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 turnovers from other operations).

b) In case the BCC regulates shares of after-tax profits, the venture in charge of accounting and tax declaration shall do accounting following the rules below:

- In case 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 turnovers, expenses and after-tax profits of BCC shall be included in their Statement of Incomes; earnings per share and financial standards shall be calculated according to total income, expenses and after-tax profits of BCC;

+ Total after-tax profits of BCC shall be included in the item “Undistributed after-tax profits” of the balance sheet, financial standards related to after-tax profit ratio which is calculated including total output of BCC.

+ Other venturers shall record their shares of BCC to turnovers from lease.

- In case the BCC regulates that other venturers of BCC may only be divided profits in case the BCC activities generate profits and they shall suffer losses, in this case, even though the legal form of BCC is after-tax profit division but the nature of BCC is division of turnovers 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 shall apply accounting method for shares of income under BCC to record turnovers, expenses and business output within a period, and provide evidence for tax declaration to other venturers, in particular:

+ All turnovers, expenses and shares of profits under BCC shall be included in their Statement of Incomes; earnings per share and financial indicator shall only be calculated according to the turnovers, expenses and profits stated in the Statement of Incomes; the venturer in charge of tax declaration shall provide copies of documents on fulfillment in obligations of BCC to state budget in order to serve the tax declaration of other venturers of BCC;

+ Undistributed after-tax profits of the balance sheet only include shares of after-tax profit of each venturer.

+ Other venturers shall send reports on their shares of turnovers and expenses whose tax liabilities are covered stated in the Statement of Income to the tax office 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, to recognize the following accounts as below 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, to recognize the following accounts as below 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, ...

Cr 331, 3411, ...

2.3. In case the construction works are completed and put into operation, the venturers shall make declaration and divide the value of the jointly controlled assets. Pursuant to the report on shares of jointly controlled asset, venturers shall determine the par value of each asset to keep records in accordance with regulations of law as follows:

Dr 211, 213, 217 (par value of shares of jointly controlled assets in details)

Dr 138 - Other receivables (un-approved and recoverable expenses)

Dr 811 - Other expenses (in case the par value of the share of asset is smaller than the construction expense)

Cr 241 - Construction in progress

Cr 711 - Other expenses (in case the par 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, ...

Cr 138 - Other payables, receivables.

When returning contributed capital to venturers, reverse the above entry. In case of any difference between the par value of returned asset and the value of contributed capital of venturers, such difference shall be recorded to other income or other expenses.

- In case 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, ...

Upon receiving contributed capital by the contributee, reverse the above entry. In case of any difference between the par value of received asset and the value of contributed capital of venturers, such difference shall be recorded to other income or other expenses.

- In case 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, to recognize the following accounts as below:

Dr 621, 622, 627, 641, 642 (BCC in details)

Dr 133 - VAT payables (if any).

Cr 111, 112, 331, ...

- Upon transferring separate expenses to add to operating expense of BCC at the end of the accounting period, to recognize the following accounts as below:

Dr 154 - Cost for work in process (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, to recognize the following accounts as below 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, ...

- In case the BCC regulates shares of joint expenses, a List of shares of joint expenses shall be made and certified by all venturers, then to recognize the following accounts as below:

Dr 138 - Other receivables (in details for every venturer)

Cr 133 - Value-added tax deductible (for input VAT).

Cr 3331 - VAT payables (in case 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 List of shares of joint expenses approved by the venturers (notified by a venturer bearing joint expenses), to recognize the following accounts as below:

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:

- Upon receiving shares of products from BCC and delivering them to inventory, to recognize the following accounts as below according to receipt slip, delivery order and relevant documents:

Dr 152 - Raw materials (in case the shares of products are not finished products)

Dr 155 - Finished products (in case the shares of products are finished products)

Dr 157 - Goods on consignment (in case the shares of products are sold without delivering to inventories)

Cr 154 - Cost for work in process (including separate expenses and joint expenses borne by every venturers) (BCC in details)

- Upon receiving shares of products from BCC and putting them into production of other products, to recognize the following accounts as below according to receipt slip and relevant documents:

Dr 621 - Direct raw materials costs

Cr 154 - Cost for work in process (including separate expenses and joint expenses borne by every venturers) (BCC in details)

- In case 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 venturer to costs of goods sold, to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 154 - Cost for work in process (including separate expenses and joint expenses borne by every venturers) (BCC in details)

3.5. Accounting for turnovers from sale of products in case a venturer sells products under a trust and share turnovers to other venturers:

a) For the seller:

- When selling products under the BCC, the sell shall issue invoices for all sold products and total amounts of sale of products shall be recorded as follows:

Dr 111, 112, 131, ...

Cr 338 - Other payables or receivables (BCC in details)

Cr 3331 - VAT payables (if any).

- Pursuant to the provisions of the BCC and the list of turnover allocation, the shares of turnovers received by each venture shall be recorded as follows:

Dr 338 - Other payables or receivables (BCC in details)

Cr 511 - Turnovers (interests earned by the seller under BCC).

- After comparing joint expenses borne by each venture and shares of turnovers earned by each venture, the other receivables and the other payables shall be offset (in details for each venturer), then to recognize the following accounts as below:

Dr 138 - Other payables, receivables.

Cr 138 - Other receivables

- When giving shares of products sold to other venturers (other than the seller), to recognize the following accounts as below:

Dr 338 - Other payables or receivables (every venturers)

Cr 111, 112, ...

b) For other venturers (other than the seller):

- According to the list of turnover allocation certified by all venturers and documents provided by the seller, other venturers shall issue invoices of their shares of turnovers and give them to the seller and to recognize the following accounts as below:

Dr 138 - Other receivables (including VAT in case output VAT is shared, in details for the sellers)

Cr 511 - Turnovers (BCC in details and amounts of shares).

Cr 3331 - VAT payables (in case of sharing output VAT).

- Where the venturers repay for sale of products, to recognize the following accounts as below according to the actual received amounts:

Dr 111, 112, ... (amounts repaid by venturers)

Cr 138 - Other receivables (in details for every seller).

4. Method of accounting for BCC in the form of after-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

- Upon receiving money, materials or goods from capital contributors, to recognize the following accounts as below:

Dr 112, 152, 156, ...

Cr 138 - Other payables, receivables.

- When incurring turnovers 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, to recognize the following accounts as below:

Dr 627, 641, 642

Cr 138 - Other payables, receivables.

- When returning amounts of money or materials contributed as capital, to recognize the following accounts as below:

Dr 138 - Other payables, receivables.

Cr 112, 152, 156, ...

In case of any difference between the par 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

- In case of contributing capital to BCC, to recognize the following accounts as below:

Dr 138 - Other receivables

Cr 112, 152, 156, ...

- Upon receiving notification of shares of profits earned from BCC, to recognize the following accounts as below:

Dr 138 - Other receivables

Cr 511 - Turnovers (5113)

- Upon receiving contributed capital, to recognize the following accounts as below:

Dr 112, 152, 156, ...

Cr 138 - Other receivables

In case of any difference between the par 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 turnovers of BCC, total turnovers included in accounting books in account 511 shall be used as the basis for comparison, explanation and determination of taxable turnovers for BCC:

- Turnovers for BCC shall be recorded as follows:

Dr 112, 131.

Cr 511 - Turnovers

Cr 3331 - VAT payables.

On the Statement of Income, only shares of turnovers are included in the item “Turnovers”

- On a periodic basis, a decrease in shares of turnovers for BCC, to recognize the following accounts as below:

Dr 511 - Turnovers

Dr 3331 - VAT payables (in case VAT is shared).

Cr 138 - Other payables, receivables.

a3) Total expenses incurred from accounting books shall be the basis for comparison and determination of taxable expenses of BCC:

- When incurring expenses of BCC, to recognize the following accounts as below:

Dr 632, 641, 642, ...

Cr 112, 331, 154, 155, ...

On the Statement of Income, only shares of turnovers are included in the item “Expenses”

- On a periodic basis, a decrease in expenses incurred from BCC borne by venturers, to recognize the following accounts as below:

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 to recognize the following accounts as below:

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 turnovers earned by each venture, the other receivables and the other payables shall be offset (in details for each venturer), then to recognize the following accounts as below:

Dr 138 - Other payables, receivables.

Cr 138 - Other receivables

b) For the venturer not in charge of accounting and tax declaration

- In case of contributing capital to BCC, to recognize the following accounts as below:

Dr 138 - Other receivables

Cr 112, 152, 156, ...

- According to the List of shares of joint expenses approved by the venturers (notified by a venturer bearing joint expenses), to recognize the following accounts as below:

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, to recognize the following accounts as below:

Dr 821 - Expenses incurred from applicable corporate income tax

Cr 138 - Other payables, receivables.

- According to the List of shares of turnovers certified by all venturers and documents provided by the seller, other venturers shall issue invoices of their shares of turnovers and give them to the seller and to recognize the following accounts as below:

Dr 138 - Other receivables (including VAT in case output VAT is shared, in details for the seller)

Cr 511 - Turnovers (BCC in details and amounts of shares).

Cr 3331 - VAT payables (in case sharing output VAT).

- After comparing joint expenses borne by each venture and shares of turnovers earned by each venture, the other receivables and the other payables shall be offset (in details for each venturer), then to recognize the following accounts as below:

Dr 138 - Other payables, receivables.

Cr 138 - Other receivables

- Where the venturers repay for sale of products, to recognize the following accounts as below according to the actual received amounts:

Dr 111, 112, ... (amounts repaid by venturers)

Cr 138 - Other receivables (in details for every seller).

- Upon receiving contributed capital, to recognize the following accounts as below:

Dr 112, 152, 156, ...

Cr 138 - Other receivables

In case of any difference between the par 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. Accounting rules

The account shall be 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.

- Regarding investments in a joint venture or an associate, the investor only create allowance due to the losses of the joint venture or the associate in case the financial statement is not applied the owner's equity method for Investments in joint ventures and associates.

- Regarding long-term investments (other than trade securities) not influencing significantly on the investee, the allowances shall be carried out as follows:

+ In case an investment in listed shares or the par 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);

+ Regarding an investment whose par 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 in case 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:

- In case the allowance for current year is higher than the allowance in the accounting books, the enterprise shall create the additional difference of allowance and record it to financial expenses within a period.

- In case 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) In case 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. In case 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:

- In case the allowance for current year is higher than the allowance in the accounting books, the enterprise shall create the additional difference of allowance and record it to financial expenses within a period.

- In case 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, ...

- The amounts of allowance for doubtful debts shall be created as prescribed in regulations in force.

- Other requirements as prescribed by 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:

- In case the amount of allowance for doubtful debts at the end of current accounting period is greater than the allowance recorded in the accounting books, the positive difference shall be recorded to an increase in allowance and an increase in administrative expenses of the enterprise.

- In case the amount of allowance for doubtful debts at the end of current accounting period is greater than the allowance recorded in the accounting books, the positive difference shall be recorded to an increase in allowance and an increase in administrative expenses of the enterprise.

e) Regarding doubtful debts for several years, in case 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 books. The elimination of doubtful debts account shall 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, in case 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 in case 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 shall 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. Regarding 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:

- In case 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 books, the positive difference shall be recorded to an increase in allowance and an increase in costs of goods sold.

- In case 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 books, the negative difference shall be recorded to a decrease in allowance and a decrease in costs of goods sold.

2. Structure and contents reflected in Account 229 - Allowance for impairment of assets

Debit:

- Reverting negative difference between the allowance of this period and the unused allowance of preceding 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 irrecoverability.

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 level-2 accounts

Account 2291 - Allowances for decline in value of trading securities: the account shall be used to record creating or reverting of allowance for decline in value of trading securities.

Account 2292 - Allowances for impairments in other entities: the account shall be used to record creating or reverting of allowance for impairments suffered by an investor due the loss of the investee.

Account 2293 - Allowances for doubtful debts: The account shall be used to record creating or reverting of allowance for doubtful receivables and held-to-maturity investments.

Account 2294 - Allowances for decline in inventories: the account shall be used to record creating or reverting of allowance for decline in inventories.

3. Accounting methods for certain major economic transactions

3.1. Method of accounting for allowance for decline in value of trading securities

a) When preparing a financial statement, in case the allowance created in this period is greater than the allowance created in the preceding period, the difference between them shall be additionally created according to the variation in market value of trading securities and to recognize the following accounts as below:

Dr 635 - Financial expenses

Cr 229 - Allowance for impairment of assets (2291).

a) When preparing a financial statement, in case the allowance created in this period is smaller than the allowance created in the preceding period, the difference between them shall be reverted according to the variation in market value of trading securities and to recognize the following accounts as below:

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 enterprise wholly owned by the State 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, in case the allowance created in this period is smaller than the allowance created in the preceding period, the difference between them shall be created and to recognize the following accounts as below:

Dr 635 - Financial expenses

Cr 229 - Allowance for impairment of assets (2292).

b) When preparing a financial statement, in case the allowance created in this period is smaller than the allowance created in the preceding period, the difference between them shall be reverted and to recognize the following accounts as below:

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, in case the enterprise use the allowance for decline in value of long-term investments to compensate for impairment losses of the long-term investment, to recognize the following accounts as below:

Dr 111, 112, ... (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 enterprise wholly owned by the State 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, in case the allowance for doubtful debts created in this period is greater than the unused allowance for doubtful debts created in the preceding period, the difference between them shall be additionally created and to recognize the following accounts as below:

Dr 642 - General administration expenses

Cr 229 - Allowance for impairment of assets (2293).

b) When preparing a financial statement, in case the allowance for doubtful debts created in this period is smaller than the unused allowance for doubtful debts created in the preceding period, the difference between them shall be reverted and to recognize the following accounts as below:

Dr 229 - Allowance for impairment of assets (2293).

Cr 642 - General administration expenses.

c) Regarding doubtful debts which are considered bad debts, the elimination of debts shall be carried out in accordance with applicable laws According to the decision on elimination of debts; to recognize the following accounts as below:

Dr 111, 112, 331, 334, ... (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, ...

d) Regarding doubtful debts which are eliminated, in case they are recovered, to recognize the following accounts as below according to the actual value of the recovered debts:

Dr 111, 112, ...

Cr 711 - Other income.

dd) Regarding overdue debts sold at contractual prices, to recognize the following accounts as below:

- In case there is not any allowance for overdue debts, to recognize the following accounts as below:

Dr 111, 112 (according to contractual prices)

Dr 642 - General administration expenses (impairment loss from sale of debts)

Cr 131, 138,128, 244, ...

- In case of 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, ...

e) Accounting for allowance for doubtful debts of a enterprise wholly owned by the State 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, in case the allowance for decline in inventories created in this period is greater than the allowance created in the preceding period, the difference between them shall be additionally created and to recognize the following accounts as below:

Dr 632 - Costs of goods sold

Cr 229 - Allowance for impairment of assets (2294).

b) When preparing a financial statement, in case the allowance for decline in inventories created in this period is smaller than the allowance created in the preceding period, the difference between them shall be converted and to recognize the following accounts as below:

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, to recognize the following accounts as below:

Dr 229 - Allowance for impairment of assets (2292) (compensation covered by the allowance)

Dr 632 - Costs of goods sold (in case the impairment loss is greater than the allowance)

Cr 152, 153, 155, 156.

d) Accounting for allowance for decline in inventories before the enterprise wholly owned by the State 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. Accounting rules

a) The account is only used in a non-project management board unit to record expenses of capital investment projects (including new fixed assets acquisition, 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. In case the enterprise carries out capital investment under self-constructed method, the account shall also record expenses incurred during construction or repair process.

Those units establishing project management board and accounting structure shall comply with Circular No. 195/2012/TT-BTC on guidance 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 shall 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 shall 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. In case the repair or maintenance expenses incur on a periodic basis, an allowance payable may be created then the allowance shall be included in operating costs.

e) The investor of property construction shall use the 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. In case 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 enterprises wholly owned by the State 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. In case 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). In case the allocation may not expire the regulated duration, in case the exchange rate loss shall be recorded to Dr 413, the Statement of Income shall state zero profit (the enterprise may not both record exchange rate loss to the item - Foreign exchange differences in the balance sheet and record after-tax profit in the Statement of Income).

+ 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 enterprises wholly owned by the State 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) In case the project of investment is cancelled, the enterprise shall 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 level-2 accounts:

- Account 2411: Fixed assets acquisition: records expenses of fixed assets acquisition and settlement of fixed assets expenses in case fixed assets shall be assembled and operated for testing before put into use (including both new fixed assets acquisition or used fixed assets). In case acquired fixed assets need additional investment or furnishment before being use, then total expenses of additional investment or furnishment shall be recorded to the account.

- Account 2412: Capital construction: records capital investment expenses and settlement of capital expenditure. The 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 shall 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 the account, but be charged directly to operating costs within a period.

2. Structure and contents reflected in 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. Accounting methods for certain major economic transactions

3.1. Accounting for capital investment expenses

3.1.1. Advances paid to contractors

a) Advances in VND:

- Upon paying an advance in VND to a contractor, to recognize the following accounts as below:

Dr 331 - Trade payables

Cr 112 - Cash in banks (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:

- Upon paying an advance in Foreign currencies to a contractor according to the actual exchange rate at the payment time, to recognize the following accounts as below:

Dr 331 - Trade payables (actual exchange rates)

Dr 635 - Financial expenses (in case losses of exchange rates incur)

Cr 112 - Cash in banks (1122) (weighted average book rates).

Cr 515 - Financial expenses (in case profits of exchange rates incur)

- When accepting completed the capital investment, the construction in progress expenses for advance amounts in Foreign currencies 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 Upon receiving the completed capital investment or repaired fixed assets from the contractor, in case the input VAT is deductible, to recognize the following accounts as below according to awarding contract, acceptance report or sale invoice:

Dr 241 - Construction in progress (2412, 2413)

Dr 133 - Value-added tax deductible (1332) (if any)

Cr 331 - Trade payables.

- In case the input VAT is non-deductible, the value of capital investment expenses in progress shall include VAT.

- In case 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. Upon buying capital investment equipment, in case the input VAT is deductible, to recognize the following accounts as below according to invoices or warehouse receipt:

Dr 152 - Raw materials (VAT-exclusive prices)

Dr 133 - Value-added tax deductible (1332)

Cr 331 - Trade payables (total payment)

Upon transferring directly non-assembly equipments to working site for the contractor, to recognize the following accounts as below:

Dr 241 - Construction in progress

Dr 133 - Value-added tax deductible (1332)

Cr 331 - Trade payables.

Cr 151 - Goods in transit

3.1.4. Upon paying to the contractor, or material, good or service suppliers related to capital construction, to recognize the following accounts as below:

Dr 331 - Trade payables

Cr 111, 112, ...

3.1.5. Delivering capital investment equipment to the contractor:

a) For non-assembly equipment, to recognize the following accounts as below:

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.

- Upon 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 to recognize the following accounts as below:

Dr 241 - Construction in progress (2412)

Cr 152 - Raw materials.

3.1.6. Upon 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), ..., to recognize the following accounts as below:

Dr 241 - Construction in progress (2412)

Dr 133 - Value-added tax deductible (1332) (if any)

Cr 111, 112, 331, 335, 3411, 343, ...

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. In case the contractor collects fines leading a decrease in payables to the contractor, to recognize the following accounts as below:

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 at Point 3.1.9 below):

- When incurring exchange rate profits, to recognize the following accounts as below:

Dr, relevant accounts

Cr 515 - Financial income

- When incurring exchange rate losses, to recognize the following accounts as below:

Dr 635 - Financial expenses

Cr, relevant accounts

3.1.9. Regarding enterprises wholly owned by the State performing tasks of security, national defense or macroeconomic stability, in case exchange rate differences arise before the operation (not engaged in the operation):

- When incurring exchange rate profits, to recognize the following accounts as below:

Dr, relevant accounts

Cr 413 - Exchange rate differences

- When incurring exchange rate losses, to recognize the following accounts as below:

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 to recognize the following accounts as below:

+ Upon transferring exchange rate profits, to recognize the following accounts as below:

Dr 413 - Exchange rate differences

Cr 515 - Financial income

+ Upon transferring exchange rate losses, to recognize the following accounts as below:

Dr 635 - Financial expenses

Cr 413 - Exchange rate differences

3.1.10. Regarding testing expenses and amounts of money collected from sale of experimental products:

a) Regarding testing expenses without production of experimental products, to recognize the following accounts as below:

Dr 241 - Construction in progress

Cr, relevant accounts

b) Regarding 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 - Cost for work in process

Cr, relevant accounts

- When delivering experimental products to inventory, to recognize the following accounts as below:

Dr 1551 - Finished products - inventory

Cr 154 - Cost for work in process.

- When selling experimental products, to recognize the following accounts as below:

Dr 112, 131

Cr 1551 - Finished products - inventory

Cr 154 - Cost for work in process (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; to recognize the following accounts as below:

Dr 241 - Construction in progress

Cr 154 - Cost for work in process.

+ 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; to recognize the following accounts as below:

Dr 154 - Cost for work in process.

Cr 241 - Construction in progress

3.1.11. In case the building work is completed and totally accepted and put into operation: In case the financial report is approved instantly, the accounting books shall be kept according to the value of assets acquired through investments. In case 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). To recognize the following accounts as below in above both cases:

Dr 211, 213, 217

Dr 1557 - Finished products - real estate (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. In case the financial report on capital investment is approved, the provisional prices shall be adjusted according to the approved value of assets:

- In case the approved value of asset acquired though capital investment is smaller than the provisional price, to recognize the following accounts as below:

Dr 138 - Other receivables (rejected expenses subject to recovery)

Cr 211, 213, 217, 1557.

- In case the approved value of asset acquired though capital investment is greater than the provisional price, to recognize the following accounts as below:

Dr 211, 213, 217, 1557

Cr, relevant accounts

- In case the fixed asset invested by capital for constructions and the competent agency permit to increase operating capital and to recognize the following accounts as below:

Dr 441 - Capital for constructions

Cr 241 - Construction in progress (damages approved to be rejected)

Cr 411 - Owner's invested equity (approved value of asset)

- In case 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 funds forming fixed assets:

Dr 3632 - Welfare fund

Cr 3533 - Welfare funds forming fixed assets.

3.1.13. In case the enterprise is an investor having project management board to do accounting for capital investment:

a) Accounting for investor:

- Upon 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 - Value-added tax deductible (if any)

Dr 111, 112, 152, 153

Cr 136 - Internal receivables

Cr 331, 333, ... (receiving liabilities, if any).

- Upon receiving the non-settled building work, the investor shall record the value of building work to provisional value. Upon carry out the settlement, the value of building work shall be adjusted according to the approved price:

+ In case the approved price is greater than the provisional price, to recognize the following accounts as below:

Dr 211, 213, 217, 1557

Cr, relevant accounts

+ In case the approved price is smaller than the provisional price, to recognize the following accounts as below:

Dr, relevant accounts

Cr 211, 213, 217, 1557.

b) Accounting for project management board: comply with regulations of Circular No. 195/2012/TT-BTC dated November 15, 2012 of the Ministry of Finance on guidance for Accounting standards for investors and amended documents (if any).

3.1.14. In case 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 to recognize the following accounts as below:

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. Pursuant to documents on expenses:

- In case the input VAT is deductible, to recognize the following accounts as below:

Dr 241 - Construction in progress (2413) (VAT-exclusive prices)

Dr 133 - Value-added tax deductible (1332)

Cr 111, 112, 152, 214, ... (total payment).

- In case the input VAT is non-deductible, the expenses incurred from repairs of fixed assets shall include VAT and to recognize the following accounts as below:

Dr 241 - Construction in progress (2413) (total payment)

Cr 111, 112, 152, 214, 334, ... (total payment).

b) When the repair is completed, in case an increase in historical cost of fixed asset may not be recorded:

Dr 623, 627, 641, 642

Dr 242 - Financial expenses (in case the expenses are great, they shall be gradually allocated)

Dr 352 - Provisions (in case 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, to recognize the following accounts as below:

Dr 211 - Tangible fixed asset

Cr 241 - Construction in progress (2413).

Article 47. Account 242 - Prepaid expenses

1. Accounting rules

a) The account shall be 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 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 shall 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) Regarding prepaid expenses in foreign currencies, at the report-preparing time, in case 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 reflected in 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. Accounting methods for certain major economic transactions

a) When incurring prepaid expenses, which shall be allocated gradually to operating expenses for many accounting periods, to recognize the following accounts as below:

Dr 242 - Prepaid expenses

Dr 133 - Value-added tax deductible (if any)

Cr 111, 112, 153, 331, 334, 338, ...

When allocating prepaid expenses to operating expenses on a periodic basis, to recognize the following accounts as below:

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, to recognize the following accounts as below:

Dr 242 - Prepaid expenses

Dr 133 - Value-added tax deductible (if any)

Cr 111, 112, ...

- In case the input VAT is non-deductible, the prepaid expenses shall include VAT.

c) Regarding tools and supplies, reusable packaging materials or instruments for renting related to operation in many accounting periods, when dispatching them for use or lease, to recognize the following accounts as below:

- When dispatching them for use or lease, to recognize the following accounts as below:

Dr 242 - Prepaid expenses

Cr 153-Tools and supplies.

- On a periodic basis, 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. In case of allocating, to recognize the following accounts as below:

Dr 623, 627, 641, 642, ...

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, to recognize the following accounts as below:

Dr 211, 213, 217 (historical cost - according to cash price)

Dr 133 - Value-added tax deductible (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)

- On a periodic basis, upon paying to the seller, to recognize the following accounts as below:

Dr 331 - Trade payables

Cr 111, 112 (periodical payables include principal and interests paid under deferred or instalment payment).

- On a periodic basis, 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:

- Upon transferring expenses incurred from repair of fixed asset to prepaid expenses, to recognize the following accounts as below:

Dr 242 - Prepaid expenses.

Cr 241 - Construction in progress (2413).

- On a periodic basis, when allocating expenses incurred from repair of fixed asset to operating expenses during a period, to recognize the following accounts as below:

Dr 623, 627, 641, 642, ...

Cr 242 - Prepaid expenses.

e) The enterprise prepays interests to the lender:

- When prepaying interests, to recognize the following accounts as below:

Dr 242 - Prepaid expenses

Cr 111, 112.

- On a periodic basis, when allocating interests under schedule to financial expenses or capitalizing such interests to the value of assets in progress, to recognize the following accounts as below:

Dr 635 - Financial expenses (in case borrowings expenses are recorded to operating expenses during a period).

Dr 241 - Construction in progress (in case borrowings expenses are capitalized to the value of assets in progress)

Dr 627 - Construction in progress (in case 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, in case 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, to recognize the following accounts as below:

Dr 111, 112 (total amounts of money collected)

Dr 242 - Prepaid expenses (prepaid bond interests in details)

Cr 34311 - Par value of bonds.

- On a periodic basis, when allocating prepaid bond interests to borrowings expenses of each accounting period, to recognize the following accounts as below:

Dr 635 - Financial expenses (in case borrowings expenses are recorded to financial expenses during a period).

Dr 241 - Construction in progress (in case borrowings expenses are recorded to value of construction in progress)

Dr 627 - Factory overheads (in case borrowings expenses are capitalized to assets in progress)

Cr 242 - Prepaid expenses (prepaid bond interests in details) (bond interests allocated during a period).

h) Regarding business combination does not lead to parent company - subsidiaries relationship (buying net asset) and their goodwill is created on the purchase date:

- In case the trading in business combination is paid in cash by or cash equivalents, to recognize the following accounts as below:

Dr 131, 138, 152, 153, 155, 156, 211, 213, 217, ... (according to par value of purchased assets)

Dr 242 - Prepaid expenses (goodwill in details)

Cr 331, 3411, ... (according to par value of liabilities and potential debts)

Cr 111, 112, 121 (amounts of cash or cash equivalents paid by the purchaser).

- In case the trading in business combination is carried out by the bond issuance of the buyer, to recognize the following accounts as below:

Dr 131, 138, 152, 153, 155, 156, 211, 213, 217, ... (according to par 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…, ... (according to par value of liabilities and potential debts)

Cr 4112 - Capital surplus (the issue price is greater than the face price).

i) In case 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 to recognize the following accounts as below:

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 enterprise wholly owned by the State, in case 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 enterprise wholly owned by the State, in case 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 enterprise is carried out shall be recorded to account 242 and allocated for within 3 years and to recognize the following accounts as below:

Dr 642 - General administration expenses

Cr 242 - Prepaid expenses.

Article 48. Account 243 - Deferred tax assets

1. Accounting rules

a) The account shall be used to record current value, and increases or decreases of deferred tax assets.

When recording a deferred tax asset, in case the change in corporate 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 applicable 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 Upon recovering the book value of the assets. In case 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 turnover shall equal (=) its book value minus (-) value of non-taxable turnover 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 a temporary difference arising deductible amounts when determining taxable income in future when the book value of asset items is recovered or liabilities are paid.

+ Temporary difference in time is a type of temporary difference, for example: in case the book profits recorded in the accounting period but the taxable income shall be 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 shall 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) In case 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 the end of the year, the enterprise shall prepare the “Statement of deductible temporary difference determination” and the “Statement of monitoring of deductible unused temporary differences”; the deductible amounts carried forward to subsequent years from unused taxable losses and tax incentives shall serve as the basis for preparing the “Statement of deferred tax asset determination” to determine the value of deferred tax assets recognized or reversed during the 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 corporate income tax assets recognized in previous years, but they are reverted in this year according to the following rules:

- In case 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.

- In case 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 shall be reverted.

g) When preparing financial statements, in case 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 in case the balance sheet is prepared, not when the deferred tax assets are recorded on the accounting books.

2. Structure and contents reflected in 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. Accounting methods for certain major economic transactions

a) In case 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) In case 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 - Mortgage, collaterals and deposits

1. Accounting rules

a) The account shall be 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 shall keep track of pledges, mortgages or deposits according to each type, entity, term or currency. Upon preparing a financial statement, the amounts whose remaining term is less than 12 months shall be classified as current assets; These amounts whose remaining term is above 12 months shall be classified as non-current 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. In case of 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 books in details (collaterals in details) and presented in the financial statement.

2. Structure and contents reflected in Account 244 - Mortgage, collaterals 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 currencies at the reporting time (in case the Foreign currencies 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 currencies at the reporting time (in case the Foreign currencies rate falls against VND).

Debit balance: Value of collaterals or cash deposits which are still under pledge, mortgage or deposit agreement.

3. Accounting methods for certain major economic transactions

a) When using cash or cash in banks for deposit purpose, to recognize the following accounts as below:

Dr 244 - Mortgage, collaterals and deposits

Cr 111, 112.

b) When using a fixed asset for pledge purpose, to recognize the following accounts as below:

Dr 244 - Mortgage, collaterals and deposits (residual value)

Dr 214 - Depreciation of fixed assets (depreciation value)

Cr 211, 213 (historical cost).

In case documents (certificate of ownership of land or property) are used for mortgage, they shall not be recorded to the account but they are not kept records in details.

c) When using other assets for pledge or mortgage purpose, to recognize the following accounts as below:

Dr 244 - Mortgage, collaterals and deposits (in details)

Cr 152, 155, 156, ...

d) Receiving collaterals or cash deposits:

- Upon receiving cash deposits, to recognize the following accounts as below:

Dr 111, 112.

Cr 244 - Mortgage, collaterals and deposits.

- Upon receiving collaterals which are fixed assets, to recognize the following accounts as below:

Dr 211, 213 (historical cost of the fixed assets used for pledge purpose).

Cr 244 - Mortgage, collaterals and deposits (residual value)

Cr 214 - Depreciation of fixed assets (depreciation value)

- Upon receiving other assets used for pledge or mortgage purpose, to recognize the following accounts as below:

Dr 152, 155, 156, ...

Cr 244 - Mortgage, collaterals and deposits (in details)

dd) In case the enterprise fails to fulfill their commitment and faces fines for violations against the contract which are deducted from their cash deposits, to recognize the following accounts as below:

Dr 811 - Other expenses (deducted amount)

Cr 244 - Mortgage, collaterals and deposits.

e) When using cash deposits to pay for the seller, to recognize the following accounts as below:

Dr 331 - Trade payables

Cr 244 - Mortgage, collaterals and deposits.

g) When preparing a financial statement, in case 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:

- In case the Foreign currencies rate rises against VND, to recognize the following accounts as below:

Dr 244 - Mortgage, collaterals and deposits

Cr 413 - Exchange rate differences (4131).

- In case the Foreign currencies rate falls against VND, to recognize the following accounts as below:

Dr 413 - Exchange rate differences (4131).

Cr 244 - Mortgage, collaterals and deposits.

Article 50. Accounting rules for liabilities

1. Liabilities of an enterprise shall 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, Internal 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) Internal 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, ...

3. Upon preparing a financial statement, the amounts payable shall be classified into long-term payables or short-term payables according to their remaining terms.

4. In case it is evident that there is an unavoidable loss, an amount payable shall be recorded according to cautious rules.

5. Upon 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.

Article 51. Account 331 - Trade payables

1. Accounting rules

a) The account shall be used to record payment of liabilities of an enterprise to the sellers of materials, goods or suppliers of services, sellers of fixed assets, investment properties or financial investment under concluded business contracts. The account shall be used to record the payment of liabilities to main contractors or sub-contractors. The buy in cash shall not be recorded to the account.

b) Liabilities to sellers, providers or contractors shall be kept records in details for every entity. The account also records prepayment to the sellers, providers or contractors but the goods, services or constructions have not been received.

c) The enterprise shall keep records of trade payables in details for each type of currency. Regarding trade payables in foreign currencies, the rules below shall be followed:

- When incurring trade payables (Cr 331) in foreign currencies, those payables shall be converted into VND according to actual exchange rates at the incurring time (selling exchange rate of the commercial bank where the enterprise regularly enters into transactions). Regarding prepayment to contractors or sellers, when it is qualified to record assets or expenses, the Cr 331 shall apply specific identification accounting book recording rate for the amounts of prepayment.

- Upon paying trade payables (Cr 331) in foreign currencies, those payables shall be converted into VND according to specific identification accounting book recording rates for every creditor (in case the creditor has multiple transactions the specific identification accounting book recording rate shall be determined according to mobile weight average of such transactions). Upon entering into a transaction in prepayment to contractors or sellers, the Dr 331 shall be applied actual exchange rates (selling rates of the commercial bank where the enterprise regularly enters into transactions) at the time in which the prepayment given;

- The enterprise shall re-evaluate trade payables derived from foreign currencies on the dates on which the financial statements are prepared as prescribed. Actual exchange rates determined when the trade payables are re-evaluated is selling rates of the commercial bank where the enterprise regularly enters into transactions on the date on which the financial statement is prepared. 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.

d) The import trustor shall record the trade payables for imported goods to the import trustee to the account similarly to ordinary trade payables.

dd) At the end of a month, in case there has not been invoices of received materials, goods or services, provisional prices may be used for accounting book recording, when those invoices are received, the prices shall be adjusted and the seller shall be notified the official prices.

e) When those accounts are accounted in details, in case the payment discounts, trade discounts or sales rebates of the seller or the supplier are not recorded in the sales invoices, they shall be kept records in details.

2. Structure and contents reflected in Account 331 - Trade payables

Debit:

- Amounts paid to sellers, suppliers or contractors;

- Prepayment to sellers, suppliers, contractors but materials, goods, services and constructions are not received;

- Amounts of sales approved by sellers;

- Payment discounts and trade discounts which the sellers approve for enterprises to deduct from trade payables;

- Value of materials or goods in shortage or inferior quality which are received back by the sellers.

- Re-evaluation of trade payables in foreign currencies (in case the Foreign currencies rate falls against VND).

Credit:

- Amounts payable to sellers, suppliers or contractors;

- Adjustment of negative difference between provisional price and actual price of amount of materials, goods and services when the invoice or notification of official price is received.

- Re-evaluation of trade payables in foreign currencies (in case the Foreign currencies rate rises against VND).

Credit balance: Outstanding balance payable to sellers, suppliers or contractors.

The account may have a Debit balance. Debit balance (if any) records prepayment to sellers or payment in excess of payables to sellers, according to every specific subject. Upon preparing the balance sheet, detailed balance of every subject reflected in the account will be taken to record to “Assets” and “Capital” account.

3. Accounting methods for certain major economic transactions

3.1. Upon purchasing materials or goods without payment for inventory using perpetual inventory method or purchasing fixed assets:

a) Domestic purchase:

- In case the input VAT is deductible, to recognize the following accounts as below:

Dr 152, 153, 156, 157, 211, 213 (VAT-exclusive prices)

Dr 133 - Value-added tax deductible (1331)

Cr 331 - Trade payables (total payment).

- In case the input VAT is non-deductible, the value of materials, goods or fixed assets shall include VAT (total payment).

b) Import:

- Value of imported goods, including excise tax, export duty or environmental protection tax (if any) shall be recorded as follows:

Dr 152, 153, 156, 157, 211, 213

Cr 331 - Trade payables

Cr 3332 - Excise tax (if any)

Cr 3333 - Export and import duty (in details, if any)

Cr 33381 - Environmental protection tax

- In case the input VAT is deductible, to recognize the following accounts as below:

Dr 133 - Value-added tax deductible (1331)

Cr 3331 - VAT payables (33312).

3.2. Upon purchasing materials or goods without payment for inventory using periodical inventory method:

a) Domestic purchase:

- In case the input VAT is deductible, to recognize the following accounts as below:

Dr 611 - Purchase (VAT-exclusive prices)

Dr 133 - Value-added tax deductible

Cr 331 - Trade payables (total payment).

- In case the input VAT is non-deductible, the value of materials or goods shall include VAT (total payment)

b. Import:

- Value of imported goods, including excise tax, export duty or environmental protection tax (if any) shall be recorded as follows:

Dr 611 - Purchase

Cr 331 - Trade payables

Cr 3332 - Excise tax (if any)

Cr 3333 - Export and import duty (in details, if any)

Cr 33381 - Environmental protection tax

- In case the input VAT is deductible, to recognize the following accounts as below:

Dr 133 - Value-added tax deductible (1331)

Cr 3331 - VAT payables (33312).

3.3. In case the enterprise carries out capital investment under contract awarding and receives completed construction from the contractor, according to awarding contract and transfer note of completed construction:

- In case the input VAT is deductible, to recognize the following accounts as below:

Dr 241 - Construction in progress (VAT-exclusive prices)

Dr 133 - Value-added tax deductible

Cr 331 - Trade payables (total payment).

- In case the input VAT is non-deductible, the value of capital investment shall include VAT (total payment)

3.4. Upon paying advance or paying trade payables to sellers, providers or contractors, to recognize the following accounts as below:

Dr 331 - Trade payables

Cr 111, 112, 341, ...

- Upon paying to the contractor in foreign currencies, those payables shall be converted into VND according to actual exchange rates at the incurring time (selling exchange rate of the commercial bank where the enterprise regularly enters into transactions).

- Upon paying an advance to the contractor in Foreign currencies, the value of capital investment shall be recorded corresponding to the amount of advance according to actual exchange rates at the time the advance is given. The outstanding balance payable of capital investment (after deducted from the advance) shall be recorded to actual exchange rates at the incurring time.

Dr 331 - Trade payables (actual exchange rates)

Dr 635 - Financial expenses (in case the actual exchange rate is smaller than accounting book recording rate of the cash account)

Cr 111, 112, ... (accounting book recording rate)

Cr 515 - Financial income (in case the actual exchange rate is greater than accounting book recording rate of the cash account)

3.5. Upon receiving back the advance from the seller because the seller fails to sell goods or provide services, to recognize the following accounts as below:

Dr 111, 112, ...

Cr 331 - Trade payables.

3.6. Upon receiving services rendered (expenses incurred from goods transportation, electricity, water, telephone, auditing, consultancy, advertisement and other services) from suppliers:

- In case the input VAT is deductible, to recognize the following accounts as below:

Dr 156 - Merchandise goods (1562)

Dr 241 - Construction in progress

Dr 242 - Prepaid expenses

Dr 623, 627, 641, 642, 635, 811

Dr 133 - Value-added tax deductible (1331) (if any)

Cr 331 - Trade payables (total payment).

- In case the input VAT is non-deductible, the value of services shall include VAT (total payment)

3.7. Upon receiving payment discounts on sale of materials or goods due to prepayment and deducting trade payables, to recognize the following accounts as below:

Dr 331 - Trade payables

Cr 515 - Financial income.

3.8. Upon purchased materials and goods are returned or eligible for sales rebates because they do not meet specification and quality, they shall be deducted from trade payables and to recognize the following accounts as below:

Dr 331 - Trade payables

Cr 133 - Value-added tax deductible (1331) (if any)

Cr 152, 153, 156, 611, ...

3.9. In case liabilities paid to sellers (creditors) who were not found out or they did not call loans, the debts shall be recorded as an increase in enterprises’ income as follows:

Dr 331 - Trade payables

Cr 711 - Other income.

3.10. Upon determining value of construction volume payables to subcontractors, according to the contract signed between main contractor and sub-contractor, invoices, voucher of project price, acceptance report of completed construction volume and sub bidding contract, to recognize the following accounts as below:

Dr 632 - Costs of goods sold (VAT-exclusive prices)

Dr 133 - Value-added tax deductible (1331)

Cr 331 - Trade payables (total payables to the subcontractor, including input VAT).

3.11. Enterprises which are commission agents for sale at fixed prices.

- Upon receiving goods for wholesale, the enterprise shall report them in the financial statement.

- Upon receiving wholesale goods, to recognize the following accounts as below:

Dr 111, 112, 131, ... (total payment)

Cr 331 - Trade payables (agency prices + taxes).

And the enterprise shall report sold goods for wholesale in the financial statement.

- When determining commission earned by the agent who is charged to commission turnover for wholesale, to recognize the following accounts as below:

Dr 331 - Trade payables

Cr 511 - Turnovers

Cr 3331 - VAT payables (if any).

- Upon paying to consignor, to recognize the following accounts as below:

Dr 331 - Trade payables (selling prices - taxes).

Cr 111, 112, ...

3.12. Accounting for trade payables at the import trustor:

- When prepaying an amount for import entrustment contract to the import trustee to open L/C, ..., to recognize the following accounts as below according to relevant documents:

Dr 331 - Trade payables (every trustee in details)

Cr 111, 112, ...

- Upon receiving import entrustment goods delivered by the trustee, it shall follow procedures for ordinary imported goods.

- Upon paying for imported goods and directly-attributable expenses incurred from imported goods to the trustee, to recognize the following accounts as below according to relevant documents:

Dr 331 - Trade payables (every trustee in details)

Cr 111, 112, ...

- Import entrustment fees paid to the trustee shall be recorded to value of imported goods; to recognize the following accounts as below according to relevant documents:

Dr 151, 152, 156, 211, ...

Dr 133 - Value-added tax deductible

Cr 331- - Trade payables (every trustee in details)

- The payment of tax liability for imported goods shall comply with regulations of account 333 - Taxes and other payables to the State Budget.

- The trustee may not use the account to record payment of entrustment but record to account 138 and 338.

3.13. Upon preparing a financial statement, the outstanding trade payables in Foreign currencies shall be evaluated according to actual exchange rates on the date on which the financial statement is prepared:

- In case the Foreign currencies rate falls against VND, to recognize the following accounts as below:

Dr 331 - Trade payables

Cr 413 - Exchange rate differences (4131).

- In case the Foreign currencies rate rises against VND, to recognize the following accounts as below:

Dr 413 - Exchange rate differences (4131).

Cr 331 - Trade payables.

Article 52. Account 333 - Taxes and other payables to the State Budget

1. Accounting rules

a) The account shall be used to record relation between enterprises and State about taxes, fees, charges and other payables, payment and outstanding payables to State budget in the fiscal year.

b) The enterprise shall actively calculate and determine taxes, fees, charges and other payables to State in compliance with law, and promptly reflect taxes payable, paid taxes, deductible taxes or tax refund, ... in accounting book.

c) The nature of indirect taxes including VAT (including using credit-invoice method or subtraction method), excise tax, export duty, environmental protection tax and other indirect taxes is receipts on behalf of a third party. Therefore, these indirect taxes are eliminated from turnovers stated in the financial statement or other statements.

The enterprise may record turnovers and indirect taxes payable in the accounting books following one in two methods below:

- The indirect taxes payable (including VAT payable using subtraction method) shall be separately recorded at the time in which the turnovers are recorded. In this method, the turnovers included in accounting books shall not include indirect taxes payable, in conformity with figures of turnovers stated in the financial statement and reflected the nature of the transaction.

- The indirect taxes payable shall be recorded as a decrease in turnovers in the accounting books. In this method, a decrease in turnovers for indirect taxes payable shall be recorded on a periodic basis, the figures of turnovers stated in the accounting record are different from the turnovers stated in the financial statement.

In any cases, the item “Turnovers” and "Revenue deductions” of the Statement of Income shall not include indirect taxes payable.

d) Regarding taxes eligible for refund or deduction, it is required to distinguish these taxes are paid in purchase process or sale process and follow rules below:

- Regarding those taxes paid into purchase process eligible for refund (i.e. temporary import transaction: excise tax, import duty, environmental protection tax which are paid shall be refunded the goods are re-exported, ...), a decrease in value of goods purchased or a decrease in costs of goods sold or other expenses. In case the input VAT is eligible for refund, a decrease in value-added tax deductible shall be recorded;

- Regarding taxes paid in import process but imported goods are not under ownership of the enterprise, in case they are eligible for refund, a decrease in other receivables shall be recorded (i.e. paid import duty on processed goods which is refunded when the goods are re-exported, ...);

- Regarding taxes payable for sale of goods or services which are eligible for deduction or refund, they shall be recorded to other income (i.e. refund of export duty, deduction in excise tax, VAT, environmental protection tax payable for sale of goods or services).

dd) Liability for state budget in export-import entrustment transactions:

- In export-import entrustment transactions (other similar transactions), the trustor shall take over liability for state budget

- The trustor shall provide services including document preparation, declaration, and payment to state budget (taxpayer on behalf of the trustor).

- Account 333 is only used by the trustor not the trustee. The trustee shall record taxes payable to state budget as expenses on behalf of a third party in the account 3388 and receive the amounts paid on behalf of the trustor to account 138. The liability of the trustor for state budget shall be reflected according to:

+ Upon receiving notification of taxes payable, the trustee shall transfer all documents, materials or notification of taxes payable issued by the competent agency to the trustor to record the taxes payable to account 333.

+ According to payment slip to state budget of the trustee, the trustor shall record a decrease in payables to the state budget.

e) Each tax, fee, charge and other amounts payable, paid amounts and outstanding amounts payable shall be keep records in details.

2. Structure and contents reflected in Account 333 - Taxes and other payables to the State Budget

Debit:

- Value-added tax deductible during a period;

- Taxes, fees, charges and other amounts payable or paid amount to the state budget;

- Taxes deducted from taxes payables;

- VAT of sales returns and sales rebates.

Credit:

- Output VAT and VAT on import goods payable;

- Taxes, fees, charges and other payables to the state budget;

Credit balance:

Taxes, fees, charges and other payables to the state budget;

In particular case, Account 333 may have the debit balance. Debit balance (if any) of Account 333 reflects tax payments and other payments greater than taxes and payables to State, or may reflect the paid taxes eligible for exemption, deduction or refund, but the refund has not been made.

Account 333 - Taxes and other payables to the State Budget, comprises 9 level-2 accounts:

- Account 3331 - VAT payable: to record input VAT, VAT payable of import goods, value-added tax deductible, paid VAT and outstanding VAT payable to state budget.

Account 3331 comprises 2 level-2 accounts:

+ Account 33311 - output VAT: to record amount of output VAT, output value-added tax deductible, VAT on sales return or sales rebates, VAT payable, paid VAT and outstanding VAT payable of products, goods or services rendered during a period.

+ Account 33312 - VAT on imported goods: to record amounts payable, paid amounts and outstanding amounts payable of VAT on imported goods to state budget.

- Account 3332 - Excise tax: to record amounts payable, paid amounts and outstanding amounts payable of excise tax to state budget.

- Account 3333 - Export and import duty: to record amounts payable, paid amounts and outstanding amounts payable of Export and import duty to state budget.

- Account 3334 - Corporate income tax: to record amounts payable, paid amounts and outstanding amounts payable of corporate income tax to state budget.

- Account 3335 - Personal income tax: to record amounts payable, paid amounts and outstanding amounts payable of personal income tax to state budget.

- Account 3336 - Royalty: to record amounts payable, paid amounts and outstanding amounts payable of royalty state budget.

- Account 337 - Land and housing tax and rental: to record amounts payable, paid amounts and outstanding amounts payable of land and housing tax and rental to state budget.

- Account 338 - Environmental protection tax and other taxes: to record amounts payable, paid amounts and outstanding amounts payable of environmental protection tax and other taxes, such as: Business rates, tax payable on behalf of oversea organizations and individuals having business activities in Vietnam, ...

+ Account 33381: environmental protection tax: to record amounts payable, paid amounts and outstanding amounts payable of environmental protection tax;

+ Account 33382: Other taxes: to record amounts payable, paid amounts and outstanding amounts payable of other taxes. Every tax shall be kept records in level-2 accounts in details.

- Account 3339 - Fees, charges and other payables: to record amounts payable, paid amounts and outstanding amounts payable of fees, charges and other payables to State other than amounts recorded to accounts 3331 through 3338. The account also reflects government grants (if any).

3. Accounting methods for certain major economic transactions

3.1. VAT payable (3331)

3.1.1. Accounting for output VAT (Account 33311)

a) Accounting for output VAT payable using credit-invoice method:

When issuing a VAT invoice and paying VAT using credit-invoice method, the income shall be recorded according to VAT-exclusive prices (VAT payable shall be recorded separately at the issuing time) as follows:

Dr 111, 112, 131 (total payment)

Cr 511, 515, 711 (VAT-exclusive prices)

Cr 3331 - VAT payable (33311).

b) Accounting for output VAT payable using subtraction method:

One of two methods below shall be chosen:

- Method 1: VAT payable shall be recorded separately when issuing invoices in accordance with above Point a;

- Method 2: to record income including VAT payable using subtraction, when determining VAT payable on a periodic basis, a decrease in income shall be recorded:

Dr 511, 515, 711

Cr 3331 - VAT payable (33311).

c) Upon paying VAT to the state budget, to recognize the following accounts as below as follows:

Dr 3331 - VAT payable

Cr 111, 112.

3.1.2. Accounting for VAT on imported goods (33312)

a) When importing materials, goods, tangible fixed assets, import VAT payable, total payment and value of materials, goods, tangible fixed assets imported (excluding VAT of import goods) shall be recorded as follows:

Dr 152, 153, 156, 211, 611, ...

Cr 333 - Taxes and other payables to the State Budget (3333)

Cr 111, 112, 331, ...

b) Recording VAT payable on imported goods:

- When deducting VAT payable on imported goods, to recognize the following accounts as below as follows:

Dr 133 - Value-added tax deductible

Cr 3331 - VAT payable (33312).

- In case the VAT payable on the imported good is non-deductible, it shall be included in the value of materials, goods or import fixed asset as follows:

Dr 152, 153, 156, 211, 611, ...

Cr 3331 - VAT payable (33312).

c) Upon paying VAT to the state budget actually, to recognize the following accounts as below as follows:

Cr 3331 - VAT payable (33312).

Cr 111, 112, ...

d) Import entrustment (applying for the trustor)

- Upon receiving notification of VAT payable on imported goods from the trustee, the trustor shall record value-added tax deductible payable on imported goods as follows:

Dr 133 - Value-added tax deductible

Cr 3331 - VAT payable (33312).

- Upon receiving tax payment slip from the trustee, the trustor shall record a decrease in the liability with state budget on VAT on import goods as follows:

Cr 3331 - VAT payable (33312).

Cr 111, 112 (in case the trustee receives cash instantly)

Cr 3388 - Other payables (in case the VAT on imported goods is not paid instantly to the trustee)

Cr 138 - Other payables (a decrease in the advance paid to the trustee for payment of VAT on imported goods)

- The trustee does not record the VAT payable on import goods similarly to the trustor, that VAT shall be recorded as VAT paid on behalf of the trustor and to recognize the following accounts as below as follows:

Dr 138 - Other payables (collecting the VAT paid on behalf of the trustor)

Dr 3388 - Other payables (deducting from received amounts from the trustor)

Cr 111, 112.

3.1.3. Accounting for value-added tax deductible

- On a periodic basis, value-added tax deductible from output VAT payable during a period shall be determined and recorded as follows:

Cr 3331 - VAT payable (33311).

Cr 133 - Value-added tax deductible.

- When a transaction takes place, in case of failure to determine that the input VAT on goods or services is whether or non-deductible, all input VAT shall be recorded to account 133. On a periodic basis, when determining the VAT non-deductible from output VAT, it shall be recorded relevant expenses as follows:

Dr 632 - Costs of goods sold (non-deductible input VAT of inventory sold)

Dr 641, 642 (non-value-added tax deductible of sales expenses or enterprise administration expenses)

Cr 133 - Value-added tax deductible.

3.1.4. Accounting for deduction in VAT payable

In case the enterprise is eligible for deduction in VAT payable, such VAT shall be recorded to other income as follows:

Dr 33311 - Output VAT (in case deduction in VAT payable)

Dr 111, 112 - In case the deduction is received in cash.

Cr 711 - Other income.

3.1.5. Accounting for refund of input VAT

In case the enterprise is eligible for VAT refund as prescribed by law because the input VAT is greater than the output VAT, to recognize the following accounts as below as follows:

Dr 111, 112.

Cr 133 - Value-added tax deductible.

3.2. Excise tax (3332)

3.2.1. Accounting rules

- The account is used by the excise taxpayer as prescribed. In the export-import entrustment, the account is used by the trustor, not by the trustee.

- Enterprises selling goods subject to excise tax shall record their turnovers excluding excise tax. At the time recording income, in case of failure to separate the excise tax payable, the turnover shall be recorded including such tax, but the excise tax payable shall be recorded as a decrease in turnover periodically. In any cases, the item “Turnovers” and “Revenue deductions” in the Statement of Income shall not include excise tax payable when selling goods or providing services.

- Enterprises importing or selling domestic goods or fixed assets subject to excise tax, their excise tax payable shall be recorded to original cost of inventories. In case the enterprise imports goods on behalf of a third party without ownership of such goods, for example, temporary import on behalf of a third party, the import duty payable shall not be recorded to value of goods but be recorded to other receivables.

- Accounting for excise tax eligible for refund or deduction:

+ In case the excise tax paid for import of goods or services is eligible for refund, a decrease in costs of goods sold (goods dispatched for sale) or a decrease in value of goods (goods dispatched for loans or borrowings, ...) shall be recorded;

+ In case the excise tax paid for import of fixed assets is eligible for refund, a decrease in other expenses (sale of fixed assets) or a decrease in historical costs of fixed assets (fixed assets for return) shall be recorded;

+ In case the excise tax paid for import of goods or fixed assets is eligible for refund by the entity having no ownership, a decrease in other receivables shall be recorded.

+ In case the excise tax paid for sale of goods or services is eligible for refund or deduction, such tax shall be recorded to other income.

3.2.2. Accounting for excise tax

a) Accounting for excise tax payable for sale of goods or services:

- When a transaction takes place, in case of failure to separate the excise tax payable, the turnovers shall be recorded excluding excise tax as follows:

Dr 111, 112, 131 (total payment)

Cr 511 - Turnovers

Cr 3332 - Excise tax.

- When a transaction takes place, in case of failure to separate the excise tax payable, the turnovers shall be recorded including excise tax as follows: When determining excise tax payable, a decrease in turnovers shall be recorded as follows:

Cr 511 - Turnovers

Cr 3332 - Excise tax.

b) When importing goods subject to excise tax, according to sale invoices of imported goods and tax notification issued by the competent agency, the excise tax payable on imported goods shall be determined and recorded as follows:

Dr 152, 156, 211, 611, ...

Cr 3332 - Excise tax.

Regarding to temporary goods not under ownership of the enterprise, i.e. transit goods which are re-exported at the bonded warehouse, upon paying excise tax on imported goods, to recognize the following accounts as below as follows:

Dr 138 - Other receivables

Cr 3332 - Excise tax.

c) Upon paying excise tax to the state budget, to recognize the following accounts as below as follows:

Dr 3332 - Excise tax.

Cr 111, 112.

d) Accounting for refund of excise tax in the import process:

- When re-exporting goods whose excise tax is eligible for refund, to recognize the following accounts as below as follows:

Dr 3332 - Excise tax

Cr 632 - Costs of goods sold (goods dispatched for sale)

Cr 152, 153, 156 (goods dispatched for return).

- When re-exporting fixed assets whose excise tax is eligible for refund, to recognize the following accounts as below as follows:

Dr 3332 - Excise tax

Cr 211 - Tangible fixed assets (fixed assets dispatched for return)

Cr 811 - Other receivables (sale of fixed assets).

- When re-exporting goods not under ownership of the enterprise whose excise tax is eligible for refund, to recognize the following accounts as below as follows:

Dr 3332 - Excise tax

Cr 138 - Other receivables.

dd) Accounting for excise tax payable for sale of goods or services which is eligible for refund or deduction: Upon receiving notification of excise tax eligible for refund or deduction in the sale process issued by the competent agency, to recognize the following accounts as below as follows:

Dr 3332 - Excise tax

Cr 711 - Other income.

e) When dispatching goods or services subject to excise tax for internal consumption, giving, promotion or advertisement without collecting money, to recognize the following accounts as below as follows:

Dr 641, 642.

Cr 154, 155.

Cr 3332 - Excise tax

g) Import entrustment (applying for the trustor)

- Upon receiving the excise tax notification from the trustee, the trustor shall record the excise tax payable as follows:

Dr 152, 156, 211, 611, ...

Cr 3332 - Excise tax.

- Upon receiving tax payment slip from the trustee, the trustor shall record a decrease in the liability with state budget on excise tax as follows:

Dr 3332 - Excise tax.

Cr 111, 112 (in case the trustee receives cash instantly)

Cr 3388 - Other payables (in case the excise tax is not paid instantly to the trustee)

Cr 138 - Other payables (a decrease in the advance paid to the trustee for payment of excise tax).

- The trustee does not record the excise tax payable similarly to the trustor, that tax shall be recorded as excise tax paid on behalf of the trustor and to recognize the following accounts as below as follows:

Dr 138 - Other payables (collecting the VAT paid on behalf of the trustor)

Dr 3388 - Other payables (deducting from received amounts from the trustor)

Cr 111, 112.

3.3. Export duty (3333)

3.3.1. Accounting rules

- The account is used by the export se taxpayer as prescribed. In the export-import entrustment, the account is used by the trustor, not by the trustee.

- Export duty is an indirect tax and not included in the turnover structure of the enterprise. Upon exporting goods, the export duty payable shall be separated from turnovers. At the time recording turnovers, in case of failure to separate the export duty payable, the turnover shall be recorded including such tax, but the export duty payable shall be recorded as a decrease in turnover periodically. In any cases, the item “Turnovers” and “Revenue deductions” in the Statement of Income shall not include export duty payable when selling goods or providing services.

- In case the export duty paid for export is eligible for refund or deduction, it shall be recorded to other income

3.3.2. Method of accounting

a) Accounting for export duty payable for sale of goods or services:

- When a transaction takes place, in case of failure to separate the export duty payable, the turnovers shall be recorded excluding export duty as follows:

Dr 111, 112, 131 (total payment)

Cr 511 - Turnovers

Cr 3333 - Export and import duty (export duty in details).

- When a transaction takes place, in case of failure to separate the export duty payable, the turnovers shall be recorded including export duty as follows: When determining export duty payable, a decrease in turnovers shall be recorded as follows

Dr 511 - Turnovers

Cr 3333 - Export and import duty (export duty in details).

b) Upon paying export duty to the state budget, to recognize the following accounts as below as follows:

Dr 3333 - Export and import duty (export duty in details).

Cr 111, 112, ...

c) Export duty eligible for refund or deduction (if any), to recognize the following accounts as below as follows:

Dr 111, 112, 3333

Cr 711 - Other income.

d) Import entrustment (applying for the trustor)

- When buying goods or services subject to export duty, the turnovers and export duty payable shall be recorded similarly to ordinary export as prescribed at Point a of this section.

- Upon receiving tax payment slip from the trustee, the trustor shall record a decrease in the liability with state budget on export duty as follows:

Dr 3333 - Export and import duty (export duty in details).

Cr 111, 112 (in case the trustee receives cash instantly)

Cr 3388 - Other payables (in case the export duty is not paid instantly to the trustee)

Cr 138 - Other payables (a decrease in the advance paid to the trustee for payment of export duty).

- The trustee does not record the export duty similarly to the trustor, that export duty shall be recorded as export duty paid on behalf of the trustor and to recognize the following accounts as below as follows:

Dr 138 - Other payables (collecting the VAT paid on behalf of the trustor)

Dr 3388 - Other payables (deducting from received amounts from the trustor)

Cr 111, 112.

3.4. Export duty (3333)

3.4.1. Accounting rules

- The account is used by the export duty payer as prescribed. In the export-import entrustment, the account is used by the trustor, not by the trustee.

- Enterprises importing goods or fixed assets shall record import duty payable to the original cost of goods or fixed assets. In case the enterprise imports goods on behalf of a third party without ownership of such goods, for example, temporary import on behalf of a third party, the import duty payable shall not be recorded to value of goods but be recorded to other receivables.

- Accounting for import duty eligible for refund or deduction:

+ In case the import duty paid for import of goods or services is eligible for refund, a decrease in costs of goods sold (goods dispatched for sale) or a decrease in value of goods (goods dispatched for loans or borrowings, ...);

+ In case the import duty paid for import of fixed assets is eligible for refund, a decrease in other expenses (sale of fixed assets) or a decrease in historical costs of fixed assets (fixed assets for return);

+ In case the import duty paid for import of goods or fixed assets is eligible for refund by the entity having no ownership, a decrease in other receivables shall be recorded (i.e. temporary imported goods for processing, ...)

3.4.2. Method of accounting for import duty

a) When importing materials, goods or fixed assets, import duty payable, total payment or paid amounts to the seller and value of imported materials, goods or fixed assets (import duty-inclusive prices) shall be recorded as follows:

Dr 152, 156, 211, 611, ... (import duty-inclusive prices)

Cr 3333 - Export and import duty (import duty in details).

Cr 111, 112, 331, ...

Regarding to temporary imported goods not under ownership of the enterprise, i.e. transit goods which are re-exported at the bonded warehouse, upon paying import duty; to recognize the following accounts as below as follows:

Dr 138 - Other receivables

Cr 3333 - Export and import duty (import duty in details).

b) Upon paying import duty to the state budget, to recognize the following accounts as below as follows:

Dr 3333 - Export and import duty (import duty in details).

Cr 111, 112, ...

c) Accounting for refund of import duty in the import process

- When re-exporting goods whose import duty is eligible for refund, to recognize the following accounts as below as follows:

Dr 3333 - Export and import duty (import duty in details).

Cr 632 - Costs of goods sold (goods dispatched for sale)

Cr 152, 153, 156 - Merchandise goods (goods dispatched for return).

- When re-exporting fixed assets whose excise tax is eligible for refund, to recognize the following accounts as below as follows:

Dr 3333 - Export and import duty (import duty in details).

Cr 211 - Tangible fixed assets (fixed assets dispatched for return)

Cr 811 - Other receivables (sale of fixed assets).

- Regarding import duty paid in import process but imported goods are not under ownership of the enterprise, in case they are eligible for refund (i.e. paid import duty on processed goods), to recognize the following accounts as below as follows:

Dr 3333 - Export and import duty (import duty in details).

Cr 138 - Other receivables.

- Upon receiving money from the state budget, to recognize the following accounts as below as follows:

Dr 112 - Cash in banks

Cr 3333 - Export and import duty (import duty in details).

d) Import entrustment (applying for the trustor)

- Upon receiving notification of import duty from the trustee, the trustor shall record import duty payable as follows:

Dr 152, 156, 211, 611, ... (import duty-inclusive prices)

Cr 3333 - Export and import duty (import duty in details).

- Upon receiving tax payment slip from the trustee, the trustor shall record a decrease in the liability with state budget on import duty as follows:

Dr 3333 - Export and import duty (import duty in details).

Cr 111, 112 (in case the trustee receives cash instantly)

Cr 3388 - Other payables (in case the import duty is not paid instantly to the trustee)

Cr 138 - Other receivables (a decrease in the advance paid to the trustee for payment of import duty).

- The trustee does not record the import duty similarly to the trustor, that import duty shall be recorded as import duty paid on behalf of the trustor and to recognize the following accounts as below as follows:

Dr 138 - Other payables (collecting the VAT paid on behalf of the trustor)

Dr 3388 - Other receivables (deducting from received amounts from the trustor)

Cr 111, 112.

3.5. Corporate income tax (3334)

a) According to corporate income tax payable to the state budget quarterly, to recognize the following accounts as below as follows:

Dr 821 - Corporate income tax expenses (8211)

Cr 3334 - Corporate income tax.

b) Upon paying corporate income tax to the state budget, to recognize the following accounts as below as follows:

Dr 3334 - Corporate income tax.

Cr 111, 112.

c) Determination of corporate income tax payable at the end of the fiscal year:

- In case the corporate income tax payable is smaller than the provisional corporate income tax every quarter, the difference between them shall be recorded as follows:

Dr 3334 - Corporate income tax.

Cr 821 - Corporate income tax expenses (8211).

- In case the corporate income tax payable is greater than the provisional corporate income tax every quarter, the difference between them shall be recorded as follows:

Dr 821 - Corporate income tax expenses (8211)

Cr 3334 - Corporate income tax.

3.6. Personal income tax (3335)

When determining personal income tax payable which is deducted from taxable income of staff and other employees, to recognize the following accounts as below as follows:

Dr 334 - Payables to staff

Cr 333 - Taxes and other payables to the State Budget (3335)

- Upon paying salaries to outsourcing people, the enterprise shall determine personal income tax payable subject to irregular upon each generation of income, to recognize the following accounts as below as follows:

+ Upon paying remuneration, fees for outsourcing, ... instantly to outsourcing people, to recognize the following accounts as below as follows:

Dr 623, 627, 641, 642, 635 (total payment); or

Dr 161 - Non-business expenses (total payment); or

Dr 353 - Bonus and welfare funds (total payment) (3531)

Cr 333 - Taxes and other payables to the State Budget (3333) (deductible personal income tax)

Cr 111, 112 (actual payment).

+ Upon paying liabilities to outsourcing people having income, to recognize the following accounts as below as follows:

Dr 331 - Trade payables (total payables)

Cr 333 - Taxes and other payables to the State Budget (deductible personal income tax)

Cr 111, 112 (actual payment).

- Upon paying personal income tax to the state budget on behalf of the people having income, to recognize the following accounts as below as follows:

Dr 333 - Taxes and other payables to the State Budget (3335)

Cr 111, 112, ...

3.7. Royalty (3336)

- When determining royalty payable which is included in the factory overheads, to recognize the following accounts as below as follows:

Dr 627 - Factory overheads (6278)

Cr 3336 - Royalty.

- Upon paying royalty to the state budget actually, to recognize the following accounts as below as follows:

Dr 3336 - Royalty.

Cr 111, 112, ...

3.8. Land and housing tax and rental (3337)

- When determining land and housing tax and rental payable which is included in the general administration expenses, to recognize the following accounts as below as follows:

Dr 642 - Corporate income tax expenses (6425)

Cr 3337 - Land and housing tax and rental.

- Upon paying land and housing tax and rental to the state budget, to recognize the following accounts as below as follows:

Dr 3337 - Land and housing tax and rental.

Cr 111, 112, ...

3.9. Environmental protection tax

3.9.1. Accounting rules

- The account is used by the environmental protection taxpayer as prescribed. In the import entrustment, the account is used by the trustor, not by the trustee.

- Enterprises selling goods subject to environmental protection tax shall record their turnovers excluding environmental protection tax payable. At the time recording turnovers, in case of failure to separate the environmental protection tax payable, the turnover shall be recorded including such tax, but the environmental protection tax payable shall be recorded as a decrease in turnover periodically.

- Enterprises importing or selling domestic goods or fixed assets subject to environmental protection tax shall record their environmental protection tax payable to original cost of inventories.

- Accounting for environmental protection tax eligible for refund or deduction:

+ In case the environmental protection tax paid for import of goods or services is eligible for refund, a decrease in costs of goods sold (goods dispatched for sale) or a decrease in value of goods (goods dispatched for loans or borrowings, ...);

+ In case the environmental protection tax paid for import of fixed assets is eligible for refund, a decrease in other expenses (sale of fixed assets) or a decrease in historical costs of fixed assets (fixed assets for return);

+ In case the environmental protection tax paid for import of goods or fixed assets is eligible for refund by the entity having no ownership, a decrease in other receivables shall be recorded.

+ In case the environmental protection tax paid for sale of goods or services is eligible for refund or deduction, such tax shall be recorded to other income.

3.9.2. Method of accounting for environmental protection tax

a) Upon selling goods or providing services subject to environmental protection tax and VAT, the turnovers shall be recorded excluding environmental protection tax and VAT as follows:

Dr 111, 112, 131 (total payment)

Cr 511 - Turnovers (Environmental protection and VAT-exclusive prices)

Cr 3331 - VAT payable (33311).

Cr account 33381 - Environmental protection tax

When a transaction takes place, in case of failure to determine the environmental protection tax payable, the turnover shall be recorded including such tax, but the environmental protection tax payable shall be recorded as a decrease in turnover periodically.

Dr 511 - Turnovers

Cr 333 - Taxes and other payables to the State Budget (in details).

b) When importing goods subject to environmental protection tax, according to sale invoices of imported goods and tax notification issued by the competent agency, environmental protection tax payable on imported goods shall be determined and recorded as follows:

Dr 152, 156, 211, 611, ...

Cr account 33381 - Environmental protection tax:

- When dispatching goods or services subject to environmental protection tax for internal consumption, giving, promotion or advertisement without collecting money, to recognize the following accounts as below as follows:

Dr 641, 642.

Cr 152, 154, 155, ...

Cr account 33381 - Environmental protection tax:

c) In case the enterprise is an import trustee who pays environmental protection tax on behalf of the import trustor, when determining the environmental protection tax payable, to recognize the following accounts as below as follows:

Dr 138 - Other receivables

Cr account 33381 - Environmental protection tax:

- Upon paying environmental protection tax to the state budget, to recognize the following accounts as below as follows:

Dr 33381 - Environmental protection tax

Cr 111, 112, ...

d) Accounting for refund of environmental protection tax in the import process

- When re-exporting goods whose environmental protection tax is eligible for refund, to recognize the following accounts as below as follows:

Dr 33381 - Environmental protection tax

Cr 632 - Costs of goods sold (goods dispatched for sale)

Cr 152, 153, 156 (goods dispatched for return).

- When re-exporting fixed assets whose excise tax is eligible for refund, to recognize the following accounts as below as follows:

Dr 33381 - Environmental protection tax

Cr 211 - Tangible fixed assets (fixed assets dispatched for return)

Cr 811 - Other receivables (sale of fixed assets).

- When re-exporting goods not under ownership of the enterprise whose environmental protection tax is eligible for refund, to recognize the following accounts as below as follows:

Dr 33381 - Environmental protection tax

Cr 138 - Other receivables.

dd) Accounting for environmental protection tax payable for sale of goods or services which is eligible for refund or deduction: Upon receiving notification of excise tax eligible for refund or deduction in the sale process issued by the competent agency, to recognize the following accounts as below as follows:

Dr 33381 - Environmental protection tax

Cr 711 - Other income.

3.10. Other taxes (33382), fees, charges and other payables (3339)

- When determining property transfer taxes subject to value of purchased asset (registration of ownership or rights to use), to recognize the following accounts as below as follows:

Dr 211 - Tangible fixed assets

Cr 333 - Taxes and other payables to the State Budget (3339)

- Upon paying other taxes (i.e. foreign contractor tax), fees, charges and other payables actually, to recognize the following accounts as below as follows:

Dr 333 - Taxes and other payables to the State Budget (33382, 3339)

Cr 111, 112.

3.11. Accounting government grants for enterprises

- Upon receiving decisions on government grants for enterprises providing goods or services at the request of the state; the government grants shall be recorded to turnovers as follows:

Dr 333 - Taxes and other payables to the State Budget (3339)

Cr 511 - Turnovers (5114).

- Upon receiving government grants, to recognize the following accounts as below as follows:

Dr 111, 112.

Cr 333 - Taxes and other payables to the State Budget (3339)

Article 53. Account 334 - Payables to staff

1. Accounting rules

The account shall be used to record payables and payment of payables to employees of enterprises, including salaries, wages, bonuses, social insurance and other payables included in employees’ incomes.

2. Structure and contents reflected in Account 334 - Payables to staff

Debit:

- Salaries, wages and bonuses, social insurance and other items which are paid or paid in advance to employees;

- Amounts deducted from salaries or wages of employees

Credit: Salaries, wages and bonuses, social insurance and other items which are paid to employees;

Credit balance: Outstanding salaries, wages and bonuses, social insurance and other items payable to employees;

Account 334 may have debit balance. Debit balance of account 334 is particular - recording negative difference between paid amounts and salaries, wages or other payables to employees (if any).

Account 334 shall be recorded according to: Salary payment and other payments.

Account 334 - Payables to staff, comprises 2 level-2 accounts:

- Account 3341 - Payables to staff: The account shall be used to record payables and payment of payables to staff of enterprises, including salaries, wages, bonuses, social insurance and other payables included in staff’ incomes.

- Account 3348 - Payables to others: The account shall be used to record payables and payment of Payables to others of enterprises, including salaries, wages, bonuses, social insurance and other payables included in employees’ incomes.

3. Accounting methods for certain major economic transactions

a) When determining salaries or allowances payable to employees as prescribed, to recognize the following accounts as below as follows:

Dr 241 - Construction in progress

Dr 622, 623, 627, 641, 642.

Cr 334 - Payables to staff (3341, 3348).

b) Bonuses paid to staff:

- When determining bonuses paid to staff from welfare fund, to recognize the following accounts as below as follows:

Dr 353 - Bonus and welfare funds (3531)

Cr 334 - Payables to staff (3341).

- Upon paying bonuses, to recognize the following accounts as below as follows:

Dr 334 - Payables to staff (3341).

Cr 111, 112, ...

c) When determining social insurance (illness, pregnancy, work-related accidents, ...) payable to staff, to recognize the following accounts as below as follows:

Dr 338 - Other payables or receivables (3383)

Cr 334 - Payables to staff (3341).

d) When determining actual annual leave salary to staff, to recognize the following accounts as below as follows:

Dr 623, 627, 641, 642.

Dr 335 - Payable expenses (Enterprises accrue salary of annual leave)

Cr 334 - Payables to staff (3341).

dd) Items shall be deducted from salary and income of staff and other employees of enterprises, such as unspent advances, medical insurance, social insurance, collected compensation of shortage of assets waiting for resolution, ..., to recognize the following accounts as below as follows:

Dr 334 - Payables to staff (3341, 3348).

Cr 141 - Advances

Cr 338 - Other payables or receivables

Cr 138 - Other receivables.

e) When determining personal income tax of staff and other employees of the enterprise payable to the state, to recognize the following accounts as below as follows:

Dr 334 - Payables to staff (3341, 3348).

Cr 333 - Taxes and other payables to the State Budget (3335)

g) When giving advance or paying salaries or wages to staff and other employees of enterprises actually, to recognize the following accounts as below as follows:

Dr 334 - Payables to staff (3341, 3348).

Cr 111, 112, ...

h) When making payables to staff and other employees of the enterprise, to recognize the following accounts as below as follows:

Dr 334 - Payables to staff (3341, 3348).

Cr 111, 112, ...

i) In case of paying salary or bonus to staff or other employees of the enterprise by products, goods, the sale turnovers excluding VAT shall be recorded as follows:

Dr 334 - Payables to staff (3341, 3348).

Cr 511 - Turnovers

Cr 3331 - VAT payable (33311).

k) Determination and payment of other payables to staff and employees of the enterprise such as shift-meal, rents, phone bills, school fees, membership cards, ...:

- When determining payables to staff and employees of the enterprise, to recognize the following accounts as below as follows:

Dr 622, 623, 627, 641, 642.

Cr 334 - Payables to staff (3341, 3348).

- When making payables to staff and employees of the enterprise, to recognize the following accounts as below as follows:

Dr 334 - Payables to staff (3341, 3348).

Cr 111, 112, ...

Article 54. Account 335 – Payable expenses

1. Accounting rules

a) The account shall be used to record payables to goods or services received from the seller or provided for the seller during a reporting period, but payments of such goods or services have not been made due to lack of invoices or documents on accounting, which are recorded to operating expenses of the reporting period.

The account is also recorded payables to employees during a period, such as annual leave salary and operating expenses during the reporting period which are deducted in advance, for example:

- Expenses in seasonal cessation of production period, in case production cessation plan can be set up. The expenses payables in cessation period shall be calculated and recorded to operating expenses during the period.

- Accruing interest expenses incurred from loans payable in case of deferred loans interests, deferred bonds interests (at maturity of bonds).

- Accruing expenses to provisionally calculate cost of property finished products sold.

b) It is required to differentiate accrued expenses and provisions recorded to the account 352 and report in the financial statement in conformity with each item, in particular:

- Provisions are current liabilities without specific payment schedule; accrued expenses are current liabilities with specific payment schedule;

- Provisions are amounts payable which are not identified (i.e. provisions for warranty on goods or building works); accrued expenses are amounts payable which is identified.

- In the financial statement, provisions are separated with trade payables and other payables but accrued expenses are a part of trade payables or other payables.

- The recording of accrued expenses to operating expenses during a period shall be carried out in conformity with turnovers and expenses incurring during a period. The payables not incurring because the goods or services are not received which are recorded to operating expenses in advance in this period to avoid suddenness in the operating expenses shall be recorded to provisions.

c) The accrued amounts not recorded to account 335 but to provisions account, such as:

- Expenses incurred from major repairs of specific tangible fixed assets due to cyclical large production, enterprises are allowed to accrue repair expenses for planning-year or several years later;

- Provisions for warranty on goods, building works or restructure;

- Other provisions (refer to account 352).

d) Accruement and recording of expenses which have not yet incurred into operating expenses during a period, shall be calculated strictly (preparing an estimate for expenses approved by the competent agency) and have reasonable and reliable evidences on expenses which have to accrue in the period, to ensure amount of expenses payable recorded in the account in conformity with actual expenses incurred. Strictly forbid accruement in expenses contents which are not allowed to be charged to operating expenses.

dd) In principle, accrued expenses payable shall be settled with actual expenses incurred. The difference between accruement and actual expenses shall be reverted.

e) The accruement of expenses to provisionally determine the costs of property goods shall also meet following rules:

- The enterprise may only accrue expenses stated in the investment estimates without sufficient documents for acceptance to the costs of goods sold and reasons and contents of accruement for every work item shall be presented.

- The enterprise may only accrue expenses to provisionally determine the costs of goods sold for completed property held for sale, which is sold during a period and meet recognition criteria of turnovers.

- The accrued expenses which are temporarily determined and actual expenses incurred which are recorded to the costs of goods sold shall be equivalent to the quota on cost according to total estimated expenses for sold property held for sale (according to the area).

g) The capitalized interest expenses shall be determined according to VAS “Borrowings costs”. The interest expenses shall be capitalized in the cases below:

- Regarding loans serving the construction of fixed assets, investment properties, and the interests shall be capitalized even in case the construction duration is under 12 months;

- The contract may not capitalize loan interests to serve the construction of building works or assets for their clients, including separate loans, for example: A contractor applies for loans for construction of building works for their clients; a shipbuilder builds ships to ship-owner, ...

h) Accruement expenses which are unused until the end of the fiscal year shall be presented in the financial statement.

2. Structure and contents reflected in Account 335 - Payable expenses

Debit:

- Actually incurred payments charged to accrued expenses;

- Positive difference between accrued expenses and actual expenses shall be recorded as a decrease in expenses.

Credit: Accrued expenses which are recorded to operating expenses.

Credit balance: Accrued expenses charged to operating expenses, but have not yet incurred actually.

3. Accounting methods for certain major economic transactions

a) When accruing into expenses incurred from annual leave salary of workers, to recognize the following accounts as below as follows:

Dr 622 - Direct labor costs

Cr 335 - Payable expenses.

b) When calculating actual annual leave salaries payable, in case the accrued amount is greater than the actual expenses incurred, to recognize the following accounts as below as follows:

Dr 335 - Payable expenses (accrued amount)

Cr 622- - Direct labor costs.

c) When accruing expenses incurred from repair of fixed assets without acceptance during a period to operating expenses and issuing invoices, to recognize the following accounts as below as follows:

Dr 241, 623, 627, 641, 642.

Cr 335 - Payable expenses.

d) When the repair of fixed assets is completed and put into operation, in case the accrued amount is greater than the actual expense incurred, to recognize the following accounts as below as follows:

Dr 335 - Payable expenses (accrued amount is greater than expense incurred)

Cr 241, 623, 627, 641, 642.

dd) When accruing estimated expenses payable during seasonal or planned production cessation period into operating expenses, to recognize the following accounts as below as follows:

Dr 623 - Costs of construction machinery

Dr 627 - Factory overheads

Cr 335 - Payable expenses.

e) Actual expenses incurring from accrued expenses, to recognize the following accounts as below as follows:

Dr 623, 627 (in case the expense incurred is greater than the accrued amount)

Dr 335 - Payable expenses (accrued amount)

Dr 133 - Value-added tax deductible (if any)

Cr 111, 112, 152, 153, 331, 334

Cr 623, 627 (in case the expense incurred is smaller than the accrued amount)

g) When determining deferred interest payable in period at end of period, to recognize the following accounts as below as follows:

Dr 635 - Financial expenses (loans interests for business capital)

Dr 627, 241 (capitalized interests)

Cr 335 - Payable expenses.

h) In case the enterprise issues bonds at par value, in case interests are deferred (at maturity of bonds), on a periodic basis, the enterprise shall accrue loan interests expenses payable in period into operating expenses, or capitalization of interests, and to recognize the following accounts as below as follows:

Dr 627, 241 (capitalized interests)

Dr 635 - Financial expenses (in case the interest is included in financial expenses)

Cr 335 - Payable expenses (bond interest payables in the period).

At the maturity of the bond, when the enterprise pays principal and interest of the bond to the bondholder, to recognize the following accounts as below as follows:

Dr 335 - Payable expenses (total bond interests)

Dr 34311 - Par value of bonds

Cr 111, 112, ...

i) In case the enterprise issues bonds at discount, in case interests are deferred (at maturity of bonds), on a periodic basis, enterprises shall accrue loan interests expenses payable in period into operating expenses or capitalization of interests, and to recognize the following accounts as below as follows:

Dr 627, 241 (capitalized interests)

Dr 635 - Financial expenses (in case the interest is included in financial expenses)

Cr 335 - Payable expenses (bond interest payables in the period).

Cr 34312 - Bond discounts (bond discount allocated in period).

At the maturity of the bond, when the enterprise pays principal and interest of the bond to the bondholder, to recognize the following accounts as below as follows:

Dr 335 - Payable expenses (total bond interests)

Dr 34311 - Par value of bonds

Cr 111, 112, ...

k) In case the enterprise issues bonds at premium, in case interests are deferred (at maturity of bonds), on a periodic basis, enterprises shall accrue loan interests expenses payable in period into operating expenses or capitalization of interests, and to recognize the following accounts as below as follows:

Dr 627, 241 (capitalized interests)

Dr 635 - Financial expenses (in case the interest is included in financial expenses)

Cr 335 - Payable expenses (bond interest payables in the period).

At the maturity of the bond, when the enterprise pays principal and interest of the bond to the bondholder, to recognize the following accounts as below as follows:

Dr 335 - Payable expenses (total bond interests)

Dr 34311 - Par value of bonds

Cr 111, 112, ...

l) Regarding enterprises wholly owned by the State converted into joint stock companies:

- Regarding overdue loans given by JSC Bank for Foreign Trade of Vietnam and the Vietnam Development Bank because the enterprise suffers losses, has no state capital and close to insolvency, the equitized enterprise shall apply for freezing, rescheduling or cancelling debts of bank interests as prescribed in applicable laws. Upon receiving the decision of cancellation of outstanding interests, to recognize the following accounts as below as follows:

Dr 335 - Payable expenses (cancelled interests)

Cr 421 - Undistributed profit after tax (the loan interests recorded to expenses of preceding periods which are cancelled)

Cr 635 - Financial expenses (the loan interests recorded to financial expenses in this period).

- In case the period from maturity date for payment of share purchase made by investors to the date on which the enterprise receives Certificate of Business registration is longer than 3 months, the enterprise may determine interests paid to investors:

+ Interests payable shall be recorded as follows:

Dr 635 - Financial expenses

Cr 335 - Payable expenses.

+ Upon paying to investors, to recognize the following accounts as below as follows:

Dr 335 - Payable expenses.

Cr 111, 112.

m) Accounting for accrued expenses for provisional determination of costs of sold property held for sale.

- When accruing expenses for provisional determination of costs of sold property held for sale, to recognize the following accounts as below as follows:

Dr 632 - Costs of goods sold

Cr 335 - Payable expenses.

- The expenses incurred from accepted construction with sufficient documents shall be recorded to expenses incurred from property construction as follows:

Dr 154 - Cost for work in process

Dr 133 - Value-added tax deductible

Cr, relevant.

- When there are sufficient documents proving that accrued expenses actually incurs, a decrease in accrued expenses and work in progress shall be recorded as follows:

Dr 335- - Accrued expenses.

Cr 154- - Work in progress.

- When all property projects are completed, a decrease in the remaining accrued expenses shall be recorded as follows:

Dr 335- - Accrued expenses.

Cr 154- - Work in progress.

Cr 632 - Costs of goods sold (positive difference between remaining accrued expenses and actual expenses incurred).

Article 55. Account 336 - Internal receivables

1. Accounting rules

a) The account shall be used to record payment of payables between an enterprise and dependent accounting attached units having no legal status (hereinafter referred to as dependent accounting units); between dependent accounting units in the same company.

In the enterprise, the classification of affiliates for accounting purpose shall base on nature of the units (independent accounting or dependent accounting, whether or not having legal status or having legal representative), but not base on the names of those units (members, branches, plants, groups, ...).

b) The account 336 shall not record payment between parent company and subsidiaries and between subsidiaries (between independent accounting units having legal status).

c) Internal receivables recorded to account 336 “Internal receivables” include working capital payables and other payables which the dependent accounting unit pays to the enterprise or other dependent accounting units; amounts which the enterprise grants to dependent accounting units. Amounts payable may relate to asset receipt, capital, funds, current payment, payment on behalf of a third party, interests, foreign exchange differences, ...;

d) According to the decentralization and operating feature, the enterprise shall decide that the dependent accounting units shall record working capital granted by the enterprise to account 3361 - Operating capital provided for attached units or account 411 - Owner's invested equity.

dd) Account 336 “Internal receivables” shall be recorded in details for every unit which has mutual payment relationship, and accounts payable will be observed in details.

e) At end of period, accountants shall check and collate Account 136 and Account 336 between units according to every internal payment content, to prepare offsetting reports for every unit, as basis for offsetting adjustment in these two accounts. Upon collating, in case having differences, the reasons for them shall be uncovered and adjusted promptly.

2. Structure and contents reflected in Account 336 - Internal receivables

Debit:

- Amounts paid for dependent accounting units;

- Amounts paid to the enterprise by dependent accounting units;

- Amounts paid for items which internal units pay or receive on behalf of other internal units;

- Offsetting receivables against payables of the same unit having payment relationships.

Credit:

- Amounts of operating capital granted to dependent accounting units by the enterprise

- Amounts payable to the enterprise by dependent accounting units;

- Amounts payable to dependent accounting units;

- Amounts payable for other internal units on items paid or received on behalf of other entities.

Credit balance: Outstanding amounts payable to the enterprise and internal units in the enterprise.

Account 336 - Internal receivables, comprises 4 level-2 accounts:

- Account 3361 - Operating capital Internal payables: The account is opened in dependent accounting units having no legal status to record operating capital granted by the enterprise.

The account does not record capital contributed to subsidiaries or units similar to subsidiaries (independent accounting units having no legal status) by the parent company.

- Account 3362 - Internal payables for foreign exchange difference: The account shall be opened only in project management board affiliated to the enterprise which is an investor to record the foreign exchange differences payable to the enterprise.

- Account 3363 - Internal payables for borrowing cost eligible for capitalization: The account shall be opened only in project management board affiliated to the enterprise which is an investor to record borrowings costs entitled to be capitalized transferred to the enterprise.

- Account 3368 - Other internal payables: records other payables between internal units in the same enterprise.

3. Accounting methods for certain major economic transactions

3.1. Accounting for dependent accounting units;

a) When a dependent accounting unit (branch, shop, project management board, ...) receives capital from the superior unit, to recognize the following accounts as below:

Dr 111, 112, 152, 155, 156, 211, 213, 217, ...

Cr 336 - Internal payables (3361).

b) When repaying amounts which are paid by other internal units or receiving goods or services from other internal units, to recognize the following accounts as below:

Dr 152, 153, 156

Dr 331 - Trade payables

Dr 641 - Selling expenses

Dr 642 - General administration expenses

Dr 133 - Value-added tax deductible

Cr 336 - Internal payables.

c) Upon collecting amounts on behalf of a third party or applying for loans from other internal units, to recognize the following accounts as below:

Dr 111, 112, ...

Cr 336 - Internal payables.

d) Upon paying amounts payables or repaying amounts paid on behalf of the dependent accounting unit to the enterprise or other internal units, to recognize the following accounts as below:

Dr 336 - Internal payables.

Cr 111, 112, ...

dd) Upon receiving decisions on transfer of assets to other internal units and decline in operating capital, to recognize the following accounts as below:

Dr 336 - Internal payables (3361)

Dr 214 - Depreciation of fixed assets (for transfer of fixed assets or investment properties)

Cr 152, 155, 156, 211, 213, 217, ...

e) Upon offsetting receivables against payables incurring from transactions between the dependent accounting unit and other internal units, to recognize the following accounts as below:

Dr 336 - Internal payables.

Cr 136 - Internal payables.

g) In case the dependent accounting unit is not assigned to account for undistributed profit after tax (TK 421), periodically the dependent accounting unit shall transfer turnovers, income, expenses directly through account 336 - Internal payables or account 911 - Income summary, to recognize the following accounts as below:

- Upon transferring turnovers or income, to recognize the following accounts as below:

Dr 511, 711.

Cr 911 - Income summary (in case the dependent accounting unit observes the income summary during a period)

Cr 336 - Internal receivables (in case the dependent accounting unit does not observe the income summary during a period)

On a periodic basis, when the dependent accounting unit in charge of observation of the income summary during a period transfers the income summary (profits) to the superior unit, to recognize the following accounts as below:

Dr 911 - Income summary

Cr 336 - Internal payables.

- Upon transferring expenses, to recognize the following accounts as below:

Dr 336 - Internal receivables (in case the dependent accounting unit is not assigned to observe the income summary)

Dr 911 - Income summary (in case the dependent accounting unit is assigned to observe the income summary separately)

Cr 632, 635, 641, 642.

On a periodic basis, when the dependent accounting unit in charge of observation of the income summary during a period transfers the income summary (losses) to the superior unit, to recognize the following accounts as below:

Dr 336 - Internal payables.

Cr 911 - Income summary.

h) In case the dependent accounting unit is not assigned to account for undistributed profit after tax (TK 421), on a periodic basis, the dependent accounting unit shall transfer undistributed profit after tax to the superior unit, to recognize the following accounts as below:

- Upon transferring profits, to recognize the following accounts as below:

Dr 421 - Undistributed profits after tax

Cr 336 - Internal payables.

- Upon transferring losses, to recognize the following accounts as below:

Dr 336 - Internal payables.

Cr 421 - Undistributed profits after tax.

3.2. Accounting for enterprises having dependent accounting units (superior units)

a) When granting welfare fund to dependent accounting units, to recognize the following accounts as below:

Dr 353 - Bonus and welfare fund

Cr 336 - Internal payables.

b) Upon paying amounts payable to dependent accounting units, to recognize the following accounts as below:

Dr 152 - Raw materials

Dr 153-Tools and supplies

Dr 211 - Tangible fixed asset

Dr 331 - Trade payables

Dr 623 - Costs of construction machinery

Dr 627 - Factory overheads

Dr 641- - Selling expenses

Dr 642 - General administration expenses

Cr 336 - Internal payables.

c) Upon paying amounts payable to dependent accounting units, to recognize the following accounts as below:

Dr 336 - Internal payables.

Cr 111, 112, ...

d) Upon offsetting internal receivables against Internal payables, to recognize the following accounts as below:

Dr 336 - Internal payables.

Cr 136 - Internal payables.

Article 56. Account 337 - Progress billings

1. Accounting rules

a) The account shall be used to record payables under schedule made by clients and receivables under turnovers for the percentage of work that has been completed which is determined by the contractor in the contract of construction in progress.

b) Account 337 "Progress billings" only applies to construction contracts regulate that contractors are permit to make payments under schedule. The account shall not apply to construction contracts regulate that contractors are permit to make payments equivalently to the percentage of work certified by clients.

c) Documents on turnovers equivalent to percentage of work that has been completed during a period (other than invoices) which are issued by the contractor and not certified by clients shall be the basis for recording to Dr 337. The contractor shall choose methods for determination of percentage of work completed, and assign related departments to determine value of completed works, and prepare documents on turnovers earned from construction contracts during a period.

Invoices prepared under billing schedule as specified in the construction contract shall be the basis for recording to Cr 337. Amounts stated in these invoices shall be the basis for recording trade receivables by contractor, but not recording turnovers in accounting period.

d) Account 337 shall be kept records in details for every construction contract.

2. Structure and contents reflected in Account 337 - Progress billings

Debit: to record receivables according to turnovers equivalent to percentage of completed works under contract of construction in progress.

Credit: to record trade payables under schedule of the contract of construction in progress.

Debit balance: to record positive difference between turnovers under the contract and trade payables under schedule of the contract of construction in progress.

Credit balance: to record negative difference between turnovers under the contract and trade payables under schedule of the contract of construction in progress.

3. Accounting methods for certain major economic transactions

a) In case a construction contract specifies that the contractor is entitled to make payment under schedule, when performance of construction contract is estimated reliably, to recognize the following accounts as below according to documents on turnovers equivalent to completed work (other than invoices) determined by the contractor:

Dr 337 - Progress billings

Cr 511 - Turnovers.

b) According to invoices prepared under billing schedule to record receivables under schedule under the contract, to recognize the following accounts as below:

Dr 131 - Trade receivables

Cr 337 - Progress billings

Cr 3331 - VAT payables.

c) When the contractor receives payment from clients, to recognize the following accounts as below:

Dr 111, 112.

Cr 131 - Trade receivables.

Article 57. Account 338 - Other payables

1. Accounting rules

a) The account shall be used to record payment of accounts payable other than accounts in group of Account 33 (from Account 331 to Account 337). The account is also used for accounting for unearned turnovers from services provided for clients and differences in prices incurring in transactions of purchase and leaseback of assets under finance lease or operating lease.

b) Structure and contents reflected in Account 338:

- Value of assets in surplus whose reasons are not uncovered awaiting resolution of competent agency; Value of assets in surplus to be returned to individuals, groups (inside and outside units) as prescribed in the decision of competent agency written in resolution report, in case the reasons were determined.

- Appropriated amount and payment for social insurance, health insurance, and unemployment insurance and trade union fees;

- Amounts deducted from salaries of employees according to the judgment of the Court;

- Amount of profits or dividends payable to owners;

- Temporary loans or borrowing of materials or goods, capital contributed to BCC which does not require a new legal entity.

- Amounts received on behalf of a third party payable or amounts received from the trustor to pay import duty, export duty or VAT on imported goods and pay on behalf of the trustor;

- Pre-payment for financial lease, infrastructure, interests of capital loans or purchase of debt instruments collected from clients during several accounting periods.

- The difference between selling prices under deferred or installment payment as committed and cash price.

- Amount payables for sale of shares of state capital when equitizing a enterprise wholly owned by the State.

- The positive difference between selling price and residual value of leased back fixed assets is financial lease; the positive difference between selling price and par value of leased back fixed assets is operating lease;

- Other payables, such as payables for sale of voluntary pension insurance, life insurance and other grants (other salaries) for employees, ...

c) Other payables in foreign currencies or payment of other payables shall be kept records in details and the converting from foreign currencies into accounting currencies according to following rules:

- When incurring payables in foreign currencies, those payables shall be converted into VND according to actual exchange rates at the incurring time (selling exchange rate of the commercial bank where the enterprise regularly enters into transactions);

- Upon paying other payables in foreign currencies, they shall be converted into specific identification accounting book recording rate;

- At the end of the accounting period, the balance of other payables shall be re-evaluated according to actual exchange rates at the incurring time (selling exchange rate of the commercial bank where the enterprise regularly enters into transactions) and recorded to financial expenses, or financial income. Unearned turnovers in foreign currencies shall not be re-evaluated in case it is not evident that the enterprise is required to return those re-payments to clients in foreign currencies.

2. Structure and contents reflected in Account 338 - Other payables

Debit:

- Transferring value of assets in surplus into relevant accounts according to decision written in resolution report;

- Trade union fees disbursed at units;

- Amounts of social insurance, health insurance, unemployment insurance, trade union fees paid to manage fund agencies of social insurance, health insurance, unemployment insurance and trade union fees.

- Unearned turnovers calculated for every accounting period; pre-payment returned to clients in case the enterprise does not keep leasing assets;

- Difference between selling price under deferred or installment payment as committed and cash price (deferred interests) allocated to financial expenses;

- Transferring positive difference between the selling price and residual value of leased back fixed assets which is financial leased to record as a decrease in operating expenses;

- Transferring positive difference between the selling price and par value of leased back fixed assets which is operating lease to record as a decrease in operating expenses;

- Paying amounts collected from equitization of enterprises wholly owned by the State to enterprise arrangement fund;

- Transferring difference between equitization expenses (-) amounts collected from equitization of state companies;

- Other payables.

Credit:

- Value of assets in surplus awaiting for resolution (without reasons); Value of assets in surplus payable to individuals or groups (inside and outside units) according to the decision written in resolution report because the reasons are uncovered instantly;

- Appropriating social Insurance, health Insurance, unemployment insurance and trade union fees into operating expenses or salaries of employees;

- Payment with employees on collective housing rents, electricity and water expenses;

- Overspending trade union fees which are granted additionally;

- Amounts of social insurance given by social insurance agencies which are paid to employees

- Unearned turnovers incurred during a period;

- The difference between selling prices under deferred or installment payment as committed and cash price.

- The positive difference between selling price and residual value of leased back fixed assets which is financial lease;

- The positive difference between selling price and par value of leased back fixed assets which is operating lease;

- Total amounts collected from sale of shares of state capital; positive difference between actual values of state capital determined when the enterprise wholly owned by the State converts into joint stock company and actual value of state capital when the enterprise's value is determined;

- Temporary loans or borrowings of materials or goods, or capital contributed to BCC which does not require a new legal entity;

- Return of receipts on behalf of other entities;

- Other payables.

Credit balance:

- Accrued social insurance, health insurance and trade union fees which have not been paid to management agency or unspent trade union fees;

- Value of assets in surplus awaiting resolution;

- Unearned turnovers incurred at the end of accounting period;

- Positive difference between selling price and residual value of leased back fixed asset without transferring;

- Total amounts collected from sale of shares of state capital; positive difference between actual value of state capital determined when the enterprise wholly owned by the State converts into joint stock company and actual value of state capital when the value to-be-paid of the enterprise at the end of the accounting period is determined;

- Other payables.

The account may have debit balance: Debit balance shall reflect payment in excess of accounts payable, or sums of social insurance paid to employees who have not yet been settled, and overspending trade union fees not being granted additionally.

Account 338 - Other payables, comprises 8 level-2 accounts:

- Account 3381 - Assets in surplus awaiting resolution: records value of assets in surplus without reasons awaiting resolution of the competent agency. In case the reasons for surplus are uncovered and there is resolution report, the assets in surplus shall be recorded to relevant accounts, not to account 338 (3381).

- Account 3382 - Trade union fees: records accruement and payment of trade union fees at units.

- Account 3383 - Social insurance: records accruement and payment of social insurance at units.

- Account 3384 - Health insurance: records accruement and payment of health insurance at units.

- Account 3385 - Payables on equitization: records amounts collected from sale of shares of state capital payables, positive difference between actual value of state capital when the enterprise wholly owned by the State converts into joint stock company and actual value of state capital when the enterprise’s value is determined;

- Account 3386 - Unemployment insurance: records accruement and payment of unemployment insurance at units.

- Account 3387 - Unearned turnovers: records current amounts and increases and decreases in unearned turnovers of the enterprise during a period. Unearned turnovers include: amounts of clients paid in advance for one or many accounting periods for asset lease; interests received in advance when lending or buying debt instruments; or the difference between selling prices under deferred and from installment payment as committed and cash price; turnovers corresponding to the value of goods, services or discounts to clients in the traditional client programs, ... The following amounts shall be not recorded to the account:

+ Amounts received in advance from buyers that enterprise has not provided goods or services;

+ Turnover has not earned from asset lease or services provided for several accounting periods (unearned turnover is only recorded when the turnover is actually collected, not recorded corresponding to TK 131 - Trade receivables).

- Account 338 - Other payables: records other payables of the unit other than payables recorded to accounts from 3381 to 3387.

3. Accounting methods for certain major economic transactions

3.1. Assets in surplus without reasons awaiting resolution:

a) When discovering assets in surplus, their value shall be recorded according to the par value as follows:

Dr 111, 152, 153, 156, 211 (according to par value)

Cr 338 - Other payables (3381).

b) In case of the resolution report on surplus in assets issued by the competent agency, to recognize the following accounts as below:

Dr 338 - Other payables (3381).

Cr 411 - Owner's invested equity; or

Cr 441 - Capital for constructions;

Cr 338 - Other payables (3388);

Cr 642 - General administration expenses

Cr 711 - Other income.

3.2. Accounting for surplus of assets in case of equitization of enterprise wholly owned by the State

- Upon receiving notification or decision on equitization issued by the competent agency, the equitized enterprise shall conduct physical inventory count and classify assets under management and use of the enterprise when the enterprise’s value is determined. Pursuant to the report on money inventory when determining the enterprise’s value, the value of money in surplus shall be recorded as follows:

Dr 111, 112.

Cr 3381 - Assets in surplus awaiting resolution

Surplus of assets: the enterprise shall keep records of surplus of assets discovered under physical inventory count in the financial statement.

- Accounting for assets in surplus or shortage: regarding assets in surplus, according to “Report on resolution to shortage or surplus of assets under physical inventory count”, to recognize the following accounts as below:

Dr 3381 - Assets in surplus awaiting resolution

Cr 331 - Trade payables (in case the assets in surplus belong to the seller)

Cr 338 - Other payables (3388);

Cr 411 - Owner's invested equity (regarding assets in surplus unable to uncover reasons or owners).

3.3. Accounting for social insurance, health insurance, unemployment insurance, or trade union fees

- When appreciating social insurance, health insurance, unemployment insurance, or trade union fees, to recognize the following accounts as below:

Dr 622, 623, 627, 641, 642 (amounts included in operating expenses)

Dr 334 - Payables to staff (amounts deducted from salaries of employees)

Cr 338 - Other payables (3382, 3383, 3384, 3386).

- Upon paying social insurance, health insurance, unemployment insurance, or trade union fees, to recognize the following accounts as below:

Dr 338 - Other payables (3382, 3383, 3384, 3386).

Cr 111, 112, ...

- Upon paying social insurance to employees in case of sick leave or maternity leave, ..., to recognize the following accounts as below:

Dr 338 - Other payables (3383).

Cr 334 - Payables to staff.

- When spending trade union fees at units, to recognize the following accounts as below:

Dr 338 - Other payables (3382).

Cr 111, 112, ...

- Upon receiving compensation for overspending trade union fees, to recognize the following accounts as below:

Dr 111, 112.

Cr 338 - Other payables (3382).

3.4. In case applying for loans or borrowings of materials or goods, or capital contributed to BCC which does not required a new legal entity, to recognize the following accounts as below:

Dr 111, 112, 152, 153, 156, ...

Cr 338 - Other payables.

3.5. Accounting for unearned turnovers on operating lease of fixed assets, investment properties, unearned turnovers of accounting period are determined by total of money collected from operating lease of fixed assets, property investment dividing for number of periods having amount received in advance from operating lease of fixed assets, property investment (in case the total advance shall be recorded to turnovers one time):

- Upon receiving rents for lease of fixed assets or property lease for many years which are prepaid by clients, unearned turnovers at VAT-exclusive prices shall be recorded as follows:

Dr 111, 112, ... (total advances)

Cr 3387 - Unearned turnovers (VAT-exclusive prices)

Cr 3331 - VAT payables (33311).

- When calculating and recording turnover of every accounting period, to recognize the following accounts as below:

Dr 3387 - Unearned turnovers

Cr 511 - Turnovers (5113, 5117).

- In case the asset-leasing contract fails to be performed, when returning money to clients, to recognize the following accounts as below:

Dr 3387 - Unearned turnovers (VAT-exclusive prices)

Dr 3331 - VAT payable (amounts returned to the lessee for VAT on non-performance of asset-leasing contract)

Cr 111, 112, ... (returned amounts).

3.6. Accounting for sale using deferred or instalment payment:

- When selling goods using deferred or instalment payment, the turnovers of the accounting period shall be recorded according to cash prices, the difference between deferred price and cash price shall be recorded to account 3387 “Unearned turnovers” as follows:

Dr 111, 112, 131, ...

Cr 511- - Turnovers (according to VAT-exclusive cash prices)

Cr 3387 - Unearned turnovers (difference between deferred price and VAT-exclusive cash price)

Cr 333 - Taxes and other payables to the State Budget (3331).

- On a periodic basis, when calculating and transferring profits from sale using deferred or instalment payment during a period, to recognize the following accounts as below:

Dr 3387 - Unearned turnovers

Cr 515 - Financial income.

- When actually collecting amounts of sale using deferred or instalment payment, including difference between selling price under deferred or installment payment as committed and cash price, to recognize the following accounts as below:

Dr 111, 112, ...

Cr 131 - Trade receivables.

- And the costs of goods sold shall be recorded as follows:

+ When selling goods, to recognize the following accounts as below:

Dr 632- Costs of goods sold

Cr 154 (631), 155, 156, 157, ...

+ When liquidating or selling an investment property, to recognize the following accounts as below:

Dr 632- Costs of goods sold (residual value of the investment property)

Dr 214 - Depreciation of fixed assets (2147) (accumulated depreciation - if any)

Cr 217 - Investment properties.

3.7. In case the selling price of the leased back fixed asset which is financial leased is greater than their residual value:

- When completing procedures for sale of assets, to recognize the following accounts as below according to relevant invoices and documents:

Dr 111, 112, ... (total payment)

Cr 711- Other income (residual value of leased back fixed asset)

Cr 3387 - Unearned turnovers (positive difference between selling price and residual value of fixed asset)

Cr 3331 - VAT payables.

And a decrease in fixed asset shall be recorded as follows:

Dr 811 - Other income (residual value of leased back fixed asset)

Dr 214 - Depreciation of fixed assets (depreciation value) (if any)

Cr 211 - Tangible fixed asset (historical cost).

- On a periodic basis, upon transferring positive difference (profit) between the selling price and residual value of financial leased back fixed assets which are financial leased to record as a decrease in operating expenses in conformity with lease term; to recognize the following accounts as below:

Dr 3387 - Unearned turnovers

Cr 623, 627, 641, 642, ...

3.8. Enterprises which have not allocated all profits on foreign exchange differences in the before-operation stage (recorded to account 3387 - Unearned turnovers) shall transfer total profits on foreign exchange differences to financial income to determine income summary during a period, and to recognize the following accounts as below:

Dr 3387 - Unearned turnovers

Cr 515 - Financial income.

3.9. Accounting for payables on equitization of enterprise wholly owned by the State.

- Upon collecting amounts from sale of shares of state capital in the enterprise, to recognize the following accounts as below:

Dr 111, 112.

Cr 3385 - Payables on equitization.

- Accounting for policies for employees in excess of the enterprise: According to the decision on determination of amounts collected from sale of shares to support policies for employees in excess of the enterprise, to recognize the following accounts as below:

Dr 3385 - Payables on equitization.

Cr 334 - Payables to staff.

Upon paying money to employees actually, to recognize the following accounts as below:

Dr 334 - Payables to staff.

Cr 111, 112.

- Settlement of equitization expenses: at the end of the equitization progress, the enterprise shall send a report and make settlement of equitization expenses with the agency deciding the equitization. The equitization expenses shall be offset against amounts collected from equitization of enterprise, to recognize the following accounts as below:

Dr 3385 - Payables on equitization.

Cr 1385 - Receivables from equitization (equitization expenses in details).

Upon paying amounts collected from equitization (after offsetting equitization expenses) to enterprise arrangement fund in the parent company of the economic group, general state company, parent company in the parent company-subsidiary relationship or Enterprise Arrangement and Development Fund held by State Capital and Investment Corporation, to recognize the following accounts as below:

Dr 3385 - Payables on equitization.

Cr 111, 112.

- In case the enterprise is not permit to use amounts collected from sale of shares, the interest payable shall be deducted from amounts payable on equitization but not recorded to financial expenses, to recognize the following accounts as below:

Dr 3385 - Payables on equitization.

Cr 335 - Payable expenses.

Upon paying money to investors, to recognize the following accounts as below:

Dr 335 - Payable expenses.

Cr 111, 112.

- Accounting for difference between the actual value of state capital when the state enterprise converts into joint stock company and the actual value of state capital when the enterprise’s value is determined.

+ In case the actual value of state capital when the state enterprise converts into joint stock company is greater than the actual value of state capital when the enterprise’s value is determined, upon paying positive difference between them (profits) to enterprise arrangement fund in the parent company of the economic group, general state company, parent company in the parent company - subsidiary relationship or Enterprise Arrangement and Development Fund held by State Capital and Investment Corporation, to recognize the following accounts as below:

Dr 421 - Undistributed profits after tax

Cr 3385 - Payables on equitization.

Upon paying amounts collected from equitization (after offsetting equitization expenses) to enterprise arrangement fund in the parent company of the economic group, general state company, parent company in the parent company-subsidiary relationship or Enterprise Arrangement and Development Fund held by State Capital and Investment Corporation, to recognize the following accounts as below:

Dr 3385 - Payables on equitization.

Cr 111, 112.

+ In case the actual value of state capital determined when the enterprise wholly owned by the State converts into joint stock company is smaller than the actual value of state capital when the enterprise's value is determined; the negative difference between them (losses) shall be recorded as follows:

In case the group or individual is subject to compensation, to recognize the following accounts as below:

Dr 138 - Other receivables (1388)

Cr 421 - Undistributed profits after tax.

Upon receiving compensation from the group or individual, to recognize the following accounts as below:

Dr 111, 112.

Cr 138 - Other receivables (1388).

In case the negative difference is caused by objective reasons, or subjective reasons due to force majeure event but the offender fails to make compensation and the competent agency considers and decides to use the amounts collected from sale of shares to compensate the losses after deducting insured compensation (if any), to recognize the following accounts as below:

Dr 3385 - Payables on equitization.

Cr 421 - Undistributed profits after tax.

3.10. Accounting for the import trustee

a) Upon receiving money from the import trustor to buy imported goods, to recognize the following accounts as below according to relevant documents:

Dr 111, 112, ...

Cr 338 - Other payables (3388).

b) Upon transferring money to make deposit to open LC (for payment using Letter of Credit), to recognize the following accounts as below according to relevant documents:

Dr 244 - Mortgage, collaterals and deposits

Cr 111, 112.

c) When importing materials, equipment or goods for the trustor, the quantity, class, quality of the entrusted imported goods, import duration, payment entity, ..., shall be recorded to the trustee's administration system and financial statement; the value of entrusted import goods shall not be recorded to balance sheet.

d) Accounting for the import entrustment payment:

- Upon transferring deposit for L/C to overseas sellers as a portion of the import entrustment payment, to recognize the following accounts as below:

Dr 138 - Other receivables

Cr 244 - Mortgage, collaterals and deposits.

- When making payment of entrusted imported goods to overseas seller, to recognize the following accounts as below:

Dr 138 - Other receivables (in case the trustor has not given advance for purchase of imported goods)

Dr 3388 - Other payables (deducted from the amounts received from the trustor)

Cr 111, 112, 3388, ...

- Import duty, VAT on imported goods, excise tax paid on behalf of the import trustor: in the export - import entrustment transaction (export-import entrustment contract is required), the trustee shall be the representative of the trustor to fulfill obligation with the state budget (taxpayer on behalf of the trustor), or tax liability taken over by the trustor. In this case, the trustee shall only record amount of money paid to state budget as amount paid on behalf of the trustor. Upon paying to state budget, to recognize the following accounts as below:

Dr 138 - Other receivables (return of amounts paid on behalf of the trustor)

Dr 3388 - Other payables (deducted from the amounts received from the trustor)

Cr 111, 112.

dd) Regarding import entrustment expenses and VAT on import entrustment expenses, the turnovers from import entrustment expenses shall be recorded as follows according to VAT invoices and relevant documents:

Dr 131, 111, 112, ... (total payment)

Cr 511 - Turnovers (5113)

Cr 3331 - VAT payables.

e) When make payment related to import entrustment (banking fees, customs inspection fees, warehouse rents, depot rents, material handling expenses, delivery expenses, ...) on behalf of the import trustor, to recognize the following accounts as below according to relevant documents:

Dr 138 - Trade receivables (every import trustor in details)

Cr 111, 112, ...

g) Upon offsetting receivables against payables at the end of the transaction, to recognize the following accounts as below:

Dr 338 - Other payables

Cr 138 - Other receivables,

3.11. Accounting for the export trustee

a) When exporting materials, equipment or goods for the trustor, the quantity, class, quality of the entrusted exported goods, export duration, payment entity ..., shall be recorded to the trustee's administration system and financial statement; the value of entrusted export goods shall not be recorded to balance sheet. The payment of export duty (if any) shall comply with regulations of account 333 - Taxes and other payables to the State Budget.

b) Upon paying on behalf of the export trustor, to recognize the following accounts as below:

Dr 138 - Other receivables (1388)

Cr 111, 112.

c) Upon receiving amount of money from the overseas purchaser, such amount shall be recorded to payables to trustor as follows:

Dr 112 - Cash in banks

Cr 338 - Other payables (3388).

d) Upon offsetting receivables against payables, to recognize the following accounts as below:

Dr 338 - Other payables

Cr 138 - Other receivables,

3.12. Upon determining profits or dividends payable to owners, to recognize the following accounts as below:

- When determining amounts payable, to recognize the following accounts as below:

Dr 421 - Undistributed profits after tax

Cr 338 - Other payables (3388).

- Upon paying profits or dividends to owners, to recognize the following accounts as below:

Dr 338 - Other payables (3388).

Cr 111, 112 (amount of profits or dividends payable to owners)

Cr 3335 - Personal income tax (in case the personal income tax of the owner is deducted at source).

3.13. Upon preparing financial statement, balance of other payables in foreign currencies according shall be re-evaluated according to actual exchange rates:

- In case incurring losses of exchange rates, to recognize the following accounts as below:

Dr 413 - Exchange rate differences

Cr 338 - Other payables.

- In case incurring profits of exchange rates, to recognize the following accounts as below:

Dr 338 - Other payables

Cr 413 - Exchange rate differences.

Article 58. Account 341 - Borrowings and financial lease liabilities

1. Accounting rules

a) The account shall be used to record loans, financial lease liabilities and payment of the loans, financial lease liabilities of the enterprises. Loans under the forms of issuance of bonds or preference shares with provisions requiring the issuer to repurchase at a certain time in the future shall not be recorded in the account.

b) Enterprises shall monitor in detail the payable term of loans, financial lease liabilities. The loans, financial lease liabilities with payment period of more than 12 months from the date of the financial statements, accountants shall present as long-term borrowings and financial lease liabilities. Borrowings and financial lease liabilities fall due for settlement within the next 12 months from the date of the financial statements, accountants shall present as short-term borrowings and financial lease liabilities for the payment plan.

c) Borrowing expenses directly related to the loans (other than payable interest), such as expenses for verification, audit, making application ... shall be accounted for in financial expenses. Where these expenses arise from loans for purposes of investment, construction or production of assets in progress, they shall be capitalized.

d) For the financial leased liabilities, total liabilities recorded in the Credit side of Account 341 shall be the total payable amount calculated on the present value of minimum lease payments or the par value of leased assets.

dd) Enterprises shall account for in details and monitor each object of the loan or liability, loan agreement and type of loan asset. In case of loans or liabilities in Foreign currencies, accountants shall monitor in detail the currency and comply with the following principles:

- Loans, liabilities in Foreign currencies shall be converted into accounting monetary units in accordance with the actual exchange rate at the arising time;

- Upon paying loans, liabilities in Foreign currencies, the Debit side of Account 341 shall be entitled to convert according to exchange rates recorded in accounting books in actually specific identification for each object;

- When establishing financial statement, the balance of the loan, financial lease liabilities in Foreign currencies shall be revalued at actual exchange rates at the date of the financial statements.

- The exchange rate differences arising from the payment and the revaluation at the end of the period of loans, financial lease liabilities in foreign currencies shall be accounted for in turnovers or expenses of financing activities.

2. Structure and contents reflected in Account 341 - Borrowings and financial lease liabilities

Debit side:

- Sums paid for loans, financial lease liabilities;

- Sum of loans, liabilities reduced due to agreement of the lenders, creditors;

- Foreign exchange differences due to revaluation of the balance of loan, financial lease liabilities by Foreign currencies at the end of period (in case exchange rate of Foreign currencies falls against the Vietnam dong).

Credit side:

- Sum of loans, financial lease liabilities incurred during the period;

- Foreign exchange differences due to revaluation of the balance of loan, financial lease liabilities by Foreign currencies at the end of period (in case exchange rate of Foreign currencies rises against the Vietnam dong).

 Credit balance: Balance of remaining loans, financial lease liabilities.

Account 341 - Borrowings and financial lease liabilities comprise 2 level-2 accounts

Account 3411 - Loans: The account records the value of the loans and the payment of the loans of enterprises (the account does not record loans under the form of bond issuance).

Account 3412 - Financial lease liabilities The account records the value of financial lease liabilities and the payment of financial lease liabilities of enterprises.

3. Accounting methods for certain major economic transactions

Loans by cash

- Loans by Vietnam dong (put into cash fund or deposited into bank), record:

Dr 111- Cash (1111)

Dr 112- Cash in banks (1121)

Cr 341 - Borrowings and financial lease liabilities (3411)

- Loans by Foreign currencies converted into Vietnam dong according to actual transaction exchange rates, record:

Dr 111-Cash (1112) (loan put into cash fund)

Dr 112- Cash in banks (1122) (loan deposited into bank)

Dr 221, 222- (loan invested into subsidiaries, associated companies, joint-ventures)

Dr 331- Supplier payable (loan paid straightly for sellers)

Dr 221-Tangible fixed assets (loan for purchase of fixed assets)

Dr 133- Deductible value-added tax (if any)

Cr 341 - Borrowings and financial lease liabilities (3411)

- Loan expenses directly related to the loan (other than accrued interest) such as expenses for audit, application for verification ... record:

Dr 241, 635

Cr 111, 112, 331

b) Loans transferred straightly to sellers for purchase of inventory, fixed assets, to pay for capital investment, in case input VAT is deductible, record:

Dr 152, 153, 156, 211, 213, 241 (purchase price excluding VAT)

Dr 213 - Intangible fixed assets (purchase price excluding VAT)

Dr 133- Deductible value-added tax (1332)

Cr 341 - Borrowings and financial lease liabilities (3411)

- In case the input VAT is non-deductible, the value of purchase and construction of fixed assets shall be recorded including VAT. Borrowing expenses directly related to the loans (other than accrued interest) as expenses for audit, application for accounting verification shall be similar to accounting entries at Point a.

c) Loans for payment or capital advance (prepaid) to sellers, contractors of construction, to pay the expenses, record:

Dr 331, 641, 642, 811

Cr 341 - Loans and finance lease (3411)

d) Loans for investments in subsidiaries, associated companies and joint ventures, shares, bonds, record:

Dr 221, 222, 228

Cr 341 - Borrowings and financial lease liabilities (3411)

dd) The accrued interest is added to the principal, record:

Dr 635- Financial expense

Dr 154, 241 (in case the interest is capitalized)

Cr 341 - Borrowings and financial lease liabilities (3411)

e) Payment loans by Vietnam dong or by sums received from debts of the client, record:

Dr 341 - Borrowings and financial lease liabilities (3411)

Cr 111, 112, 131

g) Payment of loan in Foreign currencies:

Dr 341 - Borrowings and financial lease liabilities (under exchange rates of account 3411)

Dr 635 - Financial expense (loss on forex)

Cr 111, 112 (at the exchange rate in accounting books of Accounts 111, 112)

Cr 515 - Financial income (gain on forex).

h) Accounting of transactions involving financial leased shall comply with the provisions of accounts 212 - Financial leased fixed assets.

When establishing financial statement, the balances of the loan, financial lease liabilities in Foreign currencies shall be revalued at real exchange rates at the end of period:

- In case loss on forex is incurred, record:

Dr 413 - Exchange rate differences

Cr 341 - Borrowings and financial lease liabilities

- In case gain on forex is incurred, record:

Dr 341 - Borrowings and financial lease liabilities

Cr 413 - Exchange rate differences

Article 59. Account 343 - Issued bonds

1. Accounting rules

1.1. Account 343 is only applicable to enterprises borrowing capital by the mode of releasing bond. The account shall be used to record situation of releasing bond, including convertible bond and payment situation for bond of enterprises. The account is also used for recording bonds discounts, premium when issuing bond, and allocation situation of discounts, premiums when determining borrowing costs charged to business and production costs or capitalized for every period.

1.2. Real interest rate (also called effective interest rate) is defined as follows:

a) It is interest rates for loans of commercial banks commonly applied in the market at the time of the transaction;

b) Where the interest rate cannot be determined in accordance with point a above, the real interest rate is the interest rate that enterprises may borrow under the form of issued debt instruments which shall not be convertible into shares (bond issuance shall not commonly be converted or borrowed by conventional contract) in conditions of production, business which is going on normally.

1.3. Principles of ordinary bonds (unconvertible bonds)

a) When enterprises borrow capital by releasing bond, three cases may occur:

- Releasing bond at par (released price equal to Par value of bonds): means releasing bond with the price complied with par value of bonds. This case often occurs when the market interest rate is equal to the nominal interest rate of issued bond;

- Releasing bond at discount (released price less than Par value of bonds): means releasing bond with the price lower than par value of bonds, called discounts of bond. This case often occurs when market interest rate is higher than nominal interest rate of issued bond;

- Releasing bond at premium (released price higher than Par value of bonds): means releasing bond with the price higher than par value of bonds. The difference between released Par value of bondss higher than price of bond called premium of bond. This case often occurs when market interest rate is lower than nominal interest rate of issued bond;

b) Bond discount and premium are only incurred when enterprises borrow by the mode of releasing bond, and at the releasing time, there is a difference between market interest rate and nominal interest rate approved by the investors who buy bond. Bond discount and premium are determined and recorded immediately at the time of releasing bond. The difference between market interest rate and nominal interest rate after the time of leasing bond shall not influence on value of premiums or discounts recorded.

c) Enterprises using Account 3431 - Bonds often used to record the details of contents related to the issued bond, including:

- Par value of bonds;

- Bond discount;

- Bond premium

Also monitor in detail according to issuance duration of bond.

d) Enterprises shall monitor discounts and premiums for every type of issued bond, and allocation situation of every discount and premium when determining borrowing costs charged to business and production costs or capitalized for every period, namely:

- Bond discount is allocated gradually to be charged into borrowing costs for every period during bond life;

- Bond premium is allocated gradually to reduce borrowing costs for every period during the bond life;

- In case of bonds’ interest costs are qualified for capitalization, borrowing interests and the allocation of discounts or premiums capitalized in every period shall not exceed actual borrowing interests incurred and the allocation of discounts or premiums in that period;

- The allocation of discounts or premiums may use the actual interest rate method or the straight line method:

According to the real interest rate method: Discounts or premiums allocated into each term calculated by the difference between borrowing interest costs payable for every term of interest payment (calculated by beginning book value of bond multiply (x) with rate of actual interest in the market) with amounts payable every term.

According to the straight line method: Discounts or premiums allocated equally during bond life.

e) In case of paying interest at maturity, on a periodic basis, enterprises shall calculate bond interest’s payable every term, to record it into business and production costs or capitalize it into value of unfinished assets

g) When making financial statement, in the liabilities of the balance sheet, the item of issued bond shall be recorded on net basis (determining by bond value at par minus (-) bond discount are plus (+) Bond premium)

h) Cost of issuing bonds is gradually allocated in accordance with bond life under the straight line method or real interest rate method and recorded in the financial expense or capitalized. At the time of initial record, the cost of issuing bonds shall be recorded a decrease in par value of the bond. On a periodic basis, accountants allocate cost for bond issuance by recording an increase in the par value and recording in financial expense or capitalization in accordance with the recording accrued interest of the bond.

1.4. Accounting rules of convertible bonds

Convertible bonds are bonds that may be converted into ordinary shares of the same issuer under the conditions identified in the released plan. Enterprises issuing convertible bonds shall carry out procedures and meet the conditions of the convertible bonds issuance under the legal provisions.

b) Enterprise (the issuer of convertible bonds) uses account 3432 - Convertible bonds to record the value of the principal of convertible bonds at the time of reporting. Enterprises shall open detailed accounting books to keep track of each type of convertible bonds according to term, interest rate and par value.

c) Convertible bonds recorded on account 3432 are bonds that can be converted into a number of determined shares defined in the issuance plan. Bonds that may be converted into a number of undetermined shares at maturity (depending on the market value of the shares at maturity) are accounted for as ordinary bonds.

d) Cost of issuing convertible bonds is gradually allocated in accordance with bond life under the straight line method or real interest rate method and recorded in the financial expense or capitalized. At the time of initial record, the cost of issuing convertible bonds shall be recorded reducing par value of the bond. On a periodic basis, accountings allocate cost for bond issuance by recording increasing the par value recorded in financial expense or capitalized in accordance with the recording accrued interest of the bond.

e) At the time of initial record, when issuing convertible bonds, enterprises shall calculate and determine separately value of the debt component (principal debt) and capital component of convertible bonds. Principal debt of convertible bonds shall be recorded as liabilities; component of capital (stock options) of convertible bonds shall be recorded an owner’s equity. The valuation of the components of the convertible bond is carried out as follows:

- Valuation of the principal of convertible bonds at the time of release

At the time of initial record, the value of the principal of convertible bonds is determined by discounting the nominal value of future payments (including principal and interest of bonds) about the present value under interest rate of similar bonds in the market without the right to convert into shares and subtracting the cost of issuing convertible bonds. In case of failure to determine the interest rate of similar bonds, enterprises use common loan interest rates in the market at the time of the issuance of bonds to determine the present value of future payments.

Common loan interest rate in the market is loan interest rate used in the majority of transactions in the market.

 Enterprises shall actively determine common loan interest rates in the market in the most accordance with characteristics of the production and trading of the enterprises in consistence with the provisions of the State Bank.

Example of valuation of the principal of convertible bonds at the time of release: On January 1, 2012, Thang Long joint stock company issues 1 million of convertible bonds with par value of VND 10,000 in 3-year period, nominal interest rate is 10%/year, payment of interest is every year at the end of the year. Interest rate of unconvertible similar bonds is 15%/year. At maturity, each bond is convertible into one share. Knowing that the convertible bonds are issued to mobilize capital for normal production, business (interest is included in financial expense). Valuation of the principal of convertible bonds at the time of initial record is carried out (ignoring the cost of issuing bonds) as follows:

Unit: dong

According to this example, total amount collected from the bond issuance is 10,000,000,000d, in which the total present value of future payments including principal and interest of bonds is 8,858,385,000d. This value is defined as the value of the principal of convertible bonds at the time of initial recording and shall be recorded as liabilities from the issuance of convertible bonds.

- Valuation of capital component of convertible bonds (bond conversion option)

The value of the capital component of convertible bonds is defined as the difference between the total amounts collected from issuance of convertible bonds and the value of the debt component of the convertible bond at the time of release.

According to the above example, the value of the capital component of convertible bonds is defined as: 10,000,000,000 - 8,858,385,000 = 1,141,615 billion dong. The value of capital component of convertible bonds shall be recorded as stock options under the owner’s equity.

g) After initial recording, accountants shall adjust the value of the principal of converted bond as follows:

- Record an increase in the value of the principal of the bonds for issuance costs allocated periodically;

- Record an increase in the value of the principal of bonds for the difference between the payable bond interests calculated on the interest of the unconvertible similar bond or real interest rates higher than the payable interest calculated on nominal interest rate.

Example: Following the above example, the determination of financial expenses in the period and adjustment of the value of the principal of convertible bonds at the end of the period shall be as follows:

Unit Thousand dong

h) Upon maturity of convertible bonds:

- The value of stock options of convertible bonds recorded in owner’s equity shall be transferred to be recorded as premium of share capital which does not depend on the bondholders who can exercise the option to convert into stock or not.

- In case the bondholders do not exercise the option to convert bonds into stocks, enterprises shall record a decrease in the principal of convertible bonds in proportion to the repaid amount of the bond.

- In case the bondholders exercise the option to convert bonds into stocks, accountants shall record a decrease in the principal of convertible bonds and record an increase in owner’s capital in proportion to par value of stocks released additionally. The difference between the values of the principal of the convertible bonds which is higher than the value of stocks released additionally shall be recorded as share premium.

2. Structure and contents reflected in Account 343 - Issued bond

a) Account 343 - “Issued bond”, comprises 2 level-2 accounts:

- Account 3431 - “Ordinary bond. The account comprises 3 level-2 accounts:

Account 34311 - Par value of bonds

Account 34312 - Bond discount

Account 34313 - Bond premium

- Account 3423 “Convertible bond”

b) Structure and contents reflected in Account 3431 “Ordinary bond”

Debit side:

- Payment at bond maturity;

- Bond discount incurred in period;

- Allocation of bond premium in period;

Credit side:

- Value of bond issued at par during period;

- Allocation of bond discount in period;

- Bond premium incurred in period.

Credit balance: Value of borrowing debt due to releasing bond at end of term.

c) Structure and contents reflected in Account 3432 “Convertible bond”

Debit side:

- Payment of principal at bond maturity in case bondholders do not exercise the option to convert into stocks;

- Transfer of principal of bonds to record an increase in owner’s equity in case bondholders exercise the option to convert into stocks.

Credit side:

- Value of the principal of bonds recorded at the time of release

- Value adjusted to increase the principal of bonds during the period

Credit balance: Value of the principal of bonds at the time of report.

3. Accounting methods for certain major economic transactions

3.1. Accounting for issuing ordinary bond

a) Accounting for issuing bond at par value

- Recording sums received from issued bond, record:

Dr 111, 112, ... (Sums received from buying bond)

Cr 34311 - Par value of bonds

- In case of paying bond interests on a periodic basis, when interests payments shall be calculated into business and production costs or capitalized, record:

Dr 635 - Financial expenses (in case calculated into financial expenses in period)

Dr 627, 241 (in case capitalized)

Cr 111, 112 ... (Sums paid for bond interests in period)

- In case bond interests payment are deferred (when bonds mature), every term, enterprises shall calculate in advance borrowing interest costs payable in period in business and production costs, or capitalize, record:

Dr 635 - Financial expenses (in case be calculated into financial expenses in period)

Dr 241, 627 (in case capitalized into value of unfinished asset)

Cr 335 - Payable expenses (accrued bond interest in period)

At the end of bond life, enterprises pay principal and interest bond for people buying bond, recorded:

Dr 335 - Payable expenses payable (Total sums of bond interests)

Dr 3431 - Par value of bonds (principal)

Cr 111, 112 ...

- In case of prepaying bond interests at bond releasing, borrowing interest costs shall be recorded in Debit side of Account 242 (details of prepaid bond interests), after that, allocated gradually to cost objects:

When releasing bond, recorded:

Dr 111, 112, ... (Total sums actually received)

Dr 242 - Prepaid expenses (details of prepaid bond interests)

Cr 34311 - Par value of bonds

On a periodic basis, allocate borrowing interests costs in period, record:

Dr 635 - Financial expenses (in case be calculated into financial expenses in period)

Dr 241, 627 (in case capitalized into value of unfinished asset)

Cr 242 - Prepaid expenses (details of prepaid bond interests) (sums of bond interests allocated in period)

- Expenses for bond releasing:

 Expenses for bond releasing incurred, record:

Dr 34311 - Par value of bonds

Cr 111, 112 ...

On a periodic basis, allocation of expense on bond issuance under the straight-line method or the real interest rate method, record:

Dr 635, 241, 627 (allocation of amount of expenses of issuing bonds in the period)

Cr 34311 - Par value of bonds

- Payment at bond maturity, record:

Dr 34311 - Par value of bonds

Cr 111, 112 ...

b) Accounting for issuing discount bond

- Recording sums actually received from bond releasing, record:

Dr 111, 112, ... (sum received from selling bond)

Dr 3432 - Bond discount (the difference between sums received from selling bond at price lower than par value)

Cr 34311 - Par value of bonds

- In case of periodical paying interests, when borrowing interest’s payments shall be calculated into business and production costs or capitalize, record:

Dr 635 - Financial expenses (in case calculated into financial expenses in period)

Dr 241, 627 (in case capitalized into value of unfinished asset)

C r 111, 112 ... ... (sums paid for bond interests in period)

Cr 3432 - Bond discount (Allocation amount of bond discount every term)

- In case bond interest’s payments are deferred (when bond mature):

Every term, enterprises shall calculate payable borrowing interest costs in period, record:

Dr 635 - Financial expenses (in case calculated into financial expenses in period)

Dr 241, 627 (in case capitalized into value of unfinished asset)

Cr 335 - Payable expenses (bond interests payable in period)

Cr 3432 - Bond discount (Allocation amount in period)

At end of bond life, enterprises shall pay bonds’ principal and interest for buyers of bonds, record:

Dr 335 - Payable expenses (Total sums of bond interests)

Dr 34311 - Par value of bonds

Cr 111, 112 ...

- In case of prepaying bond interests at bond releasing, borrowing interest costs shall be recorded in Debit side of acc 242 (details of prepaid bond interests), after that, allocated gradually to cost objects:

When releasing bond, record:

Dr 111, 112, ... (Total sums actually received)

Dr 3432 - Bond discount

Dr 242 - Prepaid expenses (sums of prepaid bond interests)

Cr 34311 - Par value of bonds

On a periodic basis, allocating borrowing interests costs into business and production costs in period or capitalizing, record:

Dr 635 - Financial expenses (in case calculated into financial expenses in period)

Dr 241, 627 (in case capitalized into value of unfinished asset)

Cr 242 - prepaid expenses (sums of bond interests allocated in period)

Cr 3432 - Bond discount (Allocation amount of bond discount every term)

Paying bond at maturity, record:

Dr 34311 - Par value of bonds

Cr 111, 112 ...

c) Accounting for releasing bonds at premium

- Recording sums actually received from issued bond:

Dr 111, 112,... (sum received from selling bond)

Dr 3433 - Bond premium (the difference between sums received from selling bond at price higher than par value)

Cr 34311 - Par value of bonds

- In case of periodical paying interests:

When interest payments shall be calculated into business and production costs or capitalized, record:

Dr 635 - Financial expenses (in case calculated into financial expenses in period)

Dr 241, 627 (in case capitalized into value of unfinished asset)

C r 111, 112 ... ... (sums paid for bond interests in period)

Concurrently, allocating gradually bond premium to record a decrease in borrowing costs every term, record:

Dr 34313 - Bond premium (Gradual allocation amount of every term)

Cr 635, 241, 627

- In case of interests payments are deferred (at bond maturity), every term, and enterprises shall record in advance borrowing interest costs payable in period.

When calculating borrowing interest costs for cost objects in period, record:

Dr 625, 241, 627

Cr 335 - Payable expenses (bond interests payable in period)

Concurrently, allocating gradually bond premium to record a decrease in borrowing costs every term, recorded:

Dr 34313 - Bond premium

Cr 635, 241, 627

At end of bond life, enterprises shall pay bonds’ principal and interest for people having bonds, record:

Dr 335 - Payable expenses (Total sums of bond interests)

Dr 34311 - Par value of bonds (principal)

Cr 111, 112 ...

- In case of prepaying bond interests at bond releasing, borrowing interest costs shall be recorded in the Debit side of acc 242 (details of prepaid bond interests), after that, allocated gradually to cost objects:

When releasing bond, record:

Dr 111, 112,… (Total sums actually received)

Dr 242 - prepaid expenses (sums of prepaid bond interests)

Cr 34313 - Bond premium

Cr 34311 - Par value of bonds

On a periodic basis, allocating borrowing interests costs for cost objects in period, record:

Dr 635 - Financial expenses (in case calculated into financial expenses in period)

Dr 241, 627 (in case capitalized into value of unfinished asset)

Cr 242 - Prepaid expenses (sums of bond interests allocated in period)

Concurrently, allocating gradually bond premium to record a decrease in borrowing costs every term, record:

Dr 34313 - Bond premium (allocation amount of bond premium of every term)

Cr 635, 241, 627

3.2. Accounting for issuing convertible bond

a) At the time of issuance, accountants determine the value of principal and stock options of convertible bonds by discounting the nominal value of future payments to present value, record:

Dr 111, 112 (total sum received from issuance of convertible bonds)

Cr 3432 - Convertible bonds (origin debt)

Cr 4113 - Bond conversion option (the difference between sum received and principal of convertible bonds).

b) Costs to issue bonds incurred gradually are allocated in accordance with bond terms:

- Expenses for bond releasing incurred, record:

Dr 3432- Convertible bond

Cr 111, 112, 338…

- Periodic allocation of cost to issue bonds into financial expense, record:

Dr 625, 241, 627

Cr 3432- Convertible bond

c) On a periodic basis, accountants record financial expenses or capitalize for the bond interest payable under interest of a similar bond without conversion rights or under common loan interest rates in the market simultaneously adjust the value of the principal of convertible bonds, record:

Dr 635- Financial expense

Dr 241, 627 (in case capitalized)

Cr 335 - Payable expenses (interest of bonds payable in period under nominal interest rate)

Cr 3432 - Convertible bonds (the difference between the bond interest calculated according to real interest or equivalent bond interest without right to convert higher than the bond interest payable in the period under nominal interest)

d) At bond maturity, in case the bondholders do not exercise the option to convert bonds into stocks, enterprises shall repay principal of bonds, record:

Dr 3432- Convertible bond

Cr 111, 112.

Concurrently, transfer value of stock options of convertible bonds to share premium, record:

Dr 4113 - Bond conversion option

Cr 4112- Share premium

e) At bond maturity, in case bondholders exercise the option to convert bonds into stocks, accountants record a decrease in the principal of convertible bonds and record an increase owner’s capital, record:

Dr 3432- Convertible bond

Cr 4111 - Capital contributed by owners (under par value)

Cr 4112 - Share premium (the difference between the value of additional shares issued at their par value and the value of the principal of convertible bonds).

Concurrently, transfer value of stock options of convertible bonds to share premium, record:

Dr 4113 - Bond conversion option

Cr 4112- Share premium

Article 60. Account 344- Deposit received

1. Accounting rules

a) The account used for recording amounts enterprises received deposits of outside units and individuals to ensure for services related to business and production to be performed in compliance with the signed economic contract/ such as receiving deposits to ensure the performance of economic contracts, agency contracts, ...

b) Accountants received long-time deposits shall monitor in detail each deposit received from every client under each term and each type of currency. Deposits received payable with remaining term within 12 months are presented as short-term liabilities, accounts with a term of 12 months or more are presented as non-current liabilities.

c) Cases of receiving mortgaging and pledging in kind shall not be recorded in the account but monitored in notes to financial statements.

d) In case receiving deposits in Foreign currencies, accountants shall monitor in detail the separate denomination of foreign currencies and convert into accounting monetary unit under the principles:

- At the time of receipt of deposit in Foreign currencies, accountants convert into accounting monetary units in accordance with the real exchange rate at the incurring time;

- When repaying deposit sum in Foreign currencies, accountants shall convert at the real exchange rate of recording by name;

- When preparing the financial statements, accountants shall revaluate the sum received from deposit payable at real exchange rates at the time of reporting. The incurred exchange rate differences shall be recorded immediately in financial expenses or financial income.

2. Structure and contents reflected in Account 344 - Deposit received

Debit side: Refunding money of deposit received

 Credit side: Deposit received by cash

 Credit Balance: Sums of deposit received unpaid

 3. Accounting methods for certain major economic transactions

a) Upon receipt of the deposit of units or individuals outside, record:

Dr 111, 112

Cr 344 - Deposit received (details for every client)

b) When refunding money of deposit to clients, record:

Dr 344 - Deposit received

Cr 111, 112.

In case of refunding money of deposit in Foreign currencies, record:

Dr 344 - Deposit received (in real exchange rates of recording by name of each object)

Dr 635 - Financial expense (loss on forex)

Cr 111, 112 (at exchange rate of recording weighted average of account)

Cr 515 - Financial income (gain on forex)

c) In cases deposit units are fined according to the agreement in economic contracts for their breach of economic contracts already signed with the enterprises:

- Upon receiving fine for breach of signed economic contracts: In case it is deducted from money of deposit, record:

Dr 344 - Deposit received

Cr 711 - Other income

- When actual paying remaining deposits, record:

Dr 344 - Deposit received (deducted from fines)

Cr 111, 112.

d) When preparing financial statements, accountants shall revaluate the sum received from deposit payable in Foreign currencies at real exchange rates at the time of the report:

- In case gain on forex is incurred, record:

Dr 344 - Deposit received

Cr 413 - Exchange rate differences

- In case loss on forex is incurred, record:

Dr 413 - Exchange rate differences

Cr 344 - Deposit received

Article 61. Account 347- Deferred income tax payable

1. Accounting rules

The account is used for recoding current value and variation situation of increase and decrease in deferred income tax payable. Deferred income tax payable is determined on the basic of taxable temporary difference amounts tax incurred in year and tax rate of current income tax using the following formula:

In case at the time of recording the deferred income tax payable, there is a change in corporate income tax rate in the future is known, in case refunding deferred income tax payable is in the new tax period which takes effect, tax rate applicable to record deferred income tax payable is calculated according to the new tax.

b) Basis of assessment of assets or payable liabilities and temporary differences:

- Basis of assessment of assets shall be deducted from taxable income when recovered the recording value of assets. In case the income is not taxable, the basis of charging tax of assets shall be in the book value of such assets. Basis of charging tax of income of liabilities is its recording value which minuses (-) value which shall be deducted from taxable income upon payments of liabilities in future periods. For income received in advance, basis of assessment is its recording value, which minuses the value of non-taxable income in future.

- Temporary differences are the differences between the recording value of assets or liabilities in the Balance Sheet and the basis of charging tax of such assets or liabilities. Temporary differences include two categories: deductible temporary differences and taxable temporary differences. Taxable temporary differences are temporary differences arising income tax payable upon determination of taxable income in the future when the recording value of the assets are recovered or liabilities are paid.

Temporary difference in time is only one of the cases of temporary differences, for example: In case accounting profits are recorded in this period but taxable income is calculated in another period.

Temporary differences between book value of assets or liabilities compared to basis of charging tax of such assets or liabilities may not be temporary differences in term of time, for example: When revaluing assets, the book value of the property changes, but in case the basis of charging tax does not change, the temporary difference shall arise. However, recovery time of book value and basis of charging tax shall not change; the temporary differences shall not be temporary differences in term of time.

Accountants shall not continue to use the term "permanent differences" to distinguish it from temporary differences when determining the deferred income tax due to asset recovery time or paying liabilities as well as time to deduct assets and liabilities from the taxable income is limited.

c) Deferred income tax payable shall be recorded for all taxable temporary differences, unless the deferred income tax payable is raised from the initial record of assets or liabilities of the a transaction which does not affect the accounting profit or income taxable profit (or taxable loss) at the time of transaction incurred.

d) When preparing financial statements, accountants shall determine the taxable temporary differences arising in the current year as a basis for determining the deferred income tax payable recorded in current year.

dd) The recording deferred income taxes payable in the year shall comply with under the principle of balancing the deferred income tax payable incurred in current year with deferred income tax payable recorded from previous years but in current year shall be recorded a decrease (refund), under the following principles:

- In case the deferred income tax payable arising during the year is higher than the deferred income tax payable refunded in the year, accountants only record that the addition of deferred income tax payable is the difference between deferred income tax payable arising higher than the deferred income tax payable refunded in the year;

- In case deferred income taxes payable incurred in year are less than deferred income taxes refunded in year, accountants only record a decrease (refund) of deferred income taxes being the difference between deferred income taxes payable incurred and deferred income taxes refunded in year;

e) Deferred income taxes payable incurred in year are not related to items recorded directly into owner’s capital shall be recorded as deferred income taxes expenses incurred in year.

g) Accountants shall record a decrease in deferred income taxes when temporary taxable differences do not affect to taxable profits (when assets are recovered or liabilities are paid)

h) The offsetting deferred income tax payable and deferred income tax assets shall be only performed during establishment of Balance Sheet, not during recording deferred income tax payable in the accounting books.

2. Structure and contents reflected in Account 347 - Deferred income tax payable

Debit side: Deferred income tax payable decreased (refunded) in period

 Credit side: Deferred income tax payable recorded in period.

 Credit Balance: Deferred income tax payable remained at term-end.

 3. Accounting methods for certain major economic transactions

At the end of the year, accountants shall base on “Assessment statement of deferred income tax payable”, to record deferred income tax payable incurred from transactions in year into deferred income tax expenses:

In case deferred income taxes payable incurred in year are higher than deferred income taxes payable refunded in year, accountants only record a supplementation of deferred income taxes payable; being the positive difference between deferred income taxes incurred deferred income taxes refunded in year, record:

Dr 8212 - Deferred corporate income tax expenses

Cr 347 - Deferred income tax payable.

b) In case deferred income taxes payables incurred in year are less than deferred income taxes refunded in year, accountants only record a decrease (refund) in deferred income taxes payables being the negative difference between deferred income taxes payable incurred and deferred income taxes refunded in year, record:

Dr 347 - Deferred income tax payable.

Cr 8212 - Deferred corporate income tax expenses.

Article 62. Account 352 - Provision for payables

1. Accounting rules

a) The account shall be used to record of current provision for payables, situation of appropriation and use of provision for payables of enterprises.

b) A provision for payable only record when meet all following conditions:

- Enterprises have current debt obligation (legal obligation or jointly liable obligation) due to result from a fact happened;

- Decrease in economic benefits may happen leading to the requirement for payment of debt obligation, and;

- Giving a confident estimation on value of such debt obligation

c) Value recorded of a provision payable is the most reasonably estimated the amount which will be paid for current debt obligation at of accounting year-end at the end of the interim period.

d) The provision payable shall be set up at the time of financial Statement. In case the amount of provision for payable needs to be set up in the accounting term is higher than unspent amount of provision for payable formed in the previous accounting term, the difference shall be recorded in business and production costs of that accounting term. In case the amount of provision for payable needs to be set up in the accounting term is less than the unspent amount of provision for payable set up in the previous accounting term, the refunded difference shall be recorded a decrease in business and production costs of that accounting term.

In case provision for payable on construction warranty is set up for every construction and is set up at the end of accounting year or at the end of interim accounting period. In case amount of provision for payable on construction warranty set up is higher than real expenses incurred, the difference refunded shall be recorded in Account 711 “Other income”

dd) Only expenses related to the provision for payable set up initially shall be offset by that provision for payable

e) Not record the provision for losses on operation in future; except they are related to a great risk contract and meet conditions for recording provision for payable. In case enterprises have high risk contract, current debt obligation due to contract shall be recorded and evaluated as a provision for payable, and this provision will be set up separately for every large risk contract.

g) A provision for expenses of enterprise restructuring are only recorded when having enough conditions for recording as provisions according to regulation at section “Provisions, assets, latent debts” of accounting standard. Upon conducting the enterprise restructuring, jointly liable obligation only incurred when enterprises:

- Have official and specific plan to determine clearly the enterprise restructure, which include at least 5 following contents:

All or a part of business related;

Important positions influenced;

Positions, tasks and estimated quantity of employees who will receive compensation when they are obliged to cease job;

Expenses shall be paid, and

Time the plan is performed

- Give a reliable estimation on affected subjects and conduct restructure process by start of implementing that plan, or notice important issues of restructure to affected subjects.

h) A provision for restructuring is only estimated for expenses directly incurred from restructuring activities; those are expenses that meet both two conditions:

- Need to have for restructure activities;

- Not be related to regular activities of enterprises.

Provision for restructure excluding expenses as follows:

- Retraining or transferring existing employees;

- Marketing;

- Investing in new systems and distribution networks

Provision for payables often includes:

- Payable provisions for enterprise restructure;

- Payable provisions for product warranty;

- Payable provisions for construction warranty;

- Other payable provisions, including provision for severance allowance in accordance with the law, provision for the periodical repair and maintenance of fixed assets (under technical requirement), payable provisions for contracts with major risk in which the payable costs for the obligations relating to the contract exceed the economic benefits expected to be obtained from such contracts;

k) When setting up provision for payables, enterprises are allowed to record that provision in management expenses, payable provisions for warranty of products or goods shall be recorded in selling expense, payable provisions for warranty expenses of construction shall be recorded in manufacturing overhead expenses.

2. Structure and contents reflected in Account 352 - Provision for payables

Debit side:

- To record a decrease in provision for payables when incurring expenses related to the provision set up initially;

- To record a decrease in (refund) provision for payables when enterprises are certainly not suffering decrease on economic, due to not paying debt obligation;

- To record a decrease in provision for payables on the difference from provision for payables set up this year, less than unspent provision for payables established for previous year.

Credit side: To record provision for payables appropriated and charged to expenses

Credit Balance: To record current provision for payables at term-end.

 Account 352 comprises 4 level-2 accounts

- Account 3521- Provision for product warranty: The account shall be used to record the provision for product warranty for number of products, goods defined to consume in period;

- Account 3522 - Provision for construction warranty: The account shall be used to record the provision for construction warranty for works, work items completed, handed over in period;

- Account 3523 - Provision for enterprise restructuring: The account records the payable provision for restructuring enterprise such as the cost of relocation of business, business support costs to employees.;

- Account 3524 - Other payable provision: The account records the payable provisions under the law in addition to the provision has been recorded above, such as environmental restoration costs, cleanup costs, recovery and return of premises, provision for severance allowance under the Labor Code, cost of periodic repair, maintenance of fixed asset ...

3. Accounting methods for certain major economic transactions

a) Method of accounting of provision for product, goods warranty

- In case enterprises sell goods for clients including warranty for repairing fails due to production fault, discovered in the warranty period of products, goods, enterprises shall estimate warranty costs based on the number of products, goods determined to be consumed in period. Upon making provision for the cost of repairing and maintenance of products, goods sold, record:

Dr 641 - Selling expenses

Cr 352 - Provision for payables (3521)

- When incurring expenses related to payable provision for warranty of products, goods established initially, such as material costs, direct labor costs, fixed-asset depreciation expenses, outsourced services expenses, ...:

In case there is not having the independent section on warranty of products, goods:

When incurring expenses related to payable provision for warranty of products, goods, record:

Dr 621, 622, 627,…

Dr 133 - Value-added tax deductible (if any)

Cr 111, 112, 152, 214, 331, 334, 338, ...

At term-end, transferring warranty expenses of products, goods actually incurred in period, record:

Dr 154 - Cost for work in process

Cr 621, 622, 627, ...

In repair or warranty of products, goods, accomplished and transferred to clients, record:

Dr 352 - Provision for payables (3521)

Dr 641 - Selling expenses (Insufficient payable provision for warranty of products, goods)

Cr 154 - Cost for work in process

In case of having the independent section on warranty of products, goods, and sums payable for warranty section on warranty expenses of products, goods, accomplished and transferred to clients, record:

Dr 352 - Provision for payables (3521)

Dr 641 - Selling expenses (negative difference between payable provision for warranty of products, goods and real warranty expenses)

Cr 336 - Internal Payables

- When preparing the financial statements, enterprises shall determine the provision for warranty for products, goods:

In case provision for payables needs to be set up at the accounting term is higher than unspent provision for payables set up in previous accounting term, the difference is accounted for into expenses, record:

Dr 641 - Selling expenses

Cr 352 - Provision for payables (3521)

In case provision for payables needs to be set up in the accounting term is less than unspent provision for payables set up in previous accounting term, the refunded difference shall be recorded a decrease in expenses, record:

Dr 352 - Provision for payables (3521)

Cr 641 - Selling expenses

b) Method of accounting of provision for construction warranty

- The provision for construction warranty is made for each work, work item completed, transferred in period. Upon determining the provision payable for the cost of construction warranty, record:

Dr 627- General production costs

Cr 352 - Provision for payables (3522)

- When incurring expenses related to payable provision for construction warranty established initially, such as material costs, direct labor costs, fixed-asset depreciation expenses, outsourced services expenses, ...:

In case enterprises carry out the construction warranty:

When incurring expenses related to payable provision for warranty, record:

Dr 621, 622, 627,…

Dr 133 - Value-added tax deductible (if any)

Cr 111, 112, 152, 214, 331, 334, 338, ...

At term-end, transferring warranty expenses actually incurred in period, record:

Dr 154 - Cost for work in process

Cr 621, 622, 627, ...

 Upon repair or warranty of construction accomplished and transferred to clients, record:

Dr 352 - Provision for payables (3522)

Dr 632 - Cost price of goods sold (the difference between the provision appropriated less than real warranty expenses)

Cr 154 - Cost for work in process

In case of assignment of attached units or outsourcing to perform warranty, record:

Dr 352 - Provision for payables (3522)

Dr 632 - Cost price of goods (the difference between the provisions appropriated less than real warranty expenses)

Cr 331, 336 ...

- Out of the warranty period of constructions, in case constructions have no warranty, or payable provision for warranty of construction is higher than real expenses incurred, the difference shall be refunded, record:

Dr 352 - Provision for payables (3522)

Cr 711 - Other income

c) Method of accounting of provisions for enterprise restructuring and other payable provisions

- When setting up provision for restructuring costs of enterprise, other payable provisions for contracts with major risk in which the costs required to pay for the obligations relating to contract exceed the economic benefits expected to be obtained from the contract (such as indemnity or compensation for failure to perform the contract, legal cases ...), record:

Dr 642 - Enterprise administrative expense (6426)

Cr 352 - Provision for payables (3523, 3524)

- When setting up provision for environmental restoration costs, cleanup costs, recovery and return of premises, provision for severance allowance under the Labor Code ...record:

Dr 627, 641, 642

Cr 352 - Provision for payables

- For fixed assets according to the technical requirements periodically prepared, accountants shall advance repair costs of the fixed assets, record:

Dr 627, 641, 642

Cr 352 - Provision for payables

- When incurring expenses related to the payable provision made, record:

Dr 352 - Provision for payables (3523, 3524)

Cr 111, 112, 241, 331, ...

- When preparing financial statements, enterprises shall determine payable provisions needed setting up:

In case provision for payables necessary to establish for at the accounting term is higher than unspent provision for payables established for previous accounting term, the difference is accounted for into expenses, record:

Dr 642 - Enterprise administrative expense (6426)

Cr 352 - Provision for payables (3523, 3524)

In case provision for payables necessary to establish for the accounting term is less than unspent provision for payables established at previous accounting term, the refunded difference shall be recorded a decrease in expenses, record:

Dr 352 - Provision for payables (3523, 3524)

Cr 642 - Enterprise administrative expense (6426)

d) In some cases, enterprises may seek for a third party for payment of a part or total expense for provision (for example, through insurance contracts, compensations or warranty of suppliers), the third party may refund for all what enterprises paid. Upon enterprises receive the compensation of a third party to pay a part or total expense for provision, accountants record:

Dr 111, 112 ...

Cr 711- Other income

dd) Accountants settle payable provisions before transforming 100%-state enterprises into joint stock companies.

Provisions payable after offsetting losses, at the time of being officially transformed into a joint stock company, in case they are remaining, they shall be accounted for in the state capital increase at the time of transfer, record:

Dr 352 - Provision for payables

Cr 411- owner’s capital

Article 63. Account 353- Bonus and welfare fund

1. Accounting rules

a) The account shall be used to record the current amounts, increase, decrease situation of bonus and welfare fund and reward fund of the executive management board of enterprises. Bonus and welfare funds are deducted from post-corporate income tax profits of enterprises to use for reward and encouragement of physical benefits, serving the needs of public welfare, improvement and enhancement of the standard of physical and spirit life of workers.

b) The setting up and using the bonus and welfare fund and reward fund of executive management board of company shall comply with current financial policies.

c) Bonus and welfare fund and reward fund of executive management board of company shall be accounted for detailed according to each type of fund.

d) For fixed asset invested, purchased by welfare fund completed and used in manufacturing, trading, accountants record an increase in fixed assets as well as an increase in owner’s capital and a decrease in welfare fund.

dd) For fixed asset invested, purchased by welfare fund completed and used for needs of cultural and welfare of enterprises, accountants record an increase in fixed assets and simultaneously transfer from the welfare fund (Account 3532) to welfare funds that form fixed assets (account 3533). The fixed assets shall not be deducted depreciation of fixed assets from expense monthly, at the end of the accounting year, depreciation of fixed assets shall be calculated once/year to record a decrease in welfare funds that form fixed assets.

2. Structure and contents reflected in Account 353- Bonus and welfare fund

Debit side:

- Expenses of bonus and welfare fund and reward fund of executive management board of company;

- Decrease of Welfare funds forming fixed assets when calculating the depreciation of fixed assets or the sale or liquidation, insufficient detection during inventory of fixed assets;

- Investment and purchase of fixed assets by welfare fund completed and used for needs of cultural and welfare;

- Allocation of bonus and welfare fund to subordinates.

Credit side

- Setting up bonus and welfare fund and reward fund of executive management board of company from post-corporate income tax profits;

- Bonus and welfare fund allocated by superiors;

- Welfare funds forming fixed assets increased due to investment, purchase of fixed assets by welfare fund completed and put into use in production, trading or cultural and welfare activities.

Credit balance: The remaining bonus and welfare funds of enterprises.