CIRCULAR No
CIRCULAR No. 55/2002/TT-BTC
OF JUNE 26, 2002 GUIDING THE VIETNAMESE ENTERPRISES� ACCOUNTING REGIME
APPLICABLE TO FOREIGN-INVESTED ENTERPRISES AND ORGANIZATIONS OPERATING IN
VIETNAM
Pursuant to the 1996 Law on
Foreign Investment in Vietnam and the 2000 Law Amending and Supplementing a
Number of Articles of the Law on Foreign Investment in Vietnam (hereinafter
referred collectively to as the Foreign Investment Law);
Pursuant to the May 23, 1997
Commercial Law;
Pursuant to the May 20, 1988
Ordinance on Accountancy and Statistics;
Pursuant to the Government�s
Decree No. 24/2000/ND-CP of July 31, 2000 guiding the implementation of the
Foreign Investment Law;
Pursuant to the Government�s
Decree No. 48/2000/ND-CP of September 12, 2000 detailing the implementation of
the Petroleum Law;
Pursuant to the Government�s
Decree No. 42/CP of July 8, 1995 regarding the Regulation on legal consultancy
practice by foreign lawyers� organizations in Vietnam;
Pursuant to the Finance
Ministry�s Decision No. 1141/TC/QD-CDKT of November 1, 1995 promulgating the
Enterprise�s Accounting Regime and Decision No. 167/2000/QD-BTC of October 25,
2000 on the regime of enterprises� financial reports;
Pursuant to the Finance
Ministry�s Decision No. 149/2001/QD-BTC of December 31, 2001 issuing and
announcing 4 Vietnamese accounting standards (stage 1),
The Finance Ministry hereby
guides the Vietnamese enterprises� accounting regime applicable to:
- Enterprises with foreign
direct investment (FDI); the foreign parties to business cooperation under the
Law on Foreign Investment in Vietnam;
- Foreign-invested
enterprises and organizations operating not under the Foreign Investment Law
such as Vietnam-based resident establishments of foreign companies; branches of
foreign lawyers� organizations in Vietnam operating under the Regulation on
legal consultancy practice by foreign lawyers� organizations in Vietnam (called
lawyers organizations� branches for short); trade branches; organizations and
individuals conducting activities of petroleum prospection, exploration and/or
exploitation under the Petroleum Law (hereinafter called the petroleum
contractors); and other foreign organizations as well as individuals conducting
business activities in Vietnam not in forms of investment prescribed in the Law
on Foreign Investment in Vietnam (called contractors for short).
Part I
GUIDING
THE IMPLEMENTATION OF VIETNAMESE ENTERPRISES� ACCOUNTING REGIME
I. GENERAL
PROVISIONS ON THE APPLICATION OF VIETNAMESE ENTERPRISES� ACCOUNTING REGIME
1. The
principles for application of the Vietnamese enterprises� accounting regime
Foreign-invested enterprises
and organizations (called enterprises for short) applying the Vietnamese
enterprises� accounting regime must abide by the accounting principles, contents
and methods, the financial report-making and presenting methods under the
provisions of the Vietnamese enterprises� accounting regime (issued together
with Decision No. 1141/TC/QD-CDKT of November 1, 1995, Decision No. 167/2000/QD-BTC
of October 25, 2000 of the Finance Ministry, the Circulars guiding the
amendments and supplements to Decision No. 1141/TC-QD-CDKT) and the provisions
in this Circular, on the following contents:
- The accounting voucher
regime;
- The book-keeping account
system;
- The accounting-book
regime;
- The financial report
system.
When applying the Vietnamese
enterprises� accounting regime, the foreign-invested enterprises and
organizations may amend and supplement a number of specific articles and clauses
to suit their operation particularities. Cases of amendments and/or supplements
prescribed in Items 2, 3, 4 and 5 below must be accompanied with detailed
explanation and approved by the Finance Ministry before being effected.
2.
Accounting vouchers
2.1. The enterprises must
abide by
The principles on formation
and reflection of economic and financial operations on accounting vouchers; the
checking of accounting vouchers; book- entry and keeping, preservation of
accounting vouchers; the handling of violations already prescribed in the regime
on accounting vouchers of the Vietnamese enterprises� accounting regime.
2.2. The enterprises may
supplement, concretize
a) Based on the list of
accounting vouchers prescribed in the accounting voucher regime applicable to
the Vietnamese enterprises to opt for types of voucher suitable to the operation
of the units or based on the forms of the voucher system issued together with
Decision No. 1141/TC/QD-CDKT of November 1, 1995 of the Finance Ministry to make
supplements and amendments suitable to the units� managerial requirements. The
supplements and amendments to the enterprise voucher forms must respect the
economic contents which should be reflected on the vouchers, the signatures of
persons having the responsibility to approve and persons having the material
liabilities related to the contents of arising economic operations. Besides, the
enterprises may supplement other necessary voucher forms (types of guiding
voucher) in service of business management activities. For vouchers of
compulsory forms, if amending indexes or reducing indexes, the enterprises must
register with the Finance Ministry before the application thereof.
b) For sale invoices subject
to the pre-printed forms issued by the Finance Ministry. The self-printed forms
of sale invoice must be registered with and approved by the General Department
of Tax before using them. In cases where arise transactions on returned sale
goods, sale price reduction, trade discount and/or payment discount, the
enterprises shall have to abide by the Finance Ministry�s regulations on
invoices (Section IV of the Finance Ministry�s Circular No. 122/2000/TT-BTC of
December 29, 2000 guiding the implementation of the Government�s Decree No.
79/2000/ND-CP detailing the implementation of the Value Added Tax Law).
3.
Book-keeping accounts
3.1. The enterprises must
abide by
a) The regulations on
book-keeping account system, including the code and appellation, contents,
structure and accounting method of each account, the relations concerning the
financial reports.
b) The book-keeping account
system applicable at the enterprises, which includes the accounts: Class-1
Account to class-9 Account- Accounts in the Accounting Balance Sheet; Class-0
Account- Accounts outside the Accounting Balance Sheet. The enterprises must
concretize the book-keeping account system in order to formulate their own
book-keeping account systems suitable to the requirements of management of
production and business activities at the enterprises.
3.2. The enterprise may
a) Detail all accounts of
grade III, grade IV,� according to the enterprises� managerial requirements,
which shall not have to register with the Finance Ministry.
b) Propose supplements to
accounts of grade I or grade II regarding accounts in the book-keeping account
system of enterprises which have no accounts to reflect their arising exclusive
economic contents and may implement them only after they are approved in writing
by the Finance Ministry.
c) Enterprises which apply
accounting software programs may alter a number of methods of summing up
information to make financial reports. Class- 0 accounts can be hand-inscribed.
4.
Accounting books
4.1. The enterprises must
abide by
a) The general provisions on
accounting books in the Vietnamese enterprises� accounting regime regarding the
opening of accounting books, the recording of accounting books; the correction
of errors; the closing of accounting books; the archival and preservation of
accounting books; the handling of violations.
b) The enterprises may
select one of the four forms of accounting book entry (Journal- Ledger; Voucher;
General Journal or Voucher Journal) for accounting book entries.
c) The enterprise have only
one official system of book-keeping accounts and only follow the accounting
forms already registered with the Finance Ministry, which are hand-inscribed or
put on the accounting software programs to reflect economic transactions arising
at the enterprises according to the system of book-keeping accounts selected by
the enterprises and the accounting methods prescribed in the Vietnamese
enterprises� accounting regime.
d) The accounting book
system must ensure the full reflection and supply of economic and financial
information for drawing up financial statements and satisfy other requirements
on management of business activities of enterprises.
e) The enterprises�
accounting book system includes:
e1) The general accounting
books: The Ledger; the Journal or Voucher Register, depending on each case.
These books are used to classify and sum up economic and financial information
according to the economic contents of grade-I accounts used in enterprises.
e2) The detailed accounting
book system: Depending on the requirement of business management and economic as
well as financial information supply for accounting report making, enterprises
shall open all detailed accounting books. These books are used to reflect and
sum up economic and financial information according to the economic contents of
accounts of grades II, III,� used at the enterprises.
4.2. Enterprises may
supplement, concretize
Enterprises may record
accounting books by hand or using the accounting software programs:
a) If the accounting book
system is processed and recorded by hand in a selected accounting form, the
entries must be made simultaneously on two types of book: The general accounting
books (Ledger, Journal) to reflect the fluctuation of grade-I accounts, and the
detailed accounting book to reflect the fluctuation of grade- II, grade-III,�
accounts; there must be the detailed summary to compare the parity between
grade-I accounts and grade-II and grade-III accounts.
b) In case of using the
accounting software programs:
b1) If the accounting book
system is processed and recorded by the accounting software programs, it must
ensure the principle of making entries in a selected accounting form (Vouchers;
General Journal,�) and at month-end, the accounting books must be printed out
for use and archival.
The system of account
processing and recording with computer software may memorize and sum up separate
information according to sections for general accounting and detailed
accounting; or detailed recording may be made for accounts of grades II and
III�, then details shall be summed up to acquire general information on grade-I
accounts for making internal accounting reports.
b2) Enterprises may opt for
appropriate accounting software programs without having to register them, but
these accounting software programs must be compatible with a certain accounting
form prescribed in the Vietnamese enterprises� accounting system.
5.
Financial reports
5.1. Enterprises must abide
by the following
a) Enterprises must make
financial reports, including: The accounting-balance sheet, the business result
report, the cash flow report, the financial report explanation.
b) Enterprises must strictly
abide by the regulations on forms, contents, accounting methods, presentation,
the time for making and submission of financial reports according the financial
report system issued together with Decision No. 167/2000/QD-BTC of October 25,
2000 of the Finance Ministry and amended by the provisions of this Circular.
5.2. Enterprises may
supplement, concretize
a) The internal accounting
reports;
b) The indexes requiring
interpretation in the financial report explanation;
c) The conversion of
financial reports according to forms set by their parent companies,�
II.
AMENDING, SUPPLEMENTING A NUMBER OF ACCOUNTS
1.
Not to use Account 142 - Prepaid expenses (1421- Prepaid expenses)
2.
To
supplement Account 242 - Long-term prepaid expenses.
This account is used to
reflect assets other than tangible fixed assets, financial-leasing fixed assets,
intangible fixed assets, long-term investment; arising expenses related to many
business operation periods, or prepaid expenses and the carryover of these
expenses shall be effected in the subsequent fiscal years.
The above-mentioned expenses
or assets which have actually arisen in the current fiscal year shall be
immediately memorized into the production and business costs at the time the
expenses arise without reflecting them into Account 242- Long-term prepaid
expenses.
2.1. The long-term prepaid
expenses include:
- Prepaid expense for rent
of fixed assets, workshops, warehouses, working offices, stores,� in service of
business in many fiscal years;
- Infrastructure rental
paid in advance for many years and in service of business in many periods;
- Expenses paid in advance
for many years for services or business operation labor; advertisement
expenses,�;
- Founding expenses;
- Expenses for training of
managerial officials, technical personnel; pre-operation expenses, expenses for
business operation preparation;
- Expenses for change of
business location or reorganization of enterprises;
- Expenses for charge test
runs, trial production, which are large and distributed to a number of relevant
years;
- Expenses for assorted
insurance premiums (fire and explosion insurance, civil liability insurance for
transport means owners, vehicle body insurance, property insurance, securities
insurance,�) and assorted fees paid in lump sum for many years;
- Instruments and tools
belonging to circulating assets, which are delivered for use only once, of great
value and involved in business for more than one fiscal year must be gradually
distributed into expense-bearing objects for many years;
- Loan interests, interests
on financial-leasing fixed assets, paid in advance for many years;
- Exchange rate difference
losses at the capital construction investment stage shall be gradually
distributed into the financial expenses of the subsequent fiscal years.
- Expenses for the purchase
of technical documents, technological transfer permit, trade labels other than
intangible fixed assets shall be gradually distributed into business expenses
for many years;
- Expenses for research
shall be calculated into business expenses of the subsequent fiscal years with
the maximum distribution duration of 3 years;
- Expenses for fixed-assets
overhauls arising once and being too large must be distributed for many years.
2.2. The accounting of
Account 242 must respect some following regulations:
- Only accounting into
Account 242 the arising expenses related to the operation results of many fiscal
years.
- The calculation and
distribution of long-term expenses into business expenses in each accounting
period must be based on the nature and extent of each type of expense so as to
select rational method and criteria.
- Accountants must monitor
in detail each item of long-term prepaid expense having already arisen and been
distributed into expense-bearing objects of each accounting period and the
remainder not yet distributed into expenses.
- The expenses for fixed
asset overhauls shall, depending on the plan capability, be distributed to
relevant fiscal years, for expenses which have already arisen, or deducted in
advance into business expenses, for expenses which have not actually arisen yet.
Only when they are distributed to subsequent fiscal years shall they be
reflected on Account 242- Long-term prepaid expenses.
2.3. Reflection structure
and contents of Account 242 - Long-term prepaid expenses
The Debit side:
- Increase of long-term
assets;
- Long-term prepaid expenses
having actually arisen.
The Credit side:
- Decrease of long-term
assets;
- Long-term prepaid expenses
distributed into business operation expenses in the accounting period;
The Debit balance:
- Other long-term assets and
long-term prepaid expenses not yet accounted into business expenses of the
fiscal year.
2.4. Methods of book-keeping
accounting of a number of major economic operations
- When other long-term
assets increase, recording:
Debit Account 242 -
Long-term prepaid expenses
Debit Account 133 - Deducted
VAT (if any)
Credit Accounts 111, 112,
331, 341,�
- When long-term expenses
arise (office rent; property, fire and explosion insurance premiums, research
expenses; purchase of technical documents, technological transfer permits which
are accounted according to the method of gradual distribution into business
expenses,�), recording:
Debit Account 242 -
Long-term prepaid expenses.
Debit Account 133 - Deducted
VAT (if any)
Credit Account 111 - Cash
Credit Account 112 - Bank
deposits.
Credit Account 152 -
Materials
Credit Account 153 -
Instruments, tools
Credit Account 331 - Payable
to sellers
Credit Account 334 - Payable
to employees
Credit Account 338 - Other
payable, remittable
- For cases where the
rentals of fixed assets, infrastructure are paid in advance for many years and
in service of business in many periods, recording:
Debit Account 242 -
Long-term prepaid expenses
Debit Account 133 - Deducted
VAT
Credit Accounts 111, 112.
- When long-term assets
decrease, recording:
Debit Accounts 627, 641, 642
Credit Account 242 -
Long-term prepaid expenses
- Periodically calculating
and distributing long-term expenses related to the operation period according to
rational distribution criteria into expenses for production and business
activities, sale expenses, enterprise management expenses, recording:
Debit Accounts 627, 641, 642
Credit Account 242 -
Long-term prepaid expenses
* For instruments and tools
of big values, which are delivered for use only once, they must be gradually
distributed into production and/or business expenses, or sale expenses,
enterprise-management expenses, possibly by the two following distribution
methods:
Twice distribution;
Multi-time distribution.
* Cases of twice
distribution:
- When delivering
instruments and/or tools, based on the delivery bills, recording:
Debit Account 242 -
Long-term prepaid expenses
Credit Account 153 -
Instruments, tools
At the same time making the
first distribution (equal to 50% of the value of the instruments and/or tools
delivered for use) into general production expenses, or sale expense,
enterprise-management expenses, recording:
Debit Accounts 627, 641, 642
Credit Account 242 -
Long-term prepaid expenses
- Upon reports on damage,
loss or use duration expiry of instruments and/or tools as provided for, the
accountants shall distribute their remaining values into general production
expenses, sale expenses, enterprise-management expense, according to the
formula:
Value of damaged Value of
The second- instruments
recovered Material
distribution = ������ - discarded -
compensations
amount 2 materials
(if any)
(if
any)
Accountants record:
Debit Account 152 -
Materials (value of recovered discarded materials, if any)
Debit Account 138 - Other
receivable (material compensation money receivable from persons who caused the
damage or loss).
Debit Accounts 627, 641, 642
(the amount of second distribution for using subjects)
Credit Account 242 -
Long-term prepaid expenses (second-distribution amount).
* In cases of multi-time
distribution:
- When delivering
instruments, tools or articles for lease, to base on their values, use duration
and extents to determine the number of distribution times and the expense amount
for each distribution for each type of instrument or tool. The bases for
determining the expense amount to be distributed each time may be the use
duration or the volume of products or services, which involve of the instruments
or tools in each accounting period.
?? The accounting method
shall be the same as in case of twice distribution.
???For both cases of twice
distribution and multi-time distribution, the accountants must monitor in detail
each expense item so as to ensure that the total distributed expenses are
compatible with the arising expenses and made to the right expense-bearing
objects.
- For the payable amounts of
interest on financial-leasing fixed assets, when acknowledging debts with the
lessors, recording:
Debit Account 212 -
Financial-leasing fixed assets (the current prices of fixed assets)
Debit Account 133 - Deducted
VAT (if any)
Credit Account 342 -
Long-term debts (debt principals payable to fixed asset lessors)
- For cases of advance
payment of financial-leasing fixed asset rentals for many years, recording:
Debit Account 242 -
Long-term prepaid expenses
Credit Accounts 111, 112
Periodically distributing
the payable interests on financial-leasing fixed assets into financial operation
expenses, recording:
Debit Account 635 -
Financial expenses
Credit Account 242 -
Long-term prepaid expenses
- For cases of expenses for
overhaul of fixed assets, to distribute expenses into many business periods when
the overhaul is completed:
?? Transferring the overhaul
expenses into the long-term prepaid expense account, recording:
Debit Account 242 -
Long-term prepaid expenses
Credit Account 241 -
Unfinished capital construction (2413)
?? Accounting and
distributing expenses for fixed asset overhauls into business expenses in the
accounting periods of the relevant fiscal year, recording:
Debit Accounts 627, 641,
642,�
Credit Account 242 -
Long-term prepaid expenses
3.
Supplementing Account 158 - Tax-suspension warehouse goods
Where enterprises producing
goods for export are entitled to set up tax-suspension warehouses at the
enterprises: Raw materials and supplies imported for the production of export
goods or the processing of export goods of the enterprises, which are not
subject to import tax, must be deposited into the tax- suspension warehouses.
Goods in tax- suspension warehouses shall be subject to the supervision of the
customs office, tax office and environment office.
Accountants shall open
Account 158 - Tax-suspension warehouse goods, in order to reflect the
fluctuation and existing volume of goods deposited into tax-suspension
warehouses.
The Tax-suspension Warehouse
Goods Account shall only reflect the raw materials and materials imported for
production and the products turned out by those enterprises themselves, which
are kept in tax-suspension warehouses of the enterprises.
3.1. Reflection structure
and contents of Account 158 - Tax-suspension warehouse goods
The Debit side:
The value of finished
products and goods deposited into tax-suspension warehouses increases in the
period.
The Credit side:
The value of finished
products and goods deposited into tax-suspension warehouses decreases in the
period.
The Debit balance:
The value of finished
products and goods left at the end of the period in the tax-suspension
warehouses.
3.2. Methods of book-keeping
accounting of a number of major economic operations:
a) When the raw materials
and materials imported for the production of export goods or the processing of
export goods are deposited into tax-suspension warehouses of the enterprises,
the import tax and VAT on the imported goods shall not be paid yet, recording:
Debit Account 158 -
Tax-suspension warehouse goods
Credit Account 331 - To be
paid to sellers
b) When the imported raw
materials and supplies are delivered from the tax-suspension warehouses for the
production of products for export or processing of export goods, recording:
Debit Account 621 - Direct
expenses for raw materials, materials
Credit Account 158 -
Tax-suspension warehouse goods
c) When finished products
are delivered from warehouses or goods of the export products, processed export
goods are deposited into tax-suspension warehouses (if any), recording:
Debit Account 158 -
Tax-suspension warehouse goods
Credit Accounts 156 (1561,
1562), 155
d) When exporting goods of
tax-suspension warehouses (if any):
?? Reflecting the cost
prices of export goods of tax-suspension warehouses, recording:
Debit Account 632 - The cost
prices of sold goods
Credit Account 158 -
Tax-suspension warehouse goods
?? Reflecting turnover of
export goods of tax-suspension warehouses, recording:
Debit Accounts 111, 112, 131
Credit Account 511 - Sale
turnover
Credit Account 333 - Taxes
and amounts payable to the State
[3333 - Export tax (if
any)]
e) If the export rate is
lower than the tax-suspension rate, the enterprises shall have to pay import tax
and VAT on import goods (if any) for the difference between the volume of
products to be exported and the volume of products actually exported, for which
the enterprises have to pay import tax and VAT on imported goods (if any):
?? When determining the
payable import tax (if any), recording:
Debit Account 632 - The cost
price of sold goods
Credit Account 333 (3333) -
Taxes and amounts payable to the State (Import tax)
?? When determining VAT on
imported goods (if any), recording:
Debit Account 133 - Deducted
VAT (1332)
Credit Account 333 (33312) -
Taxes and amounts payable to the State (VAT on imported goods)
?? When actually paying
import tax and VAT on imported goods (if any), recording:
Debit Account 333 (3333) -
Taxes and amounts payable to the State (Import tax)
Debit Account 333 (33312) -
Taxes and amounts payable to the State (VAT on imported goods)
Credit Accounts 111, 112
f) Where enterprises are
permitted by the Trade Ministry to sell tax-suspension warehouse goods in
Vietnamese markets, the enterprises shall have to pay the import tax and other
taxes as prescribed.
?? When permitted to use
tax-suspension warehouse goods, the enterprises must carry out procedures for
the export of goods from their tax-suspension warehouses and pay import tax for
such goods, recording:
Debit Accounts 155, 156, 632
Credit Account 158 -
Tax-suspension warehouse goods
And at the same time, they
have to pay import tax on these goods and raw materials:
?? When determining the
payable import tax (if any), recording:
Debit Accounts 155, 156, 632
Credit Account 333 (3333) -
Taxes and amounts payable to the State (Import tax).
?? When determining VAT on
imported goods (if any), recording:
Debit Account 133 - Deducted
VAT (1332)
Credit Account 333 (33312) -
Taxes and amounts payable to the State (VAT on imported goods).
?? When actually paying the
import tax and VAT on imported goods, recording:
Debit Account 333 - Taxes
and amounts payable to the State (if any)
(3333- Import tax)
Credit Accounts 111, 112
g) Where raw materials
and/or products kept at tax-suspension warehouses are delivered for sale on the
domestic market:
?? Reflecting the cost
prices of the raw materials and/or products delivered from tax-suspension
warehouses for sale, recording:
Debit Account 632 - Cost
price of goods on sale
Credit Account 158 - Tax -
suspension warehouse goods.
At the same time, paying
import tax on those goods and raw materials and accounting like the above
entries.
?? Reflecting the turnover
of those goods delivered for sale on domestic market, recording:
Debit Accounts 111, 112, 131
Credit Account 511 -
Turnover of goods sale and service provision.
Credit Account 333 - Taxes
and amounts payable to the State (33311)
h) Where the tax-suspension
warehouse goods decay and/or deteriorate in their quality, failing to satisfy
the export requirements, such goods must be re-exported or destroyed:
?? In case of re-import,
recording
Debit Accounts 155, 156
Credit Account 158 -
Tax-suspension warehouse goods
At the same time, the import
tax must be paid on these goods and raw materials, determining the payable
import tax, recording like entries in (f); when actually paying tax, recording:
Debit Account 333 - Taxes
and amounts payable to the State (if any)
(3333 - Import tax)
Credit Accounts 111, 112
?? In case of re-export,
recording:
Debit Account 331 - Payable
to sellers
Debit Account 333 (3333) -
Taxes and amounts payable to the State (VAT on imported goods)
Credit Account 158 -
Tax-suspension warehouse goods
?? In case of destruction of
goods, raw materials kept at tax-suspension warehouses, recording:
Debit Account 632 - Cost
prices of goods (destroyed goods, raw materials)
Credit Account 158 - Tax-
suspension warehouse goods
?? If allowed not to pay
import tax on the destroyed goods and/or raw materials, recording:
Debit Account 333 - Taxes
and amounts payable to the State (if any)
(3333- Import tax, 33312 -
VAT on imported goods)
Credit Account 158 -
Tax-suspension warehouse goods (the payable import tax amount).
III.
GUIDING THE ACCOUNTING OF A NUMBER OF PARTICULAR ECONOMIC OPERATIONS
1.
Accounting and handling the exchange rate differences
1.1. Exchange rate
differences and handling thereof
1.1.1. Exchange rate
differences:
The currency used in
book-keeping entries at units is Vietnam dong, or possibly foreign currency
approved by the Finance Ministry for book-keeping entries and making of
accounting reports.
If enterprises use currency
other than those used in making book-keeping entries, when converting the other
currencies into those used for recording the accounting books, the exchange rate
differences shall arise.
The exchange rate
differences are the differences arising from the conversion of an amount of
other currencies into the currencies used in book-keeping entries at different
exchange rates.
The exchange rate
differences arise mainly in the following cases:
a) The exchange rate
differences actually arising in the period (the implemented exchange rate
differences) mean the differences between the other currencies and those used
for recording accounting books at different exchange rates. Such differences
often arise in transactions of buying and selling goods and services; repayment
of payable debts, advance for goods purchases, or provision of loans in
currencies other than those used for recording accounting books. For the
above-mentioned cases, the exchange rates between the other currencies and the
currencies used for recording the accounting books shall be inscribed according
to the exchange rates of the transaction day (the actual transaction exchange
rates or the inter-bank average exchange rate announced by the State Bank at the
time when the transactions arise).
The principle for primary
accounting of a transaction in foreign currency is that it must be recorded
according to the exchange rate between the currency used for book-keeping
entries and the other currencies on the transaction days.
There are two kinds of
exchange rate differences actually arising in the period (the implemented
exchange rate) at the enterprises:
?? The exchange rate
difference actually arising in the period from capital construction activities
(pre-operation period);
?? The exchange rate
difference actually arising in the period from business activities.
b) The exchange rate
difference on the day of making the accounting balance sheet at the end of the
fiscal year (December 31) annually:
At this time, the money
items (the balance of cash accounts, bank deposits, receivable debts, payable
debts simultaneously reflected in the currencies used for book-keeping entries
and in currencies other than the currencies used for book-keeping entries) must
be reported in the exchange rate at the end of the fiscal year (December 31).
Therefore, at such time (December 31), the enterprises must re-evaluate the
money items at the exchange rate at the end of the fiscal year according to the
inter-bank average exchange rate announced by the State Bank on December 31
every year.
The exchange rate
differences on the date of making the accounting balance sheet at the end of the
fiscal year (December 31) due to the re-evaluation of money items shall also be
divided into two types:
?? The exchange rate
difference on the date of making the accounting balance sheet at the end of the
fiscal year (December 31) due to the re-evaluation of money items related to
construction investment stage;
?? The exchange rate
difference on the date of making the accounting balance sheet at the end of the
fiscal year (December 31) due to the re-evaluation of the money items related to
the production and business stage.
c) For the enterprises which
use financial instruments as reserves for foreign exchange risks, the borrowed
amounts and payable debts in foreign currencies shall be accounted according the
actually arising exchange rates. The enterprises must not re-evaluate the
borrowed amounts and payable debts in foreign currencies, for which the
financial instruments have been used as reserves for foreign exchange risks.
1.1.2. Handling of exchange
rate differences:
a) The exchange rate
differences arising in the period and differences arising from the re-evaluation
at the end of the period, which are related to production and business
activities, shall be handled as follows:
The entire exchange rate
differences arising in the period and the exchange rate differences arising from
the re-evaluation at the year-end (December 31) or the last day of the fiscal
year other than the calendar year (already approved) of the money items shall be
memorized directly into expenses for or income from the financial activities on
the business result report of the fiscal year.
Enterprises must not divide
profits on interests on the exchange rate differences arising from re-evaluation
at the end of the fiscal year of the money items.
b) The exchange rate
differences arising in the period and the differences arising from re-evaluation
at the end of the period, which are related to construction investment
activities (pre-operation stage), shall be handled in two following steps:
Step 1: While in the
construction investment period, the implemented exchange rate differences and
the exchange rate differences arising due to re-evaluation at the end of the
fiscal year of the monetary item (December 31) (loss or profit) shall be
reflected in accrual on the accounting balance sheet (Item Account 413 -
Exchange rate difference).
Step 2: Upon the completion
of the construction investment process:
- The exchange rate
differences actually arising in the construction investment period (exchange
rate loss or profit) shall not be calculated into the value of fixed assets but
fully carried over into the financial operation expenses or incomes in the
fiscal year when the fixed assets and investment assets are put into operation.
- The exchange rate
differences arising due to the re-evaluation of monetary items at the time of
final settlement, hand-over of fixed assets for putting into operation (exchange
rate loss or profit) shall not be calculated into the value of fixed assets but
distributed into financial operation income or expenses of the subsequent
business periods with the maximum duration of 5 years (as from the time the
projects are put into operation), which must conform to the utility duration of
the fixed assets.
1.2. Accounting of exchange
rate differences and accounting of the handling of exchange rate differences.
1.2.1. Accounting of
exchange rate differences arising in the period:
1.2.1.1. Accounting and
handling of exchange rate differences arising in the period of business
activities:
a) When buying goods,
services:
- If exchange rate losses
arise in the transaction of purchasing goods and/or services, recording:
Debit Accounts 151, 152,
153, 156, 157, 211, 213, 627, 641, 642,� (the exchange rate on the transaction
date)
Debit Account 635 -
Financial expenses (exchange rate losses)
Credit Accounts 111 (1112),
112 (1122) (the average exchange rate, advance import or export exchange rates).
- If exchange rate profits
arise in the transactions of purchasing goods and/or services from the outside,
recording:
Debit Account 151, 152, 153,
156, 157, 211, 213, 627, 641, 641,� (the exchange rate on transaction date)
Credit Account 111 (1112),
112 (1122) (the average exchange rate; the advance import or export exchange
rates)
Credit Account 515 -
Financial operation turnover (exchange rate profits)
b) When paying the payable
debts (debts payable to sellers, long-term and short-term loan debts, internal
loan debts,�):
- If exchange rate losses
arise in debt-repayment transactions, recording:
Debit Accounts 331, 311,
315, 341, 342, 336,� (actual exchange rate on transaction date)
Debit Account 635 -
Financial expenses (exchange rate losses)
Credit Accounts 111 (1112),
112 (1122) (the average exchange rate; the advance import or export exchange
rates).
- If exchange rate profits
arise in debt-repayment transaction, recording:
Debit Accounts 331, 311,
315, 341, 342, 336,� (actual exchange rate on the transaction date)
Credit Account 515 -
Financial operation turnover (exchange rate profits)
Credit Account 111 (1112),
112 (1122) (average exchange rate; advance import or export exchange rates)
c) Upon recovery of
receivable debts (from customers, from internal subjects,�)
- If exchange rate
difference losses arise in the transactions of receivable debt repayment,
recording:
Debit Accounts 111 (1112),
112 (1122) (the exchange rate of the transaction date)
Debit Account 635 -
Financial expenses (exchange rate losses)
Credit Accounts 131, 136
(the actual exchange rates)
- If exchange rate
difference profits arise in transaction of receivable debt repayment, recording:
Debit Account 111 (1112),
112 (1122) (the exchange rate of the transaction date)
Credit Account 515 -
Financial operation turnover (exchange rate profits)
Credit Accounts 131, 136
(the actual exchange rates)
d) When turnovers, other
incomes arise in currency units other than those used for book-keeping entries,
recording:
Debit Accounts 111 (1112),
112 (1122), 131, 138 (the exchange rate of the transaction date)
Credit Accounts 511, 711
(the exchange rate of the transaction date)
1.2.1.2. Accounting and
handling of exchange rate differences arising in the period of investment
activities:
a) When buying from the
outside goods, services, fixed assets, equipment, construction and/or
installation volumes handed over by contractors:
- If exchange rate
difference losses arise in transactions of payment for the purchase from the
outside of goods, services, fixed assets, equipment, construction and/or
installation volumes handed over by contractors, recording:
Debits Accounts 151, 152,
211, 213, 241,� (the exchange rate of the transaction date)
Debit Account 413 - Exchange
rate difference (4131) (exchange rate losses)
Credit Accounts 111 (1112),
112 (1122) (the average exchange rate; or the advance import/export exchange
rates)
- If exchange rate
difference profits arise in transactions of purchase from the outside of goods,
services, fixed assets, equipment, construction and/or installation volumes
handed over by contractors, recording:
Debit Accounts 151, 152,
211, 213, 241,� (the exchange rate of the transaction date)
Credit Accounts 111 (1112),
112 (1122) (the average exchange rate, or the advance import/export exchange
rates)
Credit Accounts 413 -
Exchange rate differences (4131) (exchange rate profits)
b) When repaying payable
debts {debts payable to sellers, long-term and short-term loan debts, internal
loan debts (if any),�}:
- If exchange rate
difference losses arise in transactions of repayment of payable debts,
recording:
Debit Accounts 331, 311,
315, 341, 342, 336,� (actual exchange rate)
Debit Account 413- Exchange
rate difference (4131) (exchange rate losses)
Credit Accounts 111 (1112),
112 (1122) (average exchange rate, the advance import/export exchange rates)
- If exchange rate
difference profits arise in transactions of repayment of payable debts,
recording:
Debit Accounts 331, 311,
315, 341, 342, 336,� (actual exchange rate)
Credit Accounts 111 (1112),
112 (1122) (average exchange rate, advance import/export exchange rates)
Credit Accounts 413 -
Exchange rate difference (4131) (exchange rate profits)
c) The exchange rate
differences (losses or profits) arising in the investment period, which are
accrued in the investment period till the time of making final settlement and
putting the projects into operation, shall be handled by transferring the entire
Debit balance or Credit balance of Account 413- Exchange rate difference- into
financial expenses or financial operation turnover in the year.
- Carrying over the entire
exchange rate difference losses arising in the investment period into the
financial expenses of the fiscal year when the investment projects start
operating commercially, recording:
Debit Account 635 -
Financial expenses
Credit Account 413 -
Exchange rate difference (4131) (exchange rate losses having already arisen)
- Carrying over the entire
exchange rate difference profits having arisen in the investment period into the
financial income of the fiscal year when the investment projects start operating
commercially, recording:
Debit Account 413 - Exchange
rate difference (4131) (exchange rate profits having already arisen)
Credit Account 515 -
Financial operation turnover.
1.3.2. Accounting of
year-end re-evaluation exchange rate differences
a) Accounting of year-end
re-evaluation exchange rate differences:
At the time (December 31)
the enterprises have to re-evaluate the money items of foreign currency origins
(currencies other than those officially used in book-keeping) at the exchange
rate at the end of the fiscal year (December 31) according to the inter-bank
average exchange rate announced by the State Bank on December 31 every year, the
exchange rate differences (profits or losses) may arise. The enterprises shall
have to detail the exchange rate differences arising due to the re-evaluation of
these money items of the capital construction investment activities
(pre-production and business stage) (4131) and the production and business
activities (4132):
- If exchange rate profits
arise, recording:
Debit Accounts 111 (1112),
112 (1122), 131, 136, 138, 311, 315, 331, 341, 342,�
Credit Account 413 -
Exchange rate difference (4131, 4132)
- If exchange rate losses
arise, recording:
Debit Account 413 - Exchange
rate difference (4131, 4132)
Credit Accounts 111 (1112),
112 (1122), 131, 136, 138, 311, 315, 331, 341, 342,�
b) Handling of year-end
re-evaluation exchange rate differences:
b1) Handling of exchange
rate differences arising from the year-end re-evaluation of money items of
production and business activities:
Enterprises may handle the
year-end re-evaluation exchange rate differences by the following method:
Transferring the entire
year-end re-evaluation exchange rate differences into financial expenses (in
case of exchange rate losses) or the financial operation turnovers (in case of
exchange rate profits) to determine the business operation results:
- Transferring the year-end
re-evaluation exchange rate difference profits into financial operation
turnovers, recording:
Debit Account 413 - Exchange
rate difference (4131)
Credit Account 515 -
Financial operation turnover (exchange rate profits)
- Transferring the year-end
re-evaluation exchange rate difference losses into financial expenses,
recording:
Debit Account 635 -
Financial expenses (exchange rate losses)
Credit Account 413 -
Exchange rate difference (4131)
It is noted that the
exchange rate differences not yet implemented do not serve as basis for
determining the business profit amounts to be divided to capital-contributing
parties.
b2) Handling of the exchange
rate differences arising from the year-end re-evaluation of money items of
capital construction investment activities:
- At the stage of on-going
capital construction investment when enterprises have not yet commenced their
operation, the year-end re-evaluation exchange rate differences shall not be
handled but reflected on Account 413- Exchange rate difference, the Debit
balance, or Credit balance shall be reflected on the accounting balance sheet.
- At the stage of investment
completion, starting production and business activities, the Debit balance or
Credit balance on Account 413- Exchange rate differences reflecting the exchange
rate differences arising from the re-evaluation of money items at the end of
each fiscal year (excluding the re-evaluation of money items related to
construction investment activities at the time of handing over the assets for
putting into operation) shall be handled as follows:
?? Transferring the Debit
balance Account 413 - Exchange rate differences (4132) to Account 242- Long-term
prepaid expenses for gradual distribution of the exchange rate loss amounts of
the construction investment stage into the subsequent fiscal years for 5 years
at most (as from the time the projects are put into operation) into financial
expenses:
Debit Account 242 -
Long-term prepaid expenses
Credit Account 413 -
Exchange rate difference (4132)
?? Transferring the Credit
balance Account 413 - Exchange rate differences (4132) to Account 335- Payable
expenses for gradual distribution of the exchange rate profits of the
construction investment stage into the subsequent fiscal years for 5 years at
most (as from the time the projects are put into operation) into the financial
operation turnovers:
Debit Account 413 - Exchange
rate difference (4132)
Credit Account 335 - Payable
expenses
2. Accounting and handling
relevant matters when converting the book-keeping entry monetary units being
Vietnam dong into another book-keeping entry currency and vice versa.
2.1. Principle for currency
conversion
- Enterprises may convert
the book-keeping entry currency being Vietnam dong into another book-keeping
entry currency and vice versa when so approved by the Finance Ministry.
- The conversion of the
book-keeping entry currency being Vietnam dong into another book-keeping entry
currency and vice versa may be effected only when the new fiscal year begins.
- Depending on the nature of
each item on the accounting balance sheet, the conversion of one book-keeping
entry currency into another book-keeping entry currency shall be effected
according to the following order and principles:
a) Order:
- Closing books, making the
accounting balance sheet according to the current book-keeping entry currency;
- Making entries to adjust
differences due to the conversion of the current book-keeping entry currency
into a new book-keeping entry currency (below the line for account-closing
total);
- Making addition of the
above difference-adjusting entries;
- Making the accounting
balance sheet according to the new currency.
b) Principles:
- The cost prices of fixed
assets and depreciation of fixed assets shall be converted at the exchange rate
on the date of purchasing the assets or the date of handing them over for
putting into operation (for fixed assets formulated through construction
investment), or evaluation of fixed assets (for fixed assets calculated
according to the value of re-evaluation of fixed assets).
- The value of goods in
stock shall be converted according to the exchange rate at the time the expenses
arise, or the average quarterly exchange rate, or the period-end exchange rate
(at the time of conversion).
- The receivable debts or
payable debts shall be converted according to the exchange rate on the date when
the value of receivable or payable debts is determined (for receivable debts or
payable debts in currencies other than the book-keeping entry currency), or the
period-end exchange rate (at the time of conversion).
- The contributed capital of
owners and reserve funds belonging to the capital of owners, undistributed
profits shall be converted according to the period-end exchange rate (at the
time of conversion).
- Capital amounts in money
(cash, bank deposits) shall be converted according to the period-end exchange
rate (at the time of conversion).
?? The exchange rate
differences (profits or losses) arising when converting the book-keeping entry
currency being Vietnam dong into another book-keeping entry currency or vice
versa shall not be accounted into the business result reports but must be
classified and considered a separate part of the owners� capital and handled
upon the liquidation of enterprises.
?? When using currency other
than Vietnam dong, or changing the book-keeping entry currency, the reasons
therefor must be clearly stated in the financial report explanation.
2.2. Accounting and handling
of exchange rate differences arising upon the conversion of the book-keeping
entry currency being Vietnam dong into another book-keeping entry currency and
vice versa:
2.2.1. Accounting the
exchange rate differences arising upon the conversion of the book-keeping entry
currency being Vietnam dong into another book-keeping entry currency and vice
versa:
- Where the exchange rate
difference losses arise upon the conversion of the book-keeping entry currency
being Vietnam dong into another book-keeping entry currency and vice versa,
recording:
Debit Accounts 111, 112,
131, 142, 211, 213,�
Debit Account 413 - Exchange
rate difference
Credit Accounts 311, 331,
338, 411, 415, 421,�
- Where exchange rate
difference profits arise upon the conversion of the book-keeping entry currency
being Vietnam dong into another book-keeping entry currency and vice versa,
recording:
Debit Accounts 111, 112,
131, 142, 211, 213,�
Credit Accounts 311, 331,
338, 411, 415, 421,�
Credit Account 413 -
Exchange rate difference.
2.2.2. Accountants handle
the exchange rate differences arising upon the conversion of the book-keeping
entry currency being Vietnam dong into another book-keeping entry currency and
vice versa:
- Handle the exchange rate
difference losses, recording:
Debit Account 412 - Asset-
revaluation difference (4122)
Credit Account 413 -
Exchange rate difference (exchange rate losses).
- Handle the exchange rate
difference profits, recording:
Debit Account 413 - Exchange
rate difference (exchange rate profits)
Credit Account 412 - Asset-
revaluation difference (4122)
The Credit balance or Debit
balance of Account 412 - Asset-revaluation difference (4122) shall be reflected
on the accounting balance sheet and handled upon the liquidation of enterprises
(when ending the business duration under the investment licenses or when the
enterprises go bankrupt,�)
3.
Conversion in financial reports at requests of parent companies
- Where enterprises use
Vietnam dong as the book-keeping entry currency, when converting the currency
used for making financial reports into a foreign currency at the requests of
their parent companies, the following principles must be observed:
?? Assets, receivable debts,
payable debts, capital of owners of money and non-money items shall all be
converted at the period-end exchange rate.
?? Income and expense items
of the business result reports shall be converted at the exchange rate of the
transaction date.
?? All exchange rate
differences arising from the conversion of the currency used for making
financial reports into a foreign currency to integrate the financial reports
shall be classified as capital of owners till the enterprises are liquidated.
- At the reporting
enterprises (affiliate companies), the exchange rate differences arising from
the conversion of the financial report-making currency into a foreign currency
at the requests of their parent companies must not be reflected into the
accounting-book system and the financial reports of the affiliate companies.
4.
Accounting of the setting up and return of reserves for stock price decrease,
receivable bad debts
4.1. Accounting of stock
price decrease reserve
a) Deduction for setting up
stock price decrease reserve
The stock price decrease
reserve is the reserve for the expected lost value which shall affect the
production and business results due to the decrease of prices of supplies,
finished products, stock merchandises under the enterprises� ownership and may
happen in the plan year (price drop, poor quality, outmoded,�). Enterprises must
have firm evidences on price decrease which may happen in the subsequent fiscal
year (on December 31) for use as basis for determining the stock price decrease
reserve set up on December 31 and accounted into expenses of the fiscal year.
At the end of the accounting
year, upon realizing that the market prices of raw materials, materials,
commodities and finished products left in stock are lower than the prices
inscribed on the accounting books, the stock price decrease reserve must be set
up.
The enterprises must base
themselves on the situation of price fall, the actual quantity of each kind of
raw materials, materials, commodity, finished products left in stock to
determine the levels of reserve for stock price decrease according to the
following formula:
The reserve
level The quantity of The
for decrease of supplies, commodities
accounting The actual market
prices of supplies, = left in stock at the x prices
on - prices at the time
commodities time of December 31 accounting
of December 31
for the plan year of the reporting year
books
The enterprises shall
determine the amount of year-end stock price decrease reserve or reimbursement
for inclusion into the cost prices of sold goods; or have to re-enter the
cost-price decrease of sold goods of the fiscal year.
b) Accounting of stock price
decrease reserves
At the end of the accounting
year, the enterprises shall base themselves on the situation of price drop of
the actual stock quantities, account and determine the new deduction level for
setting up reserve or make addition to the set-up stock price decrease reserves
{(if the reserve amount of the current year is larger than the reserve amount of
the previous year (>0)}, recording:
Debit Account 632 - Cost
prices of sold goods
Credit Account 159 - Stock
price decrease reserve
Or, if the reserve amount to
be set up in the current year is smaller than the reserve amount of the previous
year (0<), the accountants shall re-enter the value difference between the
reserve already set up at the end of the previous year and the reserve set up at
the end of the current year, recording:
Debit Account 159 - Stock
price decrease reserve
Credit Account 632 - Cost
prices of sold goods
4.2. Accounting of the
setting up of receivable bad debt reserves
a) Deduction for setting up
receivable bad debt reserves
The receivable bad debt
reserve is the reserve for the expected lost value of receivable bad debts which
may not be reclaimed due to the fact that the debtors are incapable of repaying
them and may happen in the plan year.
Enterprises shall set up
reserves for receivable bad debts which have turned due for one year or more and
not yet recovered though the enterprises have many times asked for the repayment
thereof, or the debts which have turned due for less than one year but cannot be
repaid by debtors as evidenced by signs.
At the end of the fiscal
year, enterprises must calculate and determine the new reserve amount, the
reserve supplements or re-enter the reserves set up in the previous year as
increase or decrease of the cost prices of retail goods in order to determine
the business results of the fiscal year.
Bad debts with one of the
following evidences may be written off:
* For debtors being legal
persons:
?? Court decisions declaring
the enterprises� bankruptcy according to the Law on Enterprise Bankruptcy and
the results of property division by courts;
?? Decisions of competent
bodies on dissolution of enterprises and the results of division of liquidated
property by the competent bodies.
* For debtors being
individuals:
?? The debtors still exist
but cannot repay their debts as proved by evidences;
?? The debtors have fled
away;
?? The debtors have died.
After handling those debts
by crossing them from books, enterprises should continue to monitor those debts
on accounts outside the accounting balance sheets.
b) Accounting of receivable
bad debts reserves
- At the end of the
accounting year, the enterprises shall base themselves on their receivable bad
debts, anticipate amounts of loss which may occur in the plan year and the
accountants shall determine the new reserve levels or the additional reserves
for receivable bad debts (if the reserve set up in the current year is larger
than the reserve set up in the preceding year), recording:
Debit Account 642 -
Enterprise management expenses
Credit Account 139 -
Receivable bad debt reserve
- At the end of the fiscal
year, the accountants shall re-enter the receivable bad debt reserves (if the
reserves set up in the current year is smaller than the reserve set up in the
preceding year) as the decrease of the cost prices of sold goods, recording:
Debit Account 139 -
Receivable bad debt reserves
Credit Account 642 -
Enterprise management expenses
- When determining that
debts are irrecoverable (with decisions to write off debts), making entries by
crossing those debts from books, recording:
Debit Account 642 -
Enterprise management expenses
Credit Account 131 -
Receivable from customers
Credit Account 138 - Other
receivable.
�����.
At the same time, continuing
to monitor them on Account 004 - Handled bad debts (Account outside the
accounting balance sheet) in order to monitor them within prescribed duration so
as to be able to retrospectively collect them from customer-debtors, recording:
Debit Account 004 - Handled
bad debts
- For receivable bad debts
which have already been remitted, if later such handled bad debts are
retrospectively collected, the accountants shall base on the actual value of the
recovered debt amounts, recording:
Debit Accounts 111, 112
Credit Account 711 - Other
income
At the same time, making
single entry:
Credit Account 004 - Handled
bad debts.
5.
Accounting of business capital contribution
5.1. Contribution of legal
capital
In principle, the legal
capital shall be reflected according to investment licenses and actual tempo of
capital contribution. Parties may contribute legal capital in foreign
currencies, Vietnamese currency, equipment and machinery, workshops or other
constructions, industrial property right value, technical know-how,
technological process, technical services, or land use right value, resources,
the use value of water surface, sea surface, equipment and machinery, workshops
and other constructions, industrial property right value, technical know-how,
technological process (according to Articles 7 and 9 of the Law on Foreign
Investment in Vietnam). In cases of capital contribution with work-shops,
equipment, intangible fixed assets, the independent evaluation thereof is
required according to the market prices at the time of capital contribution. The
result of each capital contribution drive must be approved by the Managing
Board. In the course of their operations, enterprises must not reduce their
legal capital.
The currency used for
book-keeping entries of actually contributed capital are Vietnam dong or a
foreign currency already approved by the Finance Ministry.
The conversion of foreign
currencies into Vietnamese currency or vice versa shall be effected at the
exchange rates officially announced by Vietnam State Bank at the time of capital
contribution and according to the actual tempo of legal capital contribution.
Enterprises must not
re-evaluate the legal capital, even in case of exchange rate difference, for
recording the legal capital increase or decrease.
When enterprises receive
legal capital actually contributed by the parties as prescribed in the
investment licenses, they must base on the exchange rates at the time of capital
contribution in Vietnam dong or foreign currencies approved by the Finance
Ministry to acknowledge the contributed capital for investment, recording:
Debit Account 211 - Tangible
fixed assets (equipment and machinery, workshops, other constructions)
Debit Account 213 -
Intangible fixed assets (industrial property right value, technical know-how,
technological process, land use right value, resources, use value of water
surface, sea surface)
Debit Accounts on Expenses
or Account 242 - Long-term prepaid expenses (technical services)
Debit Accounts 111
(1111,1112), 112 (1121, 1122) (Foreign currencies, Vietnamese currency)
Credit Account 411 -
Business capital sources (detailed monitoring for capital-contributing parties)
5.2. Contribution of
investment capital other than legal capital
Of the total investment
capital for execution of investment projects, apart from the legal capital, the
capital-contributing parties may borrow long-term or short-term capital to
supplement the sources of capital for investment in projects (borrowing from
their parent companies, banks or financial institutions). The investment capital
other than legal capital, transferred by capital-contributing parties to the
contributed capital-receiving companies, must not be recorded into the legal
capital but into the borrowed capital or debts owed to the parent companies.
Depending on whether the borrowed capital or debts owned to the parent companies
are short-term loans of under one year or over one year, they shall be properly
reflected on Account 336- Internally payable (borrowing or short-term debts from
the parent companies); Account 341- Long-term loans (long-term loans or debts
from the parent companies).
Based on the exchange rates
applicable to other contributed investment capitals (according to the average
inter-bank exchange rate announced by Vietnam State Bank at the time the
economic operation arises, or the actual exchange rates of the arising economic
operations) according to Vietnam dong, or a foreign currency approved by the
Finance Ministry at the time of capital contribution, recording:
Debit Accounts 111, 112,
152, 211,�
Credit Accounts 336, 341
The rate of payable lending
interests, if any, on loans for investment in projects, excluding the lending
interest rate on loans for contribution of legal capital (if capital is borrowed
to contribute legal capital, the lending interest rate thereon must be borne by
the parent companies) shall be accounted into business expenses in the period,
recording:
Debit Account 635 -
Financial expenses
Credit Accounts 111, 112,
335, 338.
5.3. Restructuring
investment capital, legal capital:
In the course of their
operation, enterprises may restructure their investment capital and/or legal
capital when there are changes in the objectives or scales of projects,
partners, capital-contributing modes and other cases under decisions of the
Managing Boards and with the approval of the investment-licensing agencies.
Upon restructuring the legal
capital and/or changing the capital-contributing percentages of the parties,
which leads to the increase or decrease of the legal capital, under decisions of
the Managing Boards and with the approval of the investment-licensing agencies:
- In cases of entering the
increase of legal capital, based on the actually contributed capital amounts (at
the exchange rate into Vietnam dong, or into foreign currencies approved by the
Finance Ministry at the time of capital contribution), recording:
Debit Account 111, 112,�
Credit Account 411 -
Business capital sources
- In case of entering the
decrease of legal capital, based on the legal capital amounts reduced by the
capital-contributing parties (with the agreement of the Managing Boards and the
approval of the investment-licensing agencies), recording:
Debit Account 411 - Business
capital sources
Credit Accounts 111, 112,
211, 213,�
6.
Accounting of establishment expenses, the land use right, construction
investment expenses, pre-operation expenses, test-run expenses, trial production
expenses
6.1. Accounting of
establishment expenses
The expenses for
establishment of enterprises are actual expenses related directly to the
preparation for the emergence of the enterprises and considered by the founding
members as part of the contributed capital of each party and recorded in the
charter capital of the enterprises, including expenses for research,
exploration, elaboration of investment projects on setting up the enterprises,
project evaluation expenses, founding meetings� These expenses shall be
calculated to the time the enterprises get the investment licenses and
considered long-term prepaid expenses. The establishment-related expenses must
be evidenced with lawful and valid vouchers. The time for distribution of
establishment expenses shall be 5 years at most. Enterprises should restrict the
division of profits equivalent to the value of establishment expenses not yet
distributed.
- When the expenses for
establishment of enterprises are considered by the founding parties part of the
contributed capital of each party and recorded in the charter capital of the
enterprises, recording:
Debit Account 242 -
Long-term prepaid expenses (detailed establishment expenses)
Credit Account 411 -
Business capital sources.
6.2. Accounting of the land
use right
When the Vietnamese parties
contribute capital with the land use right considered intangible assets and
recorded as follows:
Debit Account 213 -
Intangible fixed assets (2131- Land use right)
Credit Account 411 -
Business capital sources
6.3. Accounting of
construction investment expenses
6.3.1. Principles for
accounting of construction investment expenses:
When enterprises implement
investment projects on new constructions or expansion, upgrading of workshops,
architectural objects; procurement and installation of machinery and equipment,
they shall have to account fully, timely and separately the investment expenses
on Account 241- Unfinished capital construction.
The expenses directly
related to the process of capital construction include: Expenses for raw
materials and materials, labor, expenses for use of machinery, general expenses
(expenses for administrative management, wages, depreciation of fixed assets
used directly for the operation of the investment project-managing boards,�) for
the work of construction or the installation of machinery and equipment
according to the approved technical blueprints.
The capital construction
shall be carried out by mode of contractual assignment or self-help.
Upon the completion of the
investment process, enterprises shall have to settle the projects and determine
the value of assets formulated after the investment. The assets formulated after
the investment shall include tangible fixed assets, intangible fixed assets,
circulating assets and expenses calculated into business result reports.
?? The investment expenses
calculated into the value of tangible assets being houses, architectural
objects, include: Construction expenses (according to construction contracts, or
direct expenses for the performance of the construction volume), expenses for
designs, elaboration of project estimates, expenses for construction ground,
expenses distributed by the investment project-managing boards.
?? The investment expenses
calculated into the value of tangible assets being machinery and equipment
include the value of machinery and equipment (purchase prices, freight, import
tax, if any, customs fees,�), expenses for installation, test-run (if any),
expenses distributed by the investment project-managing boards.
?? The investment expenses
calculated into the value of intangible assets include land-related expenses
(compensation, ground clearance, leveling and fill-up of construction
grounds,�).
?? The investment expenses
calculated into the value of circulating assets include: the value of raw
materials and materials, instruments, tools (failing to reach the standards for
being fixed assets) accompanying equipment in complete set (if any).
?? Other investment expenses
calculated promptly or distributed gradually into business result report
include: Expenses for training of workers, personnel, managerial officials in
the project investment period; expenses for production and business preparation
in service of operation of the projects when the investment period ends and the
production and business operations commence.
?? The exchange rate
differences arising in the course of investment and the differences arising from
the re-evaluation of money items of foreign currency origins in the investment
period shall not be calculated into the value of tangible and intangible assets,
circulating assets but accounted separately and handled according to Point 1.2-
Accounting of exchange rate differences and handling of exchange rate
differences of Section III, Part II of this Circular.
Enterprises should restrict
the division of profits equivalent to the value of undistributed investment
expenses awaiting the carry-over.
Other expenses arising in
the course of capital construction investment, not directly related to the
formation of fixed assets, must be reflected into the business result reports.
6.3.2. Accounting of
expenses for implementation of construction investment:
- When expenses directly
related to the process of capital construction for formation of fixed assets by
mode of self-help or contractual assignment arise, they shall be recorded:
Debit Account 241 -
Unfinished capital construction
Credit relevant Accounts
- When settling the
projects, based on the approved settlement reports, recording the increase of
fixed assets formulated through capital construction investment:
Debit Account 211 - Tangible
fixed assets (workshops, architectural objects, machinery and equipment)
Debit Account 213 -
Intangible fixed assets (land use right: Expenses related to construction
land,�)
Debit Account 242 -
Long-term prepaid expenses (investment expenses gradually distributed)
Debit Accounts 152, 153,�
Credit Account 241 -
Unfinished capital construction
* Caution: In the process of
construction investment, the arising expenses not directly related to the
formation of fixed assets shall not be included into the investment expenses for
project implementation but reflected into the enterprise management expenses and
carried over into the business result report of the fiscal year, recording:
- When expenses not related
to construction investment activities arise, recording:
Debit Account 642 -
Enterprise management expenses
Credit relevant Accounts
- Carrying over these
expenses into the business result reports at the end of the accounting period,
recording:
Debit Account 911 -
Determining the business results
Credit Account 642 -
Enterprise management expenses
6.4. Accounting of
pre-operation expenses:
a) The pre-operation
expenses include the actually arising expenses related to the work of training
(training of workers, technicians, managerial officials,�) and production
preparation (work of preparing apparatuses,�). These expenses often arise in the
period of preparation for production and business, putting the completed
investment assets to use. If these expenses are related to many business periods
and large, the enterprises may distribute them into the subsequent years for a
maximum duration of 3 years. Enterprises should restrict the division of profits
equivalent to the value of undistributed pre-operation expenses.
b) Accounting of
pre-operation expenses
- When pre-operation
expenses not related to many periods actually arise, recording:
Debit Account 642 -
Enterprise management expenses
Credit relevant Accounts
- Then carrying over the
pre-operation expenses into business result reports in the period, recording:
Debit Account 911 -
Determining business results
Credit Account 642 -
Enterprise management expenses
- When pre-operation
expenses related to the work of training and preparation for production
activities arise, enterprises may reflect them into Account 242- Long-term
prepaid expenses and distributed into subsequent accounting period:
?? When pre-operation
expenses arise, recording:
Debit Account 242 -
Long-term prepaid expenses
Credit relevant Accounts.
?? When these pre-operation
expenses are distributed into subsequent business periods, recording:
Debit Account 642 -
Enterprise management expenses
Credit Account 242 -
Long-term prepaid expenses.
6.5. Accounting of expenses
for and turnover of test-run, trial production
6.5.1. Principles for
accounting of expenses for test run, expenses for trial production, turnover of
the sale of products or services in the period of test-run, trial production.
If in the period of
construction investment of enterprises there are (charge or non-charge)
test-runs of the entire production chain, or trial production before officially
starting production and business as prescribed in the economic and technical
blueprints of the investment projects (excluding test-run of single machines,
which shall be conducted by the installers), the expenses for test-runs, trial
production shall be accounted as follows:
Where the expenses arising
in the period of test-run or trial production are not large, the expenses for
test-run or trial production and the proceeds from the sales in this period
shall be accounted right into the business result report of the fiscal year.
These expenses for test-run, trial production shall be gathered into relevant
expense accounts and included into the cost prices of sold goods of the fiscal
year. The amounts earned from service provision or product sale shall be
recognized as turnover of the fiscal year. This turnover (if any) must also
comply with the provisions of the current Laws on VAT and Enterprise Income Tax.
Where the expenses arising
in the period of test runs or trial production are large while the proceeds from
the sale of products turned out through test-runs or trial production are
minimal, such expenses, after being offset by the proceeds, shall be accounted
into Account 242- Long-term prepaid expenses of the accounting balance sheet and
calculated into the business result report of the subsequent fiscal year for a
maximum duration of 3 years. The amounts earned in the period of test run must
also be subject to the VAT Law.
The turnover in the period
of trial production must comply with the provisions of the VAT Law and shall be
deducted from the expenses in the period of trial production.
6.5.2. Accounting of
expenses for, turnover of test runs, trial production
a) Accounting of expenses
for test runs, trial production:
a1) Accounting of expenses
for test runs, trial production
- When expenses arise in the
period of test run, trial production, the accountants shall record:
Debit Account 621, 622, 627
Credit Accounts 152, 153,
334, 338, 214, 111, 112, 331,�
- When carrying over
expenses to gather test-run, trial-production expenses arising in the period,
recording:
Debit Account 154 -
Unfinished production, business expenses
Credit Accounts 621, 622,
627
- Warehousing finished
products (if any), recording:
Debit Account 155 - Finished
products
Credit Account 154 -
Unfinished production, business expenses
a2) Where the test-run,
trial production expenses are recorded into business result reports
?? When delivering finished
products of the trial production for sale, trade promotion, or carrying over
test-run, trial-production expenses into the business result reports in the
period, recording:
Debit Account 632 - Cost
prices of sold goods
Credit Accounts 154, 155
a3) In case of recording the
actually arising test-run or trial-production expenses after being offset by
amounts collected in this period into Account 242- Long-term prepaid expenses of
the accounting balance sheet and calculated into business result report for a
maximum duration of 3 years:
?? At the period-end,
recording the expenses actually arising in the period of test run, trial
production into Account 242- Long-term prepaid expenses of the accounting
balance sheet, recording:
Account 242 - Long-term
prepaid expenses
Credit Account 154 -
Unfinished production and business expenses
Or, warehousing finished
products of the trial production (if any), recording:
Debit Account 155 - Finished
products
Credit Account 154 -
Unfinished production and business expenses
?? When enterprises sell
products of the trial production, the accountants shall carry over the cost
value of finished products of the trial production, which are sold, into the
business result reports in the period, recording:
Debit Account 632 - Cost
prices of sold goods
Credit Account 155 -
Finished products
?? When distributing
expenses in the period of test run, trial production into the business expenses
in the period in compatibility with the turnover of the sale of products of the
trial production, or distributing them within the maximum time limit of 3 years,
recording:
Debit Account 632 - Cost
prices of sold goods
Credit Account 242 -
Long-term prepaid expenses
b) Accounting of turnover of
the sale of trial-production products (if any):
In the process of test run,
trial production, the turnover from sale of trial-production products may arise:
b1) Where enterprises
account turnover of the sale of the trial-production products into business
result reports in the period:
When selling products turned
out from trial production, recording the turnover:
Debit Accounts 111, 112,
131,�
Credit Account 511 -
Turnover of goods sale and service provision
Credit Account 333 - Taxes
and amounts payable to the State budget (33311)
b2) Where enterprises offset
the turnover of the sale of products of trial production with the test-run,
trial-production expenses reflected on Account 242- Long-term prepaid expenses
of the accounting balance sheet, recording:
Debit Account 511 - Turnover
of goods sale and service provision
Credit Account 242 -
Long-term prepaid expenses.
c) Determining the business
results with the sale of products of trial production:
- Carrying over net
turnover, recording:
Debit Account 511 - Turnover
of goods sale and service provision
Credit Account 911 -
Determining business results
- Carrying over the cost
prices of products of trial production, recording:
Debit Account 911 -
Determining business results
Credit Account 632 - Cost
prices of sold goods
- Determining profits,
losses of trial-production activities, recording:
?? In case of profits,
recording:
Debit Account 911 -
Determining business results
Credit Account 421 -
Undistributed profits.
- In case of losses,
recording:
Debit Account 421 -
Undistributed profits
Credit Account 911 -
Determining business results.
7.
Recording legal capital, re-evaluating assets, preserving legal capital
contributed in foreign currencies
7.1. Recording legal
capital, re-evaluating assets
Where enterprises use
Vietnam dong as the currency for book-keeping entries, when actually receiving
the legal capital contributed in foreign currencies, they must convert them into
the currency used for book-keeping entries at the official exchange rates
announced by Vietnam State Bank at the time of conversion. Enterprises must not
re-evaluate their legal capital and asset value after they are actually
contributed and converted into Vietnam dong for book-keeping entries.
- When actually receiving
the contributed legal capital in foreign currencies, machinery and equipment,
workshops, other constructions, industrial property right value, technical
know-how, technical process, technical services with value in foreign currencies
converted into the currency used for book-keeping entries, recording:
Debit Accounts 111 (1111),
112 (1122), 211, 213,�
Credit Account 411 -
Business capital sources
7.2. Preserving legal
capital:
Enterprises shall preserve
legal capital according to the value of contributed legal capital acknowledged
in the investment licenses in foreign currencies from the after-enterprise
income tax profits by way of setting up the financial reserves from the
after-tax profits, to be decided by the enterprises, recording:
Debit Account 421 -
Undistributed income
Credit Account 415 -
Financial reserve fund.
8.
Accounting of cases of division, separation, consolidation, merger, investment
transformation (referred collectively to as reorganization of enterprises)
8.1. Accounting of
activities of division, separation, merger, consolidation of enterprises
8.1.1. Activities of
division, separation, merger or consolidation of enterprises:
Foreign-invested
enterprises; parties to business cooperation contracts shall, in the process of
operation, be allowed to change form of investment, carry out division,
separation, merger or consolidation of enterprises (Article 19a - Foreign
Investment Law)
Activities of consolidation,
merger, division, separation of enterprises, change of investment form (referred
collectively to as reorganization of enterprises) must be approved by the
licensing agencies. The new enterprises shall inherit the rights and obligations
of the former enterprises (Articles 31, 32 of Decree No. 24/2000/ND-CP of July
31, 2000 of the Government)
Consolidation of
enterprises:
Enterprises of the same type
may be consolidated with one another into a new enterprise under decisions of
the investors and with the approval by the licensing agencies. The consolidation
of enterprises must comply with the law-prescribed procedures for establishment
and registration of enterprises. After the consolidation, the former enterprises
shall terminate all civil rights and obligations, which are transferred to the
new enterprises.
Merger of enterprises:
An enterprise can be merged
(called the merged enterprise) into another enterprise of the same type (called
the merging enterprise) under decisions of the investors and with the approval
of the licensing agencies. After the merger, the merged enterprises shall
terminate all their civil rights and obligations and transfer them to the
merging enterprises.
Division or separation of
enterprises:
- An enterprise can be
divided or separated into many enterprises under decision of the investors and
with the approval of the licensing agency.
?? After the division, the
divided enterprise shall terminate all its civil rights and obligations and
transfer them to the new enterprises under decision on division of the
enterprise in conformity with the operating purposes of the enterprise.
?? After the separation, the
concerned enterprises shall exercise their rights and perform their obligations
in conformity with their operating purposes.
8.1.2. Principles for and
methods of book-keeping accounting in cases of consolidation, merger and
division of enterprises:
a) Principles for accounting
upon the consolidation, merger or division of enterprises:
- For consolidated or merged
enterprises, they must record in the accounting books the decrease of the entire
assets, debts and capital sources for transfer thereof to the new enterprises.
- For enterprises newly
formulated from the consolidation or merging enterprises:
?? Including in their
business result reports also the results of business operation of the
consolidated or merged enterprises.
?? Recording in their
accounting books the entire assets, debts and capital sources of the merged
enterprises, including goodwill and negative goodwill arising from the merger.
b) Accounting of activities
of consolidating, merging or dividing enterprises:
- At the consolidated,
merged or divided enterprises, based on the reports on transfer of assets, debts
and capital sources of the owners to the new enterprises, recording:
Debit Account 411, 331, 311,
333, 338, 334, 335, 214,�
Credit Accounts 111, 112,
131, 141, 151, 152, 153, 154, 155, 156, 211, 213,�
- At the new enterprises,
based on the reports on transfer of assets, receivable debts, payable debts,
capital sources of owners from the former enterprises, recording:
Debit Accounts 111, 112,
131, 141, 151, 152, 153, 154, 155, 156, 211, 213,�
Debit Account 242 -
Long-term pre-paid expenses
(Expenses for goodwill)
Credit Accounts 411, 331,
311, 333, 338, 334, 335,�
Credit Account 3387 -
Negative goodwill turnover.
8.1.3. Accounting in cases
of separation of enterprises:
The separated enterprises
shall record the decrease for the assets, debts and capital sources to be
transferred to the new enterprises. The new enterprises shall record the
increase of assets, debts and capital sources under the decisions on separation
of enterprises in conformity with the divided rights and obligations.
- The separated enterprises
shall, based on the reports on transfer of assets, debts and capital sources of
owners to the new enterprises, record:
Debit Account 411 - Business
capital source, or
Debit Accounts 331, 311,
341, or
Debit Account 214 - Tear and
wear of fixed assets
Credit Accounts 111, 112,
131, or
Credit Accounts 211, 213
- The new enterprises shall,
based on the reports on transfer of assets, debts and capital sources of owners
from the separated enterprises, record:
Debit Accounts 111, 112, 131
Debit Accounts 211, 213
Credit Account 411 -
Business capital sources, or
Credit Accounts 331, 311,
341
8.2. Accounting of
activities of transferring contributed capital
8.2.1. Activities of
transferring contributed capital:
The parties to joint-venture
enterprises or the investors in enterprises with 100% foreign capital may
transfer the values of their contributed capital portions in the enterprises.
Where the capital transfer generates profits, the transferors shall have to pay
enterprise income tax (Article 34, the Foreign Investment Law).
8.2.2. Accounting
principles:
a) Where the capital
portions are transferred among investors being co-capital contributors in the
enterprises, the expenses related to the transfer activities of the parties
shall not be accounted on the enterprises� books but only the procedures shall
be carried out for the change of owners� names in the business licenses.
b) Where a party (the
Vietnamese or foreign party) repurchases the capital portion of the other party
to a joint venture in order to become the sole owner of the enterprise, the
purchase of contributed capital portion should be accounted according to charge
rates, namely the equivalent cash amounts and the purchaser may record the
expenses for the purchase of this capital portion (which may be higher or lower
than the book values of the transferred capital portion) on the day of transfer.
- Where the purchase expense
is higher than the book value, the difference shall be accounted as a goodwill
and recognized as the intangible asset and distributed according to the
estimated useful duration of use and the straight-line method.
- Where the purchase expense
is smaller than the portion owned by the enterprise in the equivalent value of
purchased assets and debts determined on the day of exchange, the equivalent
value of these non-money assets should be recorded as corresponding decrease
till the difference no longer exists. Where the difference cannot be fully
eliminated by way of recording the decrease of the equivalent value of non-money
assets, the remaining difference should be reflected as a negative goodwill and
accounted as the retained income. This difference portion should be recognized
as income within a duration of no more than 5 years, except where for plausible
reasons it shall be distributed within a longer duration which, however, must
not exceed 20 years as from the date of buying the enterprise.
8.2.3. Methods of accounting
the transfer of contributed capital:
a) The accounting of
transactions related to activities of transferring contributed capital in cases
where a party (the Vietnamese or foreign party) re-purchases the contributed
capital of the other party in order to become the sole owner of the enterprise
shall be the same as the accounting in cases of consolidation, merger or
division of enterprises in Item 8.1.2- b.
b) In particular cases where
the Vietnamese party transfers its contributed capital portion to the foreign
party to a joint-venture enterprise and returns the land use right in order to
switch to the form of land lease, the decrease must be recorded for the land use
right and for the legal capital corresponding to the recorded decrease of the
land use right; when the foreign party actually pays the land rents, the
increase of owners� corresponding capital shall be recorded.
- When returning the
contributed capital with the land use right of the Vietnamese party, recording:
Debit Account 411 - Business
capital sources
Credit Account 213 -
Intangible fixed assets (2131- Land use right)
- When the enterprise
receives money from the foreign party as the land rent payment (as the foreign
party re-purchases the Vietnamese party�s capital portion contributed with the
land use right and shift to the form of land lease), and concurrently records
the increase of the actually contributed legal capital of the foreign party
corresponding to the value of the re-purchased contributed capital portion of
the transferor, or records the increase of borrowed amounts, long-term debts if
the borrowed amounts or foreign debts transferred into Vietnam for payment of
the land rent, recording:
Debit Accounts 11, 112, 242
Credit Accounts 411, 341,
342.
9.
Accounting of investment in construction, procurement of fixed assets in
activities of business cooperation and performance of business cooperation
contracts
9.1. Organizing the
accounting of activities of performing the business cooperation contracts
Business cooperation
contracts are documents signed between two or more parties for investment and
business in Vietnam, which define the responsibility and divided business
results of each party without setting up new legal persons.
The accounting work can be
performed in one of the following forms, depending on the agreement reached
between the parties to the business cooperation contracts.
Form 1:
The parties to the business cooperation contracts may agree to let a party (the
foreign party or the Vietnamese party) take the responsibility for the
performance of the entire accounting work for the business cooperation
contracts.
The accounting section for
the business cooperation contracts must be organized separately from the
accounting section of the party which undertakes to perform the accounting work,
and all activities of the business cooperation contracts shall be carried out in
the legal name of the party undertaking to perform the accounting work. The
contents of the accounting work shall include the accounting of turnover,
expenses, the determination of pre-tax business results.
At the end of each fiscal
year or upon the termination of the business cooperation contracts, the party
which performs the accounting work must settle the performance of the business
cooperation contracts in terms of turnover, expenses and business results for
use as basis for division of pre-enterprise income tax business profits (profits
or losses). Based on the divided pre-tax profits, the foreign parties shall
perform their tax and other financial obligations according to the Foreign
Investment Law while the Vietnamese parties shall perform their tax and other
financial obligations according to the law provisions applicable to domestic
enterprises.
Form 2:
In the business process, if
deeming it necessary, the business cooperation parties may agree to set up the
coordinating board for the performance of business cooperation contracts.
The coordinating board may
organize the accounting section which shall be responsible for the performance
of the entire accounting work of the business cooperation contract. The
accounting work in this case shall be implemented like that of an enterprise,
covering the contents of accounting the assets, capital sources, turnover,
expenses, determination of business results and division of pre-tax profits.
At the end of each fiscal
year or upon the termination of business cooperation contracts, the accounting
section shall account and distribute pre- enterprise income tax profits to the
parties according to capital contribution percentages and the agreement among
the parties. Based on the divided pre-tax profits, the foreign parties shall
perform their tax and other financial obligations according to the Foreign
Investment Law while the Vietnamese parties shall perform their tax and other
financial obligations according to the law provisions applicable to domestic
enterprises.
Form 3:
Each party may organize its
own accounting section to monitor its own interests and obligations in the
business cooperation contracts.
At the end of each fiscal
year or upon the termination of the business cooperation contracts, the
accounting section of each party shall account and perform tax obligations
towards the State within the scope of its responsibility. The foreign parties to
the business cooperation contracts shall perform their tax and other financial
obligations according to the Foreign Investment Law while the Vietnamese parties
perform their tax and other financial obligations according to the law
provisions applicable to domestic enterprises.
9.2. Accounting of
investment in construction, procurement of fixed assets in business cooperation
activities
In cases where enterprises
engaged in contractual business cooperation invest in the construction of new
workshops on the land of business cooperation units, or renovate old workshops
of business cooperation units, or procure machinery and equipment for use in
business cooperation units, they shall, depending on the nature of these
investment expenses, account the increase of tangible fixed assets (new
workshops, machinery and equipment), the enterprises� expenses awaiting
distribution, the level of depreciation of these assets, according to current
regulations. Upon the expiry of the business cooperation contracts, these assets
shall be liquidated, sold or transferred to the enterprises. The liquidation or
sale of those assets must comply with the current regulations of the relevant
tax laws.
- When the expenses for
investment in construction of workshops, procurement of machinery and equipment,
or repair of workshops arise, recording:
Debit Account 211 - Tangible
assets (workshops, machinery and equipment)
Debit Account 242 -
Long-term prepaid expenses (repair of workshops)
Debit Account 133 - Deducted
VAT (if any)
Credit Accounts 111, 112,
331,�
- The fixed asset
depreciation shall be accounted into expenses for contractual business
cooperation activities, recording:
Debit Account 627 - General
production expense
Credit Account 214 - Tear
and wear of fixed assets
Concurrently recording Debit
Account 009- Capital sources for basic depreciation.
- When liquidating, selling
fixed assets used for the performance of the business cooperation contracts:
?? Proceeds from
liquidation, sale of fixed assets, recording:
Debit Accounts 111, 112, 138
Credit Account 711 - Other
incomes
Credit Account 333 - Taxes
and amounts payable to the State (33311)
?? The remaining value of
fixed assets and actually arising liquidation or sale expenses, recording:
Debit Account 811 - Other
expenses
Credit Account 211 -
Tangible fixed assets (the remaining values)
Credit Accounts 111,112,
331,�( arising liquidation expenses)
10.
Accounting of the operation of assigning and accepting the product processing in
the contractual business cooperation activities
- Upon the delivery of raw
materials and materials for processing, recording:
Debit Account 331 - Payable
to sellers
Credit Account 152 - Raw
materials, materials
- Upon receiving back the
processed products, recording:
Debit Account 621 - Direct
raw materials, materials expenses
Credit Account 331 - Payable
to sellers.
- Accounting of expenses for
depreciation of fixed assets (equipment, workshops) built on other people�s land
for the performance of business cooperation contracts (if any), recording:
Debit Account 627 - General
production expenses (6274)
Credit Account 214 - Tear
and wear of fixed assets (2141)
- Accounting of other
expenses related to processing activities, recording:
Debit Account 627 - General
production expenses
Credit Accounts 111, 112
- General accounting of
production expenses and calculating the costs of processed products shall be
effected as for other products of the enterprises under the enterprises�
accounting regime.
11.
Accounting of turnover of golf course business, infrastructure dealing, assets
leasing for many years (operation leasing), entrusted import
11.1. Accounting of business
in golf course, real estate leasing, asset leasing:
Where golf course dealing,
real estate leasing and/or asset leasing activities generate turnover collected
in advance for many years, the turnover must be memorized according to fiscal
years:
a) For unimplemented
turnover:
a1) Unimplemented turnover
accounted in Account 3387- Unimplemented turnover
- Upon receipt of money paid
in advance for many periods by customers, the accountants record:
Debit Accounts 111, 112
Credit Account 3387 -
Unimplemented turnover
Credit Account 3331 -
Payable VAT (33311)
At the same time determine
the turnover of the accounting period, recording:
Debit Account 3387 -
Unimplemented turnover
Credit Account 511 -
Turnover of goods sale and service provision (5113)
- Upon paying VAT on the
actually collected amounts of multi-year turnover (with input VAT of the
accounting period deducted), recording:
Debit Account 3331 - Payable
VAT- (33311)
Credit Accounts 111, 112.
- Upon determining the
enterprise income tax payable in the fiscal year, recording:
Debit Account 421 -
Undistributed profits (Income liable to enterprise income tax)
Credit Account 333 - Taxes
and amounts payable to the State (3334)
a2) When actually paying the
enterprise income tax (for each period, or the rest), recording:
Debit Account 333 - Taxes
and amounts payable to the State (3334)
Credit Accounts 111, 112
a3) Into the subsequent
fiscal year, determining the current year�s turnover of lump-sum cash collection
(in the preceding fiscal year) in compatibility with the accounting period
(month, quarter), recording:
Debit Account 3387 -
Unimplemented turnover
Credit Account 511 -
Turnover of goods sale and service provision (5113)
- Carrying over turnover to
determine business results in the period, recording:
Debit Account 511 - Turnover
of goods sale and service provision (5113)
Credit Account 911 -
Determining business results
b) For business expenses of
these activities:
Only accounting in business
expenses in the period the actually arising expenses:
- Upon depreciation of
tangible and intangible fixed assets into expenses, recording:
Debit Account 627 - General
production expenses (6274)
Credit Account 214 - Tear
and wear of fixed assets (2141, 2143)
- When expenses directly
related to the process of business operation arise, recording
Debit Accounts 621, 622, 627
Debit Account 133- Deducted
VAT
Credit Accounts 152, 331,
334, 338, 111, 112,�
- At the end of the
accounting period, carrying over the expenses directly related to the activities
of enterprises, which are gathered on Accounts 621, 622, 627, recording:
Debit Account 154 -
Unfinished production and business expenses
Credit Accounts 621, 622,
627
- Determining the cost
values of services completely provided in the period, recording:
Debit Account 632 - Cost
prices of sold goods
Credit Account 154 -
Unfinished production and business expenses
- Carrying over the cost
values of services completely provided in the period in order to determine the
business results in the period, recording:
Debit Account 911 -
Determining business results
Credit Account 632 - Cost
price of sold goods.
- Goods sale expenses and
enterprise management expenses shall be accounted into Accounts 641, 642. At the
period-end, they shall be forwarded into Account 911 in order to determine the
business results in the period.
c) Long-term, short-term
deposits of customers shall be credited to Accounts 344, 338 (3388)
- Upon the receipt of
long-term, short-term deposits of customers, the accountants record:
Debit Accounts 111, 112
Credit Account 344 - Receipt
of long-term security, deposit (long-term deposit)
Credit Account 338 - Other
payable, remittable (3388) (short-term deposit)
- When refunding deposits to
customers, the accountants record:
Debit Accounts 344, 338
(3388)
Credit Accounts 111, 112
- Fines for contractual
breaches shall be subtracted from deposits, recording:
Debit Accounts 344, 338
(3388)
Credit Account 711 - Other
income
11.2. Accounting of
activities of dealing in infrastructure in industrial parks, export-processing
zones and hi-tech parks:
- Activities of dealing in
infrastructure mean activities of transferring land or subleasing land with
infrastructure already developed thereon and providing electricity, water (if
any) supply, public-utility,� services in industrial parks, export-processing
zones and hi-tech parks,�
- Foreign-invested
enterprises and business cooperation parties, which lease or sublease land in
industrial parks, export-processing zones, hi-tech parks (receiving transferred
land), shall be granted the land use certificates under the guidance of the
General Land Administration.
- Infrastructure business
turnover includes: Turnover of transfer or sublease of land with developed
infrastructure and turnover of infrastructure service provision (public-utility
and preservation and maintenance charges).
- The principle for
recording turnover of transfer or sublease of land with developed infrastructure
is the lump- sum payment by method of � land plot�, namely the turnover shall be
recorded when land is transferred to the lessees on the field and the rent is
paid in lump sum.
- The principle for
recording service provision turnover (public utility and preservation and
maintenance charges) according to the provisions in Paragraph 16 of Standards
for turnover and other income- Standard No.14.
- Enterprises dealing in
infrastructure must fulfill their tax obligations related to turnover of leasing
or subleasing land with developed infrastructure and service provision turnover
according to current regulations.
- The expenses related to
infrastructure �land plots� already transferred to the users (the lessees) and
the lump-sum rent collection shall be recorded according to the principle that
expenses must conform to turnover.
11.2.1. Accounting of the
receipt of contributed capital for infrastructure business:
- Upon the receipt of
capital contributed in the land use right from the time of handing over the land
on the field for infrastructure business, recording:
Debit Account 228 - Other
long-term investment (detail- infrastructure land)
Credit Account 411 -
Business capital sources
- Upon receipt of capital in
cash, machinery, equipment, other fixed assets,�, recording:
Debit Accounts 111, 112, 211
Credit Account 411 -
Business capital sources.
11.2.2. Accounting of the
process of investment in the construction of infrastructure;
- When the land-related
expenses, such as compensation expenses, ground clearance expenses, ground
leveling, fill-up expenses,� arise, recording:
Debit Account 241 -
Unfinished capital construction
Debit Account 133 - Deducted
VAT (if any)
Credit Accounts 111, 112,
152, 153, 331,�
- Upon the completion of
infrastructure construction and the approval of final settlement, recording:
Debit Account 211 - Tangible
fixed assets (buildings, architectural objects- fixed assets in general service
of infrastructure business activities- If any).
Debit Account 242 -
Long-term prepaid expenses (if any)
Debit Account 228 - Other
long-term investment (buildings, architectural objects, infrastructure projects
on land, land already invested with infrastructure for the purpose of leasing
land already with developed infrastructure)
Credit Account 241 -
Unfinished capital construction.
11.2.3. Accounting of
actually arising expenses for investment activities of developing infrastructure
land and expenses for service provision (water, electricity (if any),
public-utility and preservation and maintenance):
11.2.3.1. Accounting of the
cost value of land with infrastructure already developed for lease:
When leasing infrastructure,
transferring the leased land areas to the infrastructure lessees:
- Determining the cost value
of the �land plot� with infrastructure already developed for lease (the land use
right, land-related expenses for formation of land with developed
infrastructure, fixed assets, architectural objects closely associated to the
leased land- if any), recording:
Debit Account 635 -
Financial expenses
Credit Account 228 - Other
long-term investment (infrastructure land,�)
11.2.3.2. Accounting of
expenses for electricity, water (if any) supply, public utility, infrastructure
preservation and maintenance services provided to the infrastructure lessees:
- When the direct expenses
for the provision of water, electricity (if any) supply, public- utility,
infrastructure preservation and maintenance,� services arise, recording:
Debit Accounts 621, 622, 627
Credit Accounts 152, 153,
331, 334, 338, 111, 112,�
- Carrying over expenses
directly related to services in order to rally business expenses and calculate
the charges for electricity, water (if any) supply, public-utility and
infrastructure preservation and maintenance services, recording:
Debit Account 154 -
Unfinished production, business expenses (detailed according to services)
Credit Accounts 621, 622,
627
- Determining the cost
prices of infrastructure services provided to customers, recording:
Debit Account 632 - Cost
prices of sold goods
Credit Account 154 -
Unfinished production, business expenses.
11.2.3.3. Accounting of
goods sale expenses, enterprise management expenses:
- When the goods sale
(advertisement, sale promotion,�) expenses and enterprise management expenses
arise, recording:
Debit Account 641 - Goods
sale expenses
Debit Account 642 -
Enterprise management expenses
Credit Accounts 152, 153,
331, 334, 338, 214, 111, 112,�
11.2.3.4. Determining and
carrying over the cost value of the leased infrastructure �land plots�, the cost
prices of infrastructure services, goods sale expenses, enterprise management
expenses so as to determine the business results:
- Determining the cost value
of infrastructure land leased in the period, recording:
Debit Account 635 -
Financial expenses
Credit Account 228 - Other
long-term investment
- Determining the cost value
of infrastructure services provided in the period, recording:
Debit Account 632 - Cost
prices of sold goods
Credit Account 154 -
Unfinished production, business expenses
- Carrying over the cost
value of transferred or subleased infrastructure land and expenses for
infrastructure services provided in the period in order to determine the
business results in the accounting period, recording:
Debit Account 911 -
Determining business results
Credit Account 632 - Cost
prices of sold goods
Credit Account 635 -
Financial expenses
- Carrying over goods sale
expenses and enterprise management expenses in order to determine the business
results, recording:
Debit Account 911 -
Determining business results
Credit Accounts 641, 642
11.2.3.5. Accounting of
infrastructure business turnover:
- Turnover of leased or
subleased land with developed infrastructure shall be calculated on the leased
land areas (�land plots�) and the land-leasing duration:
?? The turnover of transfer
or sublease of land with infrastructure already developed (�land plots�), with
lump-sum rent collection, recording:
Debit Accounts 111, 112
Credit Account 515 -
Financial operation turnover
Credit Account 333 - Taxes
and amounts remittable to the Budget {3331- Payable VAT (33311)} (not calculated
on land rent)
- Turnover of transfer or
sublease of land with developed infrastructure (�land plots�), which are
returned (if any), recording:
Debit Account 333 - Taxes
and amounts remittable to the Budget (33311)
Debit Account 531 - Sold
goods which are returned
Credit Accounts 111, 112,
138, 338 (3388)
- Carrying over turnover of
transferred or subleased land (�land plots�) which are returned (if any),
recording:
Debit Account 515 -
Financial operation turnover
Debit Account 3331 - Payable
VAT (33311) ( if any)
Credit Account 531 - Sold
goods returned
- Infrastructure service
provision turnover, recording:
Debit Accounts 111, 112, 131
Credit Account 511 - Goods
sale and service provision turnover (5113)
Credit Account 3331 -
Payable VAT ( 33311)
- Collected fines for
contractual breaches, recording:
Debit Accounts 111, 112, 138
Credit Account 711 - Other
income
- Carrying over net
turnover, other incomes to determine the business results, recording:
Debit Accounts 511, 711
Credit Account 911 -
Determining business results
- Determining infrastructure
business results (land lease, service provision):
?? Business profits,
recording:
Debit Account 911 -
Determining business results
Credit Account 421 -
Undistributed profits
?? Business losses,
recording:
Debit Account 421 -
Undistributed profits
Credit Account 911 -
Determining business results
11.3. Accounting of
entrusted import activities
11.3.1. Units which carry
out import activities through import-entrusting contracts- Called the
import-entrusted party (called B1 for short) shall account the contents: The
receipt of the value of equipment under the original entrusted import contracts;
expenses related to equipment, import goods (expenses for renting warehouses
and/or storing yards, expenses for transportation of imported goods, customs
fees, import tax, VAT on import goods,�); the receipt of supplementary
equipment, goods under the entrusting contracts due to changes in equipment
structure or changes in design of equipment installation in the signed
contracts,�{The value of these supplementary equipment and all accompanied
expenses (for rent of warehouses and/or storing yards, expenses for
transportation of entrusted-import goods, customs fees, import tax, VAT on
import goods,�)} shall be fully borne by the equipment and/or goods sellers; the
receipt of money amounts of the entrusting parties for payment on the latter�s
behalf: The money for purchase of import goods, including freight, imported
goods insurance, import tax, VAT(if any) on imported goods, customs fees,...;
the transfer of entrusted-import equipment and goods, including supplementary
imported equipment and goods, to the entrusting parties and collect commissions
for the entrusted import, as follows:
a) When importing the
entrusted-import equipment, goods
a1) Accounting of the value
of equipment, goods according to the import-entrusting contracts; expenses
related to imported goods and equipment (expenses for renting warehouses,
storing yards, expenses for domestic transportation of entrusted-import goods,
import tax, VAT on import goods, customs fees,�)
- Accounting of the value of
entrusted-import goods and/or equipment (according to FOB or CIF prices) and
import tax, VAT on import goods, based on relevant vouchers to record:
Debit Account 151 -
Purchased goods en route
Debit Account 156 - Goods
(1561) (values of equipment, goods and assorted taxes: import tax, special
consumption tax, VAT on import goods)
Credit Account 331- Payable
to sellers (equipment value according to FOB or CIF price)
Credit Account 333 - Taxes
and amounts payable to the State
(3333 - Import tax; 3332 -
Special consumption tax;
33312 - Payable VAT on
import goods)
a2) Accounting of expenses
related to imported goods (expenses for renting warehouses and/or storing yards,
customs fees, expenses for domestic transportation of entrusted-import goods,�):
Debit Account 156 - Goods
(1562)
Credit Account 331 - Payable
to sellers (domestic sellers) (expenses for renting warehouses and/or storing
yards, expenses for domestic transportation of entrusted-import goods,�)
Credit Account 333- Taxes
and amounts payable to the State (3339) (Customs fees)
a3) Accounting of the
receipt of supplementary equipment under the entrusting contract, of which the
value and all accompanied expenses (expenses for renting warehouses and/or
storing yard, import tax, VAT on imported goods, customs fees, expenses for
domestic transportation of entrusted-import goods with regard to the
supplementary equipment,�) shall be fully borne by the equipment sellers,
recording:
Debit Account 156 - Goods
(1561, 1562) (equipment value, import tax and VAT on import goods and accompied
expenses)
Credit Account 131 -
Receivable from customers (the entrusting party) (the equipment value according
CIF prices notified by sellers)
Credit Account 131 - Payable
to sellers (domestic sellers) (expenses for renting warehouses and/or storing
yards, expenses for domestic transportation of entrusted-import goods,�)
Credit Account 133 - Taxes
and amounts payable to the State
(3333 - Import tax; 3332 -
Special consumption tax;
33312 - VAT payable on
imported goods;
3339 - Customs fees)
b) When the import-entrusted
parties receive money from the entrusting parties as payment on the latter�s
behalf, such as money for purchase of entrusted-import equipment, including
freight, insurance premium for imported goods, customs fees, other expenses
related to entrusted-import goods; commission for entrusted import, import tax,
VAT on import goods, recording:
Debit Accounts 111, 112
Credit Account 131 -
Receivable from customers
c) When settling amounts
related to entrusted-import goods lots in cash or bank deposits or the
import-entrusted parties are asked to pay import tax on the entrusting parties�
behalf as agreed upon, recording:
Debit Accounts 331, 333
(3332, 3333, 33312), 156 (1562)
Credit Accounts 111, 112,
238
d) When the import-entrusted
party returns the entrusted-import equipment and/or goods to the
import-entrusting party, the procedures therefor prescribed at Point 5.3,
Section IV of Circular No. 122/2000/TT-BTC of December 29, 2000 of the Finance
Ministry guiding the implementation of the Government�s Decree No. 79/2000/ND-CP
of December 29, 2000 which details the implementation of the VAT Law on
entrusted import goods must be complied with. Based on sale invoices, the
accountants shall enter:
d1) Returning the
entrusted-import goods to the import-entrusting party (including goods imported
in the first time, or goods imported additionally):
- When returning the
entrusted-import goods to the import-entrusting party, based on delivery bills
and sale invoices returned to the import-entrusting party, recording:
Debit Account 131 -
Receivable from customers (import-entrusting units)
Credit Account 156 - Goods
(1561, 1562)
Credit Account 151 -
Purchased goods en route
d2) Recording the goods sale
turnover (entrusting commission) and payable VAT (calculated on entrusted-import
commission enjoyed for the first-time entrusted importation and the additional
importation- if any):
Debit Account 131 -
Receivable from customers (entrusting units) (if subtracting from amounts
already received from the entrusting party)
Credit Account 511 - Goods
sale and service provision turnover (entrusted import commission)
Credit Account 333 - Taxes
and amounts payable to the State (3331- Payable VAT calculated on enjoyable
commission for entrusted import).
11.3.2. At the units
entrusting the import under the import-entrusting contracts- Called the
import-entrusting party (called B2 for short):
a) Accounting the values of
equipment and/or goods and expenses related to entrusted-import equipment and/or
goods (import tax, VAT on import goods, customs fees, expenses for renting
warehouses and/or storing yards, expenses for transportation of entrusted-import
goods,�); delivered equipment for use:
- When transferring money
for proxy payment (goods purchase, payment of import tax, VAT on import goods-
if any, freight, goods insurance, customs fees,�), or paying taxes as agreed
upon with the import-entrusted party, recording:
Debit Account 331 - Payable
to sellers (import-entrusted units)
Credit Accounts 111, 112.
- Upon receipt of equipment
and/or goods delivered by the import-entrusted party under the import-entrusting
contracts, based on sale invoices from the import-entrusted party, recording:
Debit Accounts 152, 211,�
Or Debit Account 156 - Goods
(1561,1562)
Debit Account 133 - Deducted
VAT (1331, 1332)
Credit Account 331 - Payable
to sellers (entrusted party) (regarding amounts payable to the import-entrusted
party: goods purchase money, import tax, VAT on import goods, customs fees,
expenses for domestic transportation) (entrusted party- if money already
transferred for proxy payment in advance).
- When delivering equipment,
goods for use in production and/or business activities, recording:
Debit Accounts 157, 211,
241, 621, 632
Credit Accounts 152, 156
- If any equipment delivered
for use is broken, for which the equipment suppliers agree to pay material
compensations, entering the value of broken equipment, recording:
Debit Accounts 131, 331
Credit Accounts 241, 621,
632
At the same time recording
as decrease the deducted VAT amounts for damaged equipment, recording:
Debit Accounts 131, 331
Credit Account 333 - Taxes
and amounts payable to the State (3331)
Or Credit Account 133 -
Deducted VAT
b) Accounting the receipt of
supplementary equipment under the delivery-entrusting contracts, of which all
accompanying expenses (expenses for renting warehouses and/or storing yards,
import tax, customs fees, expenses for transportation of entrusted-import
goods,�) are fully borne by the equipment sellers:
- Based on the invoices of
the entrusted party and the actually received goods, recording:
Debit Account 156 - Goods
(1561, 1562)
Debit Account 133 - Deducted
VAT (1331, 1332)
Credit Accounts 131, 331
(value of compensation equipment)
Credit Account 331 - Payable
to sellers (The entrusted party) (Regarding relevant expenses: Import tax, VAT
on import goods, customs fees, warehouse and/or storing yard rents, domestic
transportation freight, which have been already paid by the entrusted party and
must be reclaimed from the sellers, or advanced by the entrusting party).
b1) In cases where all the
import tax, VAT on import goods, customs fees and expenses related to the
additionally imported equipment have been advanced or paid to the entrusted
party, all these expenses (which shall be borne by the sellers, including the
value of supplementary equipment) shall later be reclaimed from the sellers.
- When advancing or paying
them to the entrusted party, recording:
Debit Account 331 - Payable
to sellers
Credit Accounts 111, 112
- Upon receiving the
invoices of the entrusted party on payable amounts related to additionally
imported equipment, recording:
Debit Account 138 - Other
receivables
Credit Account 331 - Payable
to sellers (import-entrusted units)
- When actually receiving
money repaid by sellers, recording:
Debit Accounts 111, 112
Credit Account 138 - Other
receivables
b2) Where the
import-entrusting party only receives the equipment and parts thereof via the
import-entrusted party while other accompanied expenses of the additionally
imported equipment lot shall be reclaimed from the sellers directly by the
import-entrusting party, the import-entrusting party shall only receive the sale
invoices of B1 acknowledging the value of the paid equipment for making book
entries:
Debit Account 156 - Goods
(1561, 1562)
Debit Account 133 - Deducted
VAT (1331, 1332)
Credit Accounts 138, 331
(value of compensated equipment)
12.
Accounting of profit division
- Annually, based on
after-enterprise income tax profits and the capital contribution percentage of
each party as prescribed in the investment licenses, the enterprises shall
determine the profits to be divided to the parties, which shall be approved by
the Managing Boards through voting, recording:
Debit Account 421 -
Undistributed profits
Credit Account 338 - Other
payable, remittable (3388 - Detailed profits distributed to capital-
contributing parties)
- Upon the expiry of
re-investment duration, the foreign parties transfer abroad the profits divided
on enterprise income tax which is reimbursed due to their re-investment,
recording:
Debit Account 411 - Business
capital sources (Business reinvestment capital sources)
Credit Account 338 - Other
payable, remittable (3388 - Detailed profits distributed to the
capital-contributing parties).
- When actually paying
profits to capital-contributing parties, recording:
Debit Account 338 - Other
payable, remittable (3388 - Detailed profits distributed to capital-contributing
parties)
Credit Accounts 111, 112
13. Accounting of tax on
transfer of profits abroad, reimbursement of enterprise income tax in case of
reinvestment, tax on transfer of contributed capital
13.1. Accounting of tax on
transfer of profits abroad
- When the foreign parties
transfer their divided profits ( including the enterprise income tax refunded
due to re-investment and profits earned from capital transfer) to their parent
companies or to investors contributing business capital to enterprises overseas,
they must pay tax on transfer of profits abroad according to current
regulations, recording:
Debit Account 338 - Other
payable, remittables (3388 - Detailed profits divided to foreign parties)
Credit Account 333 - Taxes
and amounts payable to the State (3338)
- Upon the actual payment of
tax on transfer of profits abroad, recording:
Debit Account 333 - Taxes
and amounts payable to the State (3338)
Credit Accounts 111, 112
13.2. Accounting of the
reimbursement of enterprise income tax in case of reinvestment
When the foreign investors
receive the reimbursed amounts of enterprise income tax for reinvestment in
projects being executed or in new projects under the Law on Foreign Investment
in Vietnam:
- In case of receiving the
reimbursed amounts of enterprise income tax for reinvestment in projects being
executed, recording:
Debit Account 112 - Bank
deposits
Credit Account 411 -
Business capital sources (Business capital source for reinvestment).
- In case of receiving the
reimbursed amounts of enterprise income tax for reinvestment in new projects, at
the enterprises which receive the reimburse tax amount, recording:
Debit Account 112 - Bank
deposits
Credit Account 411 -
Business capital sources (Business capital sources for reinvestment).
- If the foreign investors
fail to use the reimbursed enterprise income tax amounts for reinvestment, they
must return those reimbursed tax amounts plus the interests thereon calculated
being equal to the loan interest on the returned tax amounts and these
operations must not be reflected on the accounting books of the enterprises.
13.3. Accounting of tax on
transfer of contributed capital
Where profits are generated
from the transfer of contributed capital to the foreign party when a party (the
Vietnamese party or the foreign party) repurchases the contributed capital
portion of the other party in order to become the sole owner of the enterprise
and the purchase of contributed capital portions should be accounted according
to charge rates, namely the corresponding cash amount required for the
purchasers to be allowed to enter the expenses for such purchase of contributed
capital portions (which may be higher or lower than the book values of the
transferred capital amounts) made on the date of transfer, the contributed
capital transferors with income from the capital transfer must pay tax on income
from the transfer of contributed capital. Enterprises shall not account tax on
transfer of contributed capitals of the partners.
14.
Regarding the appropriation, use and final settlement of prior-deducted expenses
for job loss allowances
a) Expenses for job-loss
allowances
The expenses for job-loss
allowances are amounts to be paid by enterprises to laborers when they quit
their jobs according to current regulations of the State.
The job-loss allowances for
laborers can be subtracted from the taxable incomes of enterprises according to
the provisions in Article 9, Chapter II of the Enterprise Income Tax Law.
Where these expenses are
expected to be large upon the expiry of the investment licenses, are related to
the implementation of the State�s current regulations for laborers and accord
the commitments in the labor contracts signed with the laborers, in principle,
the enterprises may make advance deductions from the business expenses of the
relevant fiscal years for to each laborer to reserve for these expenses.
The bases for making advance
deductions as reserve for job loss allowance expenses for laborers shall be
calculated on the amount expected to pay to each laborer according to the
State�s current regulations for laborers and the labor contracts signed with
laborers. The levels of deduction for setting up this reserve shall not exceed
one month�s wages of the laborers on the average payroll of the months in the
year.
Annually, the enterprises
must clearly settle the advance appropriation and the use of thereof for
job-loss allowance for laborers as well as the balance thereof to be carried
forward to subsequent fiscal years.
The unused amounts of
advance appropriation for job-loss allowance for laborers must be recorded as
expense decrease.
b) Accounting of the advance
appropriation of expenses for job loss allowance
- When making advance
appropriation of expenses for job loss allowance for laborers, which are
calculated into business expenses in the period, recording:
Debit Account 642 -
Enterprise management expenses
Credit Account 335 - Payable
expenses (detailed advance appropriation for job-loss allowances for laborers).
- The unused advance
appropriation amounts for job-loss allowance for laborers must be re-entered as
decrease of enterprise management expenses, recording:
Debit Account 335 - Payable
expenses (detailed advance appropriation for job-loss allowances for laborers)
Credit Account 642 -
Enterprise management expenses
15. Regarding the gradual
distribution and advance appropriation of expenses for fixed-asset overhauls
a) Expenses for overhaul of
fixed assets, advance deduction or gradual distribution of expenses for overhaul
of fixed assets
The expenses for overhaul of
fixed assets are considered expenditures and accounted directly or distributed
gradually into business expenses in the period.
For some particular sectors
where the expenses for overhaul of fixed assets arise irregularly among the
fiscal years, if enterprises wish to deduct in advance the expenses for overhaul
of fixed assets into the current fiscal year while the overhaul of fixed assets
will arise in the subsequent fiscal years, they must draw up plans on advance
deduction of expenses for overhaul of fixed assets and submit them to the
Finance Ministry for consideration and decision. After getting the written
approval of the Finance Ministry, the enterprises must notify their direct
managing tax offices thereof. The enterprises must settle the actual overhaul
expenses against the prior-deducted overhaul expenses; if the actual overhaul
expenses are larger or smaller than the prior-deducted expenses, they may
additionally calculate them into the business expenses in the period or
gradually distribute them (if the actual expenses are larger than the
prior-deducted expenses), or return the amounts deducted in excess (if the
prior-deducted amounts are larger than the actual expense amounts).
If enterprises of particular
sectors apply the method of gradual distribution of fixed-asset overhaul
expenses into subsequent business periods, they must also draw up plans for
gradual distribution of fixed asset overhaul expenses and notify the direct
managing tax offices thereof.
b) Accounting of fixed-asset
overhaul expenses, prior-deduction or gradual distribution of fixed-asset
overhaul expenses:
- When the fixed-asset
overhaul expenses actually arise in the accounting period, recording:
Debit Accounts 627, 641,
642,�
Debit Account 133 - Deducted
VAT (1331)
Credit Accounts 111, 112,
152, 153, 334, 338, 331,�
- Where the fixed-asset
overhaul expenses are large and related to many accounting periods, the
enterprises shall make the gradual distribution of these expenses:
?? When the fixed-asset
overhaul expenses actually arise in the accounting period, recording:
Debit Account 242 -
Long-term prepaid advance (distributed gradually into the subsequent fiscal
years)
Debit Account 133 - Deducted
VAT (1331)
Credit Accounts 111, 112,
152, 153, 334, 338, 331,�
?? When gradually
distributing fixed asset overhaul expenses into subsequent business periods,
recording:
Debit Accounts 627, 641,
642,�
Credit Account 242 -
Long-term prepaid expenses (distributed gradually into subsequent fiscal years)
- Where fixed-asset overhaul
expenses arise irregularly among the fiscal years, if the enterprises wish to
deduct them in advance into the current fiscal year and the overhaul of fixed
assets shall arise in the subsequent fiscal years, they must draw up plans for
advance deduction of fixed- asset overhaul expenses and settle the amounts
deducted in advance against the actual expense amounts:
?? When deducting in advance
the fixed-asset overhaul expenses into the expenses of the accounting period,
recording:
Debit Accounts 627, 641,
642,�
Credit Account 335 - Payable
expenses
?? When fixed-asset overhaul
expenses actually arise in subsequent business periods, recording:
Debit Account 241 -
Unfinished capital construction
Debit Account 133 - Deducted
VAT (1331)
Credit Accounts 111, 112,
152, 153, 334, 338, 331,�
?? Upon the completion of
overhauls, the actual overhaul expenses shall be carried over into Account 335-
Payable expenses, recording:
Debit Account 335 - Payable
expenses
Credit Account 241 -
Unfinished capital construction
?? Where the actual
fixed-asset overhaul expenses are larger than the prior-deducted amounts, the
actual expense surplus shall also be entered:
Debit Accounts 627, 641, 642
(actual expense surplus over the prior-deducted amount)
Debit Account 335 - Payable
expenses (equal to the prior-deducted amounts)
Credit Account 241 -
Unfinished capital construction (settling the actually arising fixed-asset
overhaul expenses).
?? Where the actual
fixed-asset overhaul expenses are smaller than the prior-deducted amounts, the
differences between the prior-deducted amounts and the actual expense amounts
must be reimbursed:
Carrying over the actual
overhaul expenses, recording:
Debit Account 335 - Payable
expenses
Credit Account 241 -
Unfinished capital construction (settling the actual fixed-asset overhaul
expenses).
Reimbursing the
over-deducted amounts for fixed-asset overhaul:
Debit Account 335 - Payable
expenses (excessive prior-deducted amounts)
Credit relevant Accounts.
IV.
FINANCIAL REPORT
A number of supplements to
the methods of making financial reports
1.
The
accounting balance sheet (Form B01- DN):
1.1. Section A - Current
assets and short-term investment: Canceling prepaid expense index (Code 152);
adding indexes to Part IV. Inventories (Code 140); tax-suspension warehouse
(Code 149).
1.2. Section B - Fixed
assets and long-term investment: Supplementing indexes to Part V- Long-term
prepaid expenses (Code 241): Reflecting expenses distributed in a fiscal year at
the time of reporting. Figures for recording into this index is the Debit
balance of Account 242- Long-term prepaid expenses on Ledger. Section B- Fixed
assets and long-term investment (Code 200) shall be calculated = Code 210 + Code
220 + Code 230 + Code 240 + Code 241.
2.
Business
result report (Form B02- DN): Supplementing and amending a number of headings of
Part I- Profits, losses of the business result report.
2.1. Index Before-enterprise
income tax general profits (Code 40): Reflecting the pre-enterprise income tax
business results according to the provisions of the enterprise accounting
regime.
2.2. The Index Payable
enterprise income tax (Code 41): Reflecting the enterprise income tax amount
payable in the reporting period, which is determined on the basis of total
pre-tax profits (Code 41) plus (+) non-subtracted expenses to calculate the
taxable income; minus (-) income amounts not liable to enterprise income tax (if
any), including the loss amount carried from the preceding year (according to
the provisions of the Enterprise Income Tax Law) multiplied by (x) the
enterprise income tax rate prescribed in the investment licenses.
2.3. Index After-tax profits
(29-30) (Code 42): means the enterprises� after-tax profits of the current year.
This index is determined on the basis of adjusting the contents determined in
Items 1.1 and 1.2 above.
2.4. Where the enterprises
have their business losses of the preceding year carried forward, following Code
42, the enterprises may supplement the Index Accumulated losses carried forward
to following year (Code 43): Reflecting the current year�s losses carried
forward into the subsequent year, including losses carried forward into the
subsequent year according to the provisions of the Enterprise Income Tax Law.
3.
Amending
and supplementing a number of detailed indexes in the financial report
explanation.
Adding the explanations on
the land use right value and assets associated to land.
Part II
PROVISIONS
ON PERFORMING THE WORK OF ACCOUNTING, AUDIT FOR VIETNAM-BASED RESIDENT
ESTABLISHMENTS OF FOREIGN COMPANIES AND FOREIGN CONTRACTORS
1.
Principle for application of the accounting regime
The Vietnam-based resident
establishments of foreign companies such as trade branches; foreign
organizations and individuals conducting business activities in Vietnam not in
the investment forms prescribed by the Law on Foreign Investment in Vietnam
(called foreign contractors for short) shall have to:
- Strictly observe the
provisions of the Ordinance on Accountancy and Statistics of May 20, 1988 and
Circular No. 60/TC-CDKT of September 1, 1997, Circular No. 155/1998/TT-BTC of
December 8, 1998 of the Finance Ministry guiding the performance of the
accounting work for foreign-invested enterprises and organizations in Vietnam.
- Perform the accounting
work to reflect honestly and fully the real fluctuation and existing numbers of
assets and capital sources currently under their ownership, use or management
according to commitments in conformity with law provisions; reflect turnover,
income, business expenses and results, reflect the situation of performance of
obligations to pay taxes and remittances to the State budget.
2.
Applicable accounting regime
- The Vietnam-based resident
establishments of foreign companies must abide by the provisions in Circular No.
60/TC-CDKT of September 1, 1997, Circular No. 155/1998/TT-BTC of December 8,
1998 of the Finance Ministry, guiding the implementation of the accounting work
for foreign-invested enterprises and organizations as well as the provisions of
this Circular.
- Foreign organizations and
individuals conducting business activities in Vietnam not in the investment
forms prescribed in the Law on Foreign Investment in Vietnam (called foreign
contractors for short) may implement the accounting work according to the system
of Vietnamese enterprises� accounting regulations or other commonly-used
accounting regime.
- The petroleum contractors
shall implement the accounting regimes submitted by themselves and approved by
the Finance Ministry.
3.
Registration of applicable accounting regimes
3.1. For Vietnam-based
resident establishments of foreign companies: They must comply with the
provisions on registration of applicable accounting regimes at Point B, Part
III, Circular No. 60/TC-CDKT of September 1, 1997 of the Finance Ministry.
3.2. For foreign
contractors:
a) Foreign contractors
paying VAT by deduction method as prescribed in the VAT Law and paying
enterprise income tax as provided for in the Enterprise Income Tax Law must
implement the accounting work according to the Vietnamese enterprises�
accounting regime and register the applicable accounting regimes with the
Finance Ministry and get the Finance Ministry�s approval before the
implementation thereof (according to provisions at Point B, Part III, Circular
No.60/TC-CDKT of September 1, 1997 of the Finance Ministry).
b) Foreign contractors
paying VAT by deduction method as prescribed in the VAT Law and paying
enterprise income tax by method of tax setting shall have to implement the
accounting regime according to the Vietnamese enterprises� accounting regime and
register the applicable accounting regimes with the Finance Ministry and get the
Finance Ministry�s approval before the implementation thereof (according to
provisions at Point B, Part III, Circular No.60/TC-CDKT of September 1, 1997 of
the Finance Ministry). In this case, the foreign contractors may open a complete
accounting book system or a simple accounting book system including the general
and detailed accounting books to monitor debts payable to sellers, the existing
volume and fluctuation of raw materials and materials, purchased goods and
services and the deducted VAT; turnover of the sale of products, goods, services
and the payable output VAT and VAT; receivable debts of customers to serve as
bases for formulation of annual report and the settlement of payable VAT
according to the provisions of the Law on VAT.
The foreign contractors
mentioned above (Point b) shall, within 10 working days as from the time of
signing contracts with Vietnamese parties or contractors, have to register the
Vietnamese accounting regimes with the Finance Ministry. Within 5 working days
as from the date of receiving the valid dossiers, the Finance Ministry shall
give its official opinions in writing on the registration of the accounting
regimes of the contractors.
c) Foreign organizations and
individuals paying VAT by method of direct calculation on added value and paying
the enterprise income tax by method of tax setting may apply other commonly used
accounting regime without having to register the applicable accounting regimes
with the Finance Ministry.
Part III
ORGANIZATION OF IMPLEMENTATION
This Circular takes
implementation effect as from the fiscal year of 2002.
If problems arise in the
course of implementation, they should be reported to the Finance Ministry for
settlement.
For the Finance Minister
Vice Minister
TRAN VAN TA
