Circular No. 10/TC-CĐKT stipulates amendments and supplements to accounting regulations for the implementation of Decision No. 76-HĐBT dated June 26, 1986 of the Council of Ministers on ensuring financial autonomy in production and business operations of grassroots economic units.

CIRCULAR

Regarding the guarantee of autonomy in production and business operations for grassroots economic units

Following the circulars guiding the financial system for grassroots economic units, this circular stipulates amendments and supplements to accounting to implement Decision No. 76-HĐBT dated June 26, 1986 of the Council of Ministers as follows:

I. ACCOUNTING FOR FIXED ASSETS AND DEPRECIATION OF FIXED ASSETS

In addition to the points already specified in the Joint Circular of the Ministry of Finance and the General Statistics Office No. 43-LB/TT dated November 29, 1986 on accounting for the processing of results from comprehensive inventory and revaluation of fixed assets, enterprises must implement the following points:

In cases where fixed assets have been fully depreciated but are still used in production and business operations, the enterprise must reassess the remaining usable value of the fixed assets to continue depreciation and include it in the cost of products. The basic depreciation amount of these fixed assets shall be transferred to the enterprise's production development incentive fund, recorded as follows:

Debit Account 86 - Depreciation Capital (86.1 - Basic Depreciation Capital).

Credit Account 87 - Enterprise Funds (87.1 - Production Development Incentive Fund).

When transferring money to the bank, record:

Debit Account 55 - Other Bank Deposits (55.5 - Bank Deposits for Enterprise Funds).

Credit Account 51 - Bank Deposits.

Depreciation capital for major repairs shall be used according to the current regulations.

2. In cases where fixed assets have not yet been fully depreciated but are damaged and cannot be used due to subjective reasons, the enterprise must follow the liquidation procedures, reducing the value of fixed assets and fixed capital according to the current regulations. The loss caused by the premature damage of fixed assets, if such assets were invested with credit funds, the enterprise must use the production development incentive fund to repay the bank the outstanding loan amount, recorded as follows:

Debit Account 87 - Enterprise Funds (87.1 - Production Development Incentive Fund).

Credit Account 72 - Repayment of Bank Loans for Basic Construction from Profits and Other Sources.

When repaying the bank, record:

Debit Account 94 - Long-term Bank Loans.

Credit Account 55 - Other Bank Deposits (55.5 - Bank Deposits for Enterprise Funds).

If the fixed assets were invested with budget funds, the enterprise must use its own capital for basic construction investment to pay the remaining undepreciated value to the state budget, recorded as follows:

- Determine the amount to be paid:

Debit Account 87 - Enterprise Funds (87.4 - Own Capital for Basic Construction Investment).

Credit Account 71 - Settlement with the State Budget (71.4 - Other Payments).

- When settling with the state budget:

Debit Account 71 - Settlement with the State Budget (71.4 - Other Payments).

Credit Account 55 - Other Bank Deposits (55.7 - Bank Deposits for Own Capital for Basic Construction Investment).

3. In cases where authorized bodies issue orders to transfer or permit the sale of fixed assets, the enterprise must conduct a revaluation of those fixed assets to determine their original cost and remaining value consistent with the investment and purchase costs and the level of wear and tear at the time of handover. The original cost and remaining value of the revalued fixed assets serve as the basis for the handover and settlement between the transferring and receiving parties.

All transfers and sales of fixed assets by enterprises must be settled in cash and strictly comply with the state regulations on procedures and methods of accounting records.

Revenue from the transfer or sale of fixed assets must be remitted to the state budget (if funded by the state budget), repaid to the bank (if funded by credit), or supplemented to the own capital for basic construction investment (if funded by own capital). The accounting entries are as follows:

a) When revenue from the transfer or sale of fixed assets funded by the state budget or credit is received, record:

Debit Account 51 - Bank Deposits.

Credit Account 30 - Non-core Business Operations.

b) Determine the amount to be remitted to the state budget or repaid to the bank, record:

Debit Account 30 - Non-core Business Operations.

Credit Account 71 - Settlement with the State Budget (71.4 - Other Payments), or:

Credit Account 72 - Repayment of Bank Loans for Basic Construction from Profits and Other Sources.

The amount to be remitted to the state budget is the remaining undepreciated value of the fixed assets. The amount to be repaid to the bank is the outstanding loan amount for the basic construction investment of the transferred or sold fixed assets.

c) When remitting to the state budget, record:

Debit Account 71 - Settlement with the State Budget (71.4 - Other Payments).

Credit Account 51 - Bank Deposits.

d) When repaying the bank, record:

Debit Account 94 - Long-term Bank Loans.

Credit Account 51 - Bank Deposits.

e) Any surplus (revenue exceeding the amount to be remitted) from the transfer or sale of fixed assets shall be added to the production development incentive fund, recorded as follows:

Debit Account 30 - Non-core Business Operations.

Credit Account 87 - Enterprise Funds (87.1 - Production Development Incentive Fund).

When transferring money to the bank, record:

Debit Account 55 - Other Bank Deposits (55.5 - Bank Deposits for Enterprise Funds).

Credit Account 51 - Bank Deposits.

g) Any deficit (amount to be remitted exceeding revenue) from the transfer or sale of fixed assets shall be covered by the production development incentive fund, recorded in reverse entries to those in point e.

h) In cases where enterprises are permitted to retain revenue from the sale of fixed assets funded by the state budget to supplement own capital for basic construction investment, guidance will be provided in Section II of this circular.

For fixed assets invested with own capital, when revenue from the transfer or sale is received, it shall be directly accounted for as own capital for basic construction investment, recorded as follows:

Debit Account 55 - Other Bank Deposits (55.7 - Bank Deposits for Own Capital for Basic Construction Investment).

Credit Account 87 - Enterprise Funds (87.4 - Own Capital for Basic Construction Investment).

4. In cases of liquidating fixed assets, enterprises must strictly follow the state regulations on procedures and methods of accounting records.

All revenues and expenditures arising during the liquidation process of fixed assets shall be accounted for according to the current accounting system.

The excess of revenue over expenditure from the liquidation of fixed assets shall be transferred to the production development incentive fund; accounting entries shall be recorded as follows:

Debit Account 85 - Basic Capital (85.2 - Working Capital).

Credit Account 87 - Enterprise Funds (87.1 - Production Development Incentive Fund).

When transferring funds to the bank account, record:

Debit Account 55 - Other Bank Deposits (55.5 - Bank Deposits for Enterprise Funds).

Credit Account 51 - Bank Deposits.

If the expenditure exceeds revenue due to the liquidation of fixed assets, the production development incentive fund shall be used to cover the deficit, with accounting entries being recorded in reverse of the above entries.

II. ACCOUNTING FOR THE ESTABLISHMENT AND USE OF OWN CAPITAL FOR BASIC CONSTRUCTION INVESTMENT

Based on the provisions of Section II of Circular No. 10-ĐTXD dated July 22, 1986 issued by the Ministry of Finance guiding the establishment, management, and use of own capital for basic construction investment and the use of basic facilities by production and business organizations under state-owned economic sectors, the sources of annual own capital for basic construction investment of enterprises include retained basic depreciation, a certain percentage of enterprise funds (production development incentive fund, welfare fund), and major repair depreciation of fixed assets deemed necessary for technical renovation without periodic major repairs. Additionally, there are other sources such as proceeds from the reallocation of capital from other places, proceeds from the sale of fixed assets allowed to be retained according to state regulations...

The own capital for basic construction investment that is established must be deposited into a special account for own capital for basic construction investment opened at the Investment and Construction Bank where the enterprise maintains its accounts, and it can be used for deepening investments aimed at modernizing equipment, constructing new facilities, renovating and expanding production and business bases, and building housing and other welfare facilities for the enterprise.

Joint enterprises and State Corporations (organizations operating under the Joint Enterprise Regulations) have the right to coordinate the own capital for basic construction investment of enterprises under their management (after mutual agreement with the enterprises).

To monitor and manage the own capital for basic construction investment, accountants use Account 87 "Enterprise Funds" Sub-account 87.4 "Own Capital for Basic Construction Investment" (to be added), with detailed records according to each source of formation, and Account 55 "Other Bank Deposits," Sub-account 55.7 "Bank Deposits for Own Capital for Basic Construction Investment" (to be added) within the unified accounting system. The accounting recording method is as follows:

1. When allocating retained basic depreciation as own capital for basic construction investment, the accountant records:

Debit Account 86 - Depreciation Capital (86.1 - Basic Depreciation Capital).

Credit Account 87 - Enterprise Funds (87.4 - Own Capital for Basic Construction Investment).

When transferring funds to the bank account, record:

Debit Account 55 - Other Bank Deposits (55.7 - Bank Deposits for Own Capital for Basic Construction Investment).

Credit Account 51 - Bank Deposits.

2. When allocating the production development incentive fund or welfare fund as own capital for basic construction investment, the accountant records:

Debit Account 87 - Enterprise Funds (87.1 - Production Development Incentive Fund; 87.3 - Welfare Fund).

Credit Account 87 - Enterprise Funds (87.4 - Own Capital for Basic Construction Investment).

When transferring funds to the bank account, record:

Debit Account 55 - Other Bank Deposits (55.7 - Bank Deposits for Own Capital for Basic Construction Investment).

Credit Account 55 - Other Bank Deposits (55.5 - Bank Deposits for Enterprise Funds).

3. When allocating the supplementary major repair depreciation fund to increase own capital for basic construction investment, the accountant records:

Debit Account 86 - Depreciation Capital (86.2 - Major Repair Depreciation Capital).

Credit Account 87 - Enterprise Funds (87.4 - Own Capital for Basic Construction Investment).

When transferring bank deposits, record:

Debit Account 55 - Other Bank Deposits (55.7 - Bank Deposits for Own Capital for Basic Construction Investment).

Credit Account 55 - Other Bank Deposits (55.1 - Bank Deposits for Major Repairs).

4. When receiving own capital for basic construction investment allocated or transferred by joint enterprises or state corporations, the accountant records:

Debit Account 55 - Other Bank Deposits (55.7 - Bank Deposits for Own Capital for Basic Construction Investment).

Credit Account 87 - Enterprise Funds (87.4 - Own Capital for Basic Construction Investment).

5. When permitted to retain proceeds from the sale of fixed assets from budget investment to supplement own capital for basic construction investment, the accountant records:

Debit Account 30 - Non-core Business Operations.

Credit Account 87 - Enterprise Funds (87.4 - Own Capital for Basic Construction Investment).

When transferring money to the bank, record:

Debit Account 55 - Other Bank Deposits (55.7 - Bank Deposits for Own Capital for Basic Construction Investment).

Credit Account 51 - Bank Deposits.

6. When transferring or reallocating own capital for basic construction investment to another unit according to the coordination plan of joint enterprises or state corporations, the accountant records:

Debit Account 87 - Enterprise Funds (87.4 - Own Capital for Basic Construction Investment).

Credit Account 55 - Other Bank Deposits (55.7 - Bank Deposits for Own Capital for Basic Construction Investment).

7. When using own capital for basic construction investment, the transfer of capital and sources of capital will be carried out according to the state's basic construction management regime.

- When transferring capital, the accountant records:

Debit Account 87 - Enterprise Funds (87.4 - Own Capital for Basic Construction Investment).

Credit Account 95 - Basic Construction Disbursements (95.2 - Other Sources of Capital).

- When transferring bank deposits, record:

Debit Account 54 - Bank Deposits for Basic Construction Investment.

Credit Account 55 - Other Bank Deposits (55.7 - Bank Deposits for Own Capital for Basic Construction Investment).

III. ACCOUNTING FOR WORKING CAPITAL

1. According to Circular No. 46-TT/LB/TC/NHNN dated December 6, 1986 issued jointly by the Ministry of Finance and the State Bank guiding the management of working capital of state-owned enterprises, the working capital of enterprises is provided through two sources:

a) Self-owned and treated as self-owned capital includes:

- Initial capital allocation from the state budget when the enterprise begins production;

- Capital extracted from the production development incentive fund for annual self-supplementation of working capital;

- Fixed debt quotas and other sources of capital (if any).

b) Working capital borrowed from the State Bank:

When starting production and business activities, the enterprise receives a portion of the working capital quota from the state budget. During the production and business process, the enterprise meets additional working capital needs through self-owned and treated as self-owned capital sources or borrowing from the bank based on plans and credit contracts with the bank.

Additionally, when necessary, the superior management authority may allocate or add working capital to the enterprise (with or without repayment). To facilitate production and business operations,

in addition to the initial capital provided by the state budget, the enterprise must mobilize and utilize its self-owned and treated as self-owned working capital sources effectively.

To strictly manage the sources of self-owned and treated as self-owned working capital of enterprises, detailed records on accounting books and reports on working capital (Sub-account 85-2) must clearly reflect the situation of increases, decreases, and current amounts of working capital according to each source of capital:

- Working capital provided by the state budget.

- Working capital supplemented from the production encouragement and development fund.

- Working capital from other sources.

When there is a change in the prices of materials and inventory goods belonging to current assets, the competent authority shall decide on the accounting treatment of the price difference, which may be recorded in the enterprise's working capital or increased in the bank loan balance according to the actual ratio of each type of capital. Enterprises that have not yet processed the price difference of materials and inventory goods still listed under account 15 "revaluation of materials and inventory goods" must proceed with processing according to the provisions of Circular No. 36-LB/TC/NH dated February 17, 1986, issued jointly by the Ministry of Finance and the State Bank, and Circular No. 164-TC/CĐKT dated March 17, 1986, issued by the Ministry of Finance.

2. Methods for accounting working capital:

a) When there is a decision to supplement working capital from the production encouragement and development fund, the accountant records:

Debit Account 87 - Funds of the enterprise (87.1 - Production encouragement and development fund).

Credit Account 85 - Basic capital (85.2 - Working capital - detailed working capital supplemented from the production encouragement and development fund).

When transferring money to the bank, record:

Debit Account 51 - Bank deposits.

Credit Account 55 - Other Bank Deposits (55.5 - Bank Deposits for Enterprise Funds).

b) When receiving working capital transferred or added by a superior agency, the accountant records:

Debit Account 51 - Bank deposits.

Credit Account 85 - Basic capital (85.2 - Working capital - detailed working capital from other sources).

When required to repay this amount to the superior agency, the accountant records it in reverse.

c) Handling the price difference due to changes in material and inventory goods prices:

- Reflecting the price difference due to increases or decreases in material and inventory goods stock, the accountant records:

If prices increase:

Debit Account for materials and inventory goods.

Credit Account 15 - Revaluation of materials and inventory goods.

If prices decrease:

Debit Account 15 - Revaluation of materials and inventory goods.

Credit Account for materials and inventory goods:

- Reflecting the price difference calculated for each part of working capital, the accountant records:

In case of price increase:

Debit Account 15 - Revaluation of materials and inventory goods.

Credit Account 71 - Settlement with the state budget (part paid to the state budget) (71.3 - Price differences).

Credit Account 93 - Short-term bank loans (part increasing the loan balance).

Credit Account 85 - Basic capital (part increasing self-owned working capital) (85.2 - Working capital).

In case of price decrease:

Debit Account 93 - Short-term bank loans (part decreasing the loan balance).

Debit Account 85 - Basic capital (part decreasing self-owned working capital) (85.2 - Working capital).

Credit Account 15 - Revaluation of materials and inventory goods.

d) In cases where the Ministry, General Department, or local authorities adjust working capital provided by the state budget from surplus enterprises to deficit enterprises among subordinate enterprises:

- When transferring working capital out, the accountant records:

Debit Account 85 - Basic capital (85.2 - Working capital details - working capital provided by the state budget).

Credit Account 51 - Bank Deposits.

- When receiving working capital transferred from another place, the accountant records it as in item b above.

IV. ACCOUNTING FOR CERTAIN EXPENSES INCLUDED IN COST OF PRODUCTION UNDER NEW REGULATIONS

Based on Article 12 of the temporary regulations of the Council of Ministers on financial autonomy rights of grassroots economic units (issued together with Decision No. 76-HĐBT dated June 26, 1986, of the Council of Ministers). Expenses previously included in the extra-costs outside the cost of production are now regulated to be accounted for within the cost of production:

- Costs for centralized skill training classes organized by the enterprise.

- Medical expenses for the enterprise's clinic or health station (with support from the enterprise welfare fund).

- Costs for collective dining halls, night shift dining halls, and hazardous work dining halls of the enterprise.

- Military training costs and wages of workers on leave for military training.

These expenses are accounted for in administrative expenses, indirect costs, or circulation fees.

When these expenses occur, the accountant records:

Debit Account 26 - Administrative expenses or

Debit Account 27 - Indirect costs or

Debit Account 44 - Circulation fees

Credit relevant accounts.

Other extra-costs outside the cost of production will be guided in separate circulars.

V. ACCOUNTING FOR FINANCIAL RESULTS AND USE OF ENTERPRISE FUNDS

Based on Articles 14 and 15 of the temporary regulations of the Council of Ministers on financial autonomy rights of grassroots economic units (issued together with Decision No. 76-HĐBTR dated June 26, 1986, of the Council of Ministers), the enterprise's realized profit includes:

- Realized profit within the plan stipulated by the decree, including:

Profit within the plan.

Profit exceeding the plan.

- Profit from secondary production using scrap materials and by-products.

For penalties such as economic contract violations, cash discipline violations, credit, and settlement penalties, they must be deducted from the retained profit of the enterprise.

When paying penalties, the accountant records:

Debit Account 99 - Profit and loss.

Credit Account 51 - Bank Deposits.

To accurately distribute each portion of profit, the accountant must separately reflect each portion of profit and loss in the accounting books and reports.

The accountant submits profits to the state budget and sets up enterprise funds according to the current accounting regulations. Regarding the use of enterprise funds, in addition to the expenditure items already specified in the regulations, additional expenditure items and accounting methods are as follows:

- When setting up the scientific research and technical development fund and the centralized financial reserve fund at the higher management agency from the enterprise's production encouragement fund, the accountant records:

Debit Account 87 - Funds of the enterprise (87.1 - Production encouragement and development fund).

Credit Account 55 - Other bank deposits (55.5 - Bank deposits for enterprise funds).

- When setting up the Minister's Fund (or the General Director's Fund for the association of enterprises or the corporation for units not subject to the three enterprise funds), from the bonus and welfare funds, the accountant records:

Debit Account 87 - Enterprise funds

(87.2 - Bonus fund)

(87.3 - Welfare fund).

Credit Account 55 - Other bank deposits

(55.5 - Bank deposits for enterprise funds).

In cases where the total amount allocated to the bonus and welfare funds of the basic unit exceeds 50% of the annual basic wage bill of the enterprise's employees, the state will collect a progressive adjustment fee. After deducting a certain percentage for the higher level to establish a financial reserve fund, the remaining amount will be replenished into the enterprise funds (into which fund and how much is decided by the enterprise director). The distribution result will be determined when finalizing the settlement.

When preparing and reviewing the final accounts, it is necessary to determine the total amount allocated to enterprise funds, the profit to be paid to the state budget. The portion of the bonus fund and welfare fund that exceeds 50% of the basic salary fund (after deducting 1% for these two funds to establish the Minister's Fund or General Director's Fund) must be allocated to the state budget and the superior management agency to establish a financial reserve fund.

- First, the accountant records the payment entries for the enterprise funds temporarily allocated and additional allocations made:

Debit Account 99 - Profit and Loss. Amount allocated to enterprise funds.

Credit Account 80 - Allocated Capital (80.1; 80.2; 80.3). Temporarily allocated amount.

Credit Account 87 - Enterprise Funds (87.1; 87.2; 87.3). Additional allocation amount.

- Reflect the amount to be paid to the state budget and submitted to the superior agency to establish a financial reserve fund for the excess bonus fund and welfare fund allocation:

Debit Account 99 - Profit and loss.

Credit Account 71 - Settlement with the State Budget (71.4 - Other Payments).

Credit Account 87 - Internal Industry Transactions for Recurring Operations (87.3 - Other Payment Items).

- When paying to the state budget or superior agency:

Debit Account 71 - Transactions with the State Budget (71.4 - Other Payment Items).

Debit Account 78 - Internal Industry Transactions for Recurring Operations (78.3 - Other Payment Items).

Credit Account 51 - Bank Deposits.

- In cases where enterprises must allocate part of the bonus fund and welfare fund to establish the bonus fund and welfare fund of the Enterprise Joint Stock Company or Corporation (not subject to the three-fund allocation review), the accountant records:

Debit Account 87 - Enterprise funds

(87.2 - Bonus fund)

(87.3 - Welfare Fund)

Credit Account 55 - Other Bank Deposits (55.5 - Bank Deposits for Enterprise Funds).

- The accountant establishes and uses the bonus fund and welfare fund of the superior management agency on Account 88 "Industry and Enterprise Joint Stock Company Funds", sub-account 88.2 "Bonus Fund", 88.3 "Welfare Fund".

- The accountant establishes and uses the Minister's Fund (or General Director's Fund) and the superior management agency's financial reserve fund on Account 88 "Industry and Enterprise Joint Stock Company Funds", sub-account 88.6 "Superior Management Agency Financial Reserve Fund" and sub-account 88.8 "Minister's Fund or General Director's Fund" (to be opened).

- Regarding bank deposit accounting for the above funds, it is carried out on Account 55 "Other Bank Deposits", sub-account 55.6 "Bank Deposits for Industry and Enterprise Joint Stock Company Funds" (detailed separately for each type of fund).

Accounting operations related to cost pricing, foreign currency income and expenditure, joint ventures, and economic associations will be addressed in separate guidelines.

This Circular takes effect from July 1, 1986, and applies to all state-owned economic sectors.

During the implementation of this Circular, if any difficulties arise, it is requested that the People's Committees of provinces and centrally-administered cities promptly report to the Ministry of Finance for study and resolution./.

Any difficulties encountered during implementation should be reported to the Ministry of Finance for study and resolution.