Circular No. 106/2008/TT-BTC guiding accounting when converting state-owned enterprises with 100% state capital into joint-stock companies

CIRCULAR

Guidelines for accounting when transferring state-owned enterprises to joint-stock companies

100% state capital to joint-stock companies

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||| Based on Accounting Law No. 03/2003/QH11 dated June 17, 2003;

||| Based on Decree No. 109/2007/NĐ-CP dated June 26, 2007 of the Government regarding the transfer of state-owned enterprises with 100% state capital to joint-stock companies;

||| Based on Circular No. 146/2007/TT-BTC dated December 6, 2007 of the Ministry of Finance guiding the implementation of certain financial issues when transferring state-owned enterprises with 100% state capital to joint-stock companies as stipulated in Decree No. 109/2007/NĐ-CP dated June 26, 2007 of the Government;

||| Based on Decision No. 09/2008/QĐ-BTC dated January 31, 2008 of the Minister of Finance promulgating the Management and Usage Regulations of the Enterprise Restructuring Support Fund at State-Owned Groups, State-Owned Corporations, and Parent Companies;.

||| The Ministry of Finance guides accounting when transferring state-owned enterprises with 100% state capital to joint-stock companies as follows:

Part A

GENERAL PROVISIONS

1. ||| This Circular applies only to entities implementing privatization as provided for in Article 2 of Decree No. 109/2007/NĐ-CP.

2. ||| This Circular only guides accounting when transferring state-owned enterprises with 100% state capital to joint-stock companies; accounting matters not covered in this Circular shall be implemented according to current accounting regulations.

3. ||| Upon receiving the decision on privatization from the competent authority, the enterprise is responsible for organizing an inventory, classifying assets under its management and use at the valuation date, handling financial issues up to the valuation date, and preparing the Financial Statement at the valuation date.

4. ||| Based on the value of the privatized enterprise decided by the competent authority, the enterprise is responsible for adjusting the accounting records; preserving and handing over debts and assets excluded from the enterprise's valuation according to Clause 2, Article 14 and Clause 2, Article 15 of Decree No. 109/2007/NĐ-CP; preparing the enterprise's financial statements during the period from the valuation date to the official date of becoming a joint-stock company. In cases where the valuation date is the previous year and the official transition date is the following year, the enterprise may prepare a single financial statement for the entire period without needing to separate two reports at December 31 and the official transition date.

5. ||| Based on the decision to adjust the enterprise's value at the time of registration to become a joint-stock company and the directive of the privatization steering committee, the enterprise adjusts the accounting books, prepares handover files, and organizes the handover between the enterprise and the joint-stock company.

6. ||| When receiving assets and capital handed over from the privatized enterprise, the joint-stock company must open new accounting books to reflect the value of received assets and capital.

Part B

SPECIFIC PROVISIONS

I. ||| GUIDELINES FOR ACCOUNTING AT STATE-OWNED ENTERPRISES WITH 100% STATE CAPITAL PRIOR TO TRANSITION TO JOINT-STOCK COMPANIES

1. ||| Accounting for the results of asset inventory:

Upon receiving notification or decision on privatization from the competent authority, the privatized enterprise is responsible for conducting an inventory and classifying assets under its management and use at the valuation date.

a). ||| In case of shortage:

Based on the report on the results of the asset inventory at the valuation date, the accountant reflects the value of discovered shortages through the accounting entry:

- ||| In case of cash, materials, goods shortage, record:

Debit Account 1381 - Shortage Assets Awaiting Disposal

Credit Accounts 111, 152, 155, 156...

- ||| In case of fixed asset shortage, record:

Debit Account 1381 - Shortage Assets Awaiting Disposal (Remaining Value)

Debit Account 214 - Depreciation of Fixed Assets (Accumulated Depreciation)

Credit Account 211 - Tangible Fixed Assets (Original Cost).

b). ||| In case of surplus:

- ||| In case of surplus cash: Based on the report on the results of the cash inventory at the valuation date, the accountant reflects the value of discovered surplus cash through the accounting entry:

Debit Accounts 111, 112...

Credit Account 3381 - Surplus Assets Awaiting Resolution.

- ||| In case of surplus assets: The accountant debits Account 002 - Materials, Goods Held for Others, Processing (Details of surplus assets discovered through inventory awaiting disposal). The accountant credits Account 002 and records in related accounts in the Balance Sheet after investigating the cause and obtaining the authorized decision.

2. ||| Accounting for surplus and shortage assets discovered in the inventory:

The enterprise must analyze the causes of surplus and shortage assets, determine the responsibility of organizations and individuals, and handle compensation for material losses according to current regulations. The value of shortage assets, after deducting compensation payments, is recorded as cost of goods sold for materials and goods shortage and recorded as other expenses for the remaining value of fixed asset shortage.

- ||| For shortage assets discovered through inventory, based on the "Minutes on Handling Surplus and Shortage Assets Through Inventory", record:

Debit Account 111 - Cash (individuals, organizations pay compensation)

Debit Account 1388 - Other Receivables (individuals, organizations must pay compensation)

Debit Account 334 - Payroll Liabilities (If deducting wages from employees who made mistakes)

Debit Account 632 - Cost of Goods Sold (remaining loss, damage of materials, goods to be included in enterprise losses)

Debit Account 811 - Other Expenses (remaining value of fixed asset shortage discovered through inventory to be included in enterprise losses)

Credit Account 1381 - Shortage Assets Awaiting Disposal.

- ||| For surplus assets discovered through inventory, based on the "Minutes on Handling Surplus and Shortage Assets Through Inventory", record:

Debit Account 3381 - Surplus Assets Awaiting Resolution

Credit Account 331 - Payable to Sellers (If surplus assets belong to sellers)

Credit Account 338 - Other Payables (3388) (Surplus assets belonging to other parties)

Credit Account 411 - Operating Capital (For surplus assets whose cause cannot be determined and whose owner cannot be found).

If the surplus asset is not cash, simultaneously credit Account 002.

3. ||| Accounting for the sale and liquidation of unused assets, stagnant assets, and pending liquidation assets

For idle assets, accumulated assets, and assets awaiting liquidation that have been approved in writing by the authority deciding on shareholding reform, the enterprise shall organize their sale or liquidation in accordance with current regulations. The accountant must monitor and record revenues, expenses, and reductions in assets, specifically as follows:

- Reflecting revenue from selling or liquidating idle fixed assets and fixed assets awaiting liquidation, record:

Debit Accounts 111, 112, 131

Credit Account 3331 - VAT payable (if applicable)

Credit Account 711 - Other income.

- Reflecting revenue from selling accumulated inventory that is idle or unnecessary, record:

Debit Accounts 111, 112, 131

Credit Account 3331 - VAT payable

Credit Account 511 - Revenue from sales and services provided.

- Reflecting expenses for selling or liquidating idle fixed assets and fixed assets awaiting liquidation, record:

Debit Account 811 - Other expenses

Debit Account 133 - VAT deductible (if applicable)

Credit Accounts 111, 112, 331.

- Reflecting reduction in sold or liquidated fixed assets, record:

Debit Account 811 - Other expenses (remaining value)

Debit Account 214 - Depreciation of fixed assets

Credit Account 211 - Tangible fixed assets.

- Reflecting cost of goods sold for accumulated inventory that is idle or unnecessary being sold or liquidated, record:

Debit Account 632 - Cost of goods sold

Credit Accounts 152, 153, 154, 155, 156.

4. Accounting for transferring idle materials, assets, accumulated assets, and assets awaiting liquidation not yet processed to state corporations, state-owned enterprises, parent companies, or other independent state-owned enterprises:

- In case the enterprise transfers idle materials, goods, accumulated, and awaiting liquidation not yet processed to state corporations, state-owned enterprises, parent companies, or other independent state-owned enterprises, record:

Debit Account 411 - Operating capital

Credit Accounts 152, 153, 155.

- In case the enterprise transfers idle fixed assets and fixed assets awaiting liquidation to state corporations, state-owned enterprises, parent companies, or other independent state-owned enterprises, record:

Debit Account 411 - Operating capital

Debit Account 214 - Depreciation of fixed assets

Credit Account 211 - Tangible fixed assets.

5. Accounting for transferring welfare facilities as assets:

- In case housing for employees invested using the company's welfare fund is transferred to local land management agencies for management, accounting records as follows:

Debit Account 4313 - Welfare Fund formed Fixed Assets (Remaining value)

Debit Account 214 - Depreciation of fixed assets (Depreciation value)

Credit Account 211 - Tangible fixed assets (Original value).

- For welfare facilities invested using state funds, if the enterprise continues to use them for business purposes after shareholding reform, accounting records as follows:

Debit Account 466 - Source of funds forming fixed assets

Credit Account 411 - Operating capital.

6. Accounting for handling difficult-to-collect receivables before determining the enterprise's value to convert into a joint-stock company:

a) For receivables that have sufficient evidence proving they cannot be recovered according to regulations, based on relevant documents such as decisions to write off debts, decisions to hold organizations and individuals responsible for compensation, record:

Debit Accounts 111, 112, 331, 334 (Portion for organizations and individuals responsible for compensation)

Debit Account 139 - Provision for difficult-to-collect receivables (Portion already established provision)

Debit Account 642 - Administrative expenses (Portion included in expenses)

Credit Accounts 131, 138,...

b) For overdue receivables sold to the Company for Purchasing Debts and Accumulated Assets of Enterprises at agreed prices, depending on actual circumstances, accounting records as follows:

- In case the overdue receivable has not established a provision for difficult-to-collect receivables, record:

Debit Accounts 111, 112 (At the agreed sale price)

Debit Account 642 - Administrative expenses (Remaining loss from selling debt)

Credit Accounts 131, 138,...

- In case the overdue receivable has established a provision for difficult-to-collect receivables but the amount of provision is insufficient to cover the loss from selling the debt, the remaining loss is recorded as administrative expenses, record:

Debit Accounts 111, 112 (At the agreed sale price)

Debit Account 139 - Provision for difficult-to-collect receivables (Amount already established provision for these overdue receivables)

Debit Account 642 - Administrative expenses (Remaining loss from selling debt)

Credit Accounts 131, 138,...

- In case the overdue receivable has established a provision and the amount of provision is higher or equal to the loss from selling the debt, record:

Debit Accounts 111, 112 (At the agreed sale price)

Debit Account 139 - Provision for difficult-to-collect receivables (Difference between book value of the receivable and sale price)

Credit Accounts 131, 138,...

7. Accounting for handling payables before converting into a joint-stock company:

Before converting into a joint-stock company, the enterprise undergoing shareholding reform must handle payables, depending on each payable and the decision to handle it, accounting records as follows:

- For payables that do not need to be paid but are recorded as an increase in state capital, record:

Debit Accounts 331, 338,...

Credit Account 411 - Operating capital (4111).

- For overdue loans from State Commercial Banks and Vietnam Development Bank that the enterprise cannot repay due to losses and lack of state capital, the enterprise must complete procedures and documents to request debt write-off, deferred payment, or interest write-off according to current laws. When there is a decision to write off interest, record:

Debit Account 335 - Expenses payable (Interest written off)

Credit Account 421 - Undistributed profit after tax (Portion of interest previously recorded as expense now written off)

Credit Account 635 - Financial expenses (Portion of interest recorded as financial expense in this period).

- For social insurance debts and employee debts, the enterprise must settle these debts completely before shareholding reform to ensure workers' rights. When paying money for social insurance debts and employee debts, record:

Debit Account 338 - Other payables

Debit Account 334 - Payable to employees

Credit Accounts 111, 112.

8. Accounting for provisions before the enterprise converts into a joint-stock company:

- Provisions for difficult-to-collect receivables, inventory write-down provisions, short-term and long-term investment write-down provisions, after offsetting losses, if any remain, will be recorded as an increase in state capital, record:

Debit Account 129 - Short-term investment write-down provision

Debit Account 139 - Provision for difficult-to-collect receivables

Debit Account 159 - Inventory write-down provision

Debit Account 229 - Long-term investment write-down provision

Credit Account 411 - Operating capital.

- Provisions for severance benefits and post-employment obligations, after offsetting losses, if any remain at the time of formal conversion into a joint-stock company, will be recorded as an increase in state capital at the time of transfer, record:

Debit Account 351 - Provision for severance benefits

Debit Account 352 - Provision for Liabilities

Credit Account 411 - Operating capital.

9. Accounting for exchange rate differences balance.

Exchange rate differences arising from foreign exchange transactions occurring during the pre-operation phase of basic construction investment activities, where the investment project has not yet been completed, shall be recorded as an increase in state capital, with the following entries:

Debit Account 413 - Foreign Exchange Differences (4132)

Credit Account 411 - Operating capital.

10. Accounting for long-term investment capital in other enterprises

a) In cases where a joint-stock enterprise inherits long-term investments in other enterprises, the unit must re-evaluate the value of the long-term investment at the time of transfer according to Article 32 of Decree 109/2007/NĐ-CP and guiding Circulars.

b) In cases where a joint-stock enterprise does not inherit long-term investments in other enterprises and transfers them to another state-owned enterprise as a partner, based on the handover record, credit:

Debit Account 411 - Operating capital

Accounts 222, 223, 228...

c) In cases where the enterprise and the joint venture partner agree to terminate the joint venture contract, the contributing parties have the responsibility to establish a liquidation committee to carry out the liquidation and implement the asset distribution plan according to the articles of association and the joint venture contract.

When the joint venture ceases operations, the Vietnamese partner enterprise bases its handling on the value of assets received from the division of joint venture assets as follows:

+ If the value of assets received (divided) is less than the contributed capital, debit:

Accounts 111, 112, 152, 155, 156, 211, 213... (Value of divided assets)

Debit Account 635 - Financial Expenses (Difference between contributed capital and value of divided assets)

Credit Account 222 - Contributed Capital (Amount of contributed capital)

+ If the value of assets received (divided) is greater than the contributed capital, debit:

Accounts 111, 112, 152, 155, 156, 211, 213... (Value of divided assets)

Credit Account 222 - Contributed Capital (Amount of contributed capital)

Credit Account 515 - Financial Revenue (Difference between value of divided assets and contributed capital)

11. Accounting for surplus of incentive fund and welfare fund before determining enterprise value

- When transferring the surplus of the incentive and welfare funds to employees listed in the regular roster of the enterprise at the time of joint-stock conversion, debit:

Account 431 - Incentive and Welfare Fund

Credit Account 334 - Payable to Employees.

When disbursing money from the "Incentive and Welfare Fund" to employees, record as follows:

Debit Account 334 - Payable to employees

Credit Accounts 111, 112.

- In cases where the enterprise has overdrawn from the "Incentive and Welfare Fund" (Account 431 has a debit balance), handle as follows:

+ For amounts directly paid to employees listed in the regular roster at the time of the decision to convert to joint-stock, which must be recovered before selling preferential shares, debit:

Account 138 - Other Receivables

Credit Account 431 - Incentive and Welfare Fund.

+ For amounts that were incorrectly accounted for, gifts, payments to employees who lost their jobs or resigned before the joint-stock conversion decision and treated by the valuation authority as uncollectible receivables, debit:

Accounts 111, 112, 334 (Portion to be compensated by organizations or individuals)

In cases where the amount of unemployment allowance payments in the year is large, resulting in losses for the enterprise, the enterprise may allocate such expenses over the next three years as long-term prepaid expenses, after payment, record:

Credit Account 431 - Incentive and Welfare Fund.

12. Accounting for the reassessment of the value of tangible fixed assets when determining enterprise value

Based on the documentation for reassessing enterprise value, the enterprise adjusts the value of tangible fixed assets according to the following principle: Any increase in residual value of fixed assets is recorded on the credit side of Account 412 - Revaluation Difference; Any decrease in residual value of fixed assets is recorded on the debit side of Account 412 - Revaluation Difference and must detail this difference for each fixed asset. Specifically, for each case, record as follows:

- In cases where the reassessed value of fixed assets is higher than the book value and accumulated depreciation, the accounting entry is:

Debit Account 211 - Original Cost of Fixed Assets (Reassessed Increase)

Credit Account 214 - Depreciation of Fixed Assets (Reassessed Increase)

Credit Account 412 - Revaluation Difference (Increase in Value of Fixed Assets).

- In cases where the reassessed value of fixed assets is lower than the book value and accumulated depreciation, the accounting entry is:

Debit Account 214 - Depreciation of Fixed Assets (Reassessed Decrease)

Debit Account 412 - Revaluation Difference (Decrease in Value of Fixed Assets)

Credit Account 211 - Original Cost of Fixed Assets (Reassessed Decrease).

The enterprise will depreciate fixed assets based on the new original cost after adjusting for the reassessment value.

13. Accounting for the difference between actual value and book value of state capital:

The difference between the actual value and the book value of state capital is recorded as a business advantage, recorded as follows:

Debit Account 242 - Prepaid Long-Term Expenses

Credit Account 411 - Operating capital.

14. Accounting for prepaid land rental differences

In cases where the entity has paid land rent in advance for the entire lease period or has prepaid land rent for several years before July 1, 2004 (the date the Land Law came into effect) and there is an increase due to the reassessment of the land rental price at the time of valuation for the remaining period of the land lease contract or the remaining prepaid land rent period, the accounting entry is as follows:

- In cases where prepaid land rent meets the criteria for recording as intangible fixed assets, the increase is recorded as:

Debit Account 213 - Intangible Fixed Assets

Credit Account 411 - Operating capital.

- In cases where prepaid land rent does not meet the criteria for recording as intangible fixed assets, the increase is recorded as:

Debit Account 242 - Prepaid Long-Term Expenses

Credit Account 411 - Operating capital.

15. Accounting for joint-stock conversion costs

- When joint-stock conversion-related expenses arise, record:

Debit Account 1385 - Receivable for Joint-Stock Conversion (Details of joint-stock conversion costs)

Credit Accounts 111, 112, 152, 331...

- Upon completion of the joint-stock conversion process, the enterprise must report and settle the joint-stock conversion costs with the joint-stock conversion decision-making body. The total joint-stock conversion costs are deducted from the proceeds from the sale of state-owned shares, and the approved joint-stock conversion costs are transferred, recorded as:

Debit Account 3385 - Payable for Joint-Stock Conversion (Details of proceeds from the sale of state-owned shares)

Credit Account 1385 - Receivable for Joint-Stock Conversion (Details of joint-stock conversion costs).

16. Accounting for interest expense payable to investors purchasing shares

In the case where the time from when the investor pays for purchasing shares to the company receiving the Business Registration Certificate exceeds three months, the enterprise shall be entitled to calculate interest payable to investors, and accounting shall reflect according to the following specific cases:

- If the funds received from selling shares for additional capital belong to the account of the unit and the unit uses them, record:

Debit Account 635 - Financial Expenses

Credit Account 335 - Payable Expenses.

When paying money to investors, record:

Debit Account 335 - Payable Expenses

Credit Accounts 111, 112.

- If the funds received from selling shares belong to state capital and the unit does not use these funds, this interest payable must be deducted from the amount to be remitted for share issuance without being recorded as financial expenses, accounting records:

Debit Account 3385 - To be returned for share issuance

Credit Account 335 - Payable Expenses.

When paying money to investors, record:

Debit Account 335 - Payable Expenses

Credit Accounts 111, 112.

17. Accounting for the difference between the actual value of state capital at the time the SOE transfers to a joint-stock company compared to the actual value of state capital at the time of determining the enterprise's value

a) If the actual value of state capital at the time the enterprise transfers to a joint-stock company is greater than the actual value of state capital at the time of determining the enterprise's value, the increased difference (profit) must be paid into the Enterprise Restructuring Support Fund of the Group, Corporation, parent company, or the Enterprise Restructuring Support Fund of the State Capital Investment Corporation, record:

Debit Account 421 - Undistributed Profit

Credit Account 3385 - To be returned for share issuance.

When paying money into the Enterprise Restructuring Support Fund of the Group, Corporation, parent company, or the Enterprise Restructuring Support Fund of the State Capital Investment Corporation, record:

Debit Account 3385 - To be returned for share issuance

Credit Accounts 111, 112.

b) If the actual value of state capital at the time the enterprise transfers to a joint-stock company is less than the actual value of state capital at the time of determining the enterprise's value, the decreased difference (loss) shall be reflected as follows:

- If a collective or individual must compensate, record:

Debit Account 138 - Other Receivables (1388)

Credit Account 421 - Undistributed Profit.

When receiving compensation money from collectives or individuals, record:

Debit Accounts 111, 112

Credit Account 138 - Other Receivables (1388).

- If the decrease is due to objective reasons, or subjective reasons but due to force majeure, and the person responsible for compensation is unable to fulfill the compensation and has been approved by the competent authority to use the proceeds from the sale of shares to offset losses after deducting the portion covered by insurance compensation (if any), record:

Debit Account 3385 - To be returned for share issuance

Credit Account 421 - Undistributed Profit.

18. Accounting for transferring sources of capital and funds belonging to the owner's equity to state capital at the enterprise at the official transfer time to a joint-stock company

At the time the enterprise officially transfers to a joint-stock company, accounting shall transfer the entire balance of Development Fund, Financial Reserve Fund, Other Funds belonging to owner's equity, Undistributed Profit, Basic Construction Investment Capital, Revaluation Differences of Assets, and Exchange Rate Differences to operating capital, record:

Debit Accounts 412, 413, 414, 415, 418, 421, 441

Credit Account 411 - Operating capital.

II. ACCOUNTING FOR FUNDS RECEIVED FROM SHARE ISSUANCE

1. Accounting for funds received from selling shares

- When receiving funds from selling shares belonging to state capital at the enterprise, record:

Debit Accounts 111, 112...

Credit Account 3385 - To be returned for share issuance

- When receiving funds from issuing additional shares to increase operating capital, record:

Debit Accounts 111, 112 (Issue price)

Credit Account 411 - Operating Capital (Account 4111: Par Value and Account 4112: Excess over par value of the issue price).

2. Accounting for policies towards surplus labor at the enterprise

a) Based on the decision of the competent authority regarding the amount of funds to be used from the proceeds of share issuance to support the enterprise in implementing policies towards surplus labor at the time of share issuance, record:

Debit Account 3385 - To be returned for share issuance

Credit Account 334 - Payable to Employees.

When actually paying money to employees, record:

Debit Account 334 - Payable to employees

Credit Accounts 111, 112.

b) If the proceeds from share issuance are insufficient to support the enterprise in implementing policies towards employees, based on the decision approving the additional amount from the Enterprise Restructuring Support Fund of the Group, Corporation, parent company, or the Enterprise Restructuring Support Fund at the State Capital Investment Corporation, record:

Debit Accounts 136, 138

Credit Account 334 - Payable to Employees.

When receiving money, record:

Debit Account 111, 112

Credit Accounts 136, 138.

When disbursing money to implement policies towards surplus labor, record:

Debit Account 334 - Payable to Employees.

Credit Accounts 111, 112.

3. Settlement of share issuance costs

Upon completion of the share issuance process, the enterprise must report and settle share issuance costs with the share issuance decision-making body. Share issuance costs are deducted from the proceeds of share issuance of the enterprise, record:

Debit Account 3385 - To be returned for share issuance

Credit Account 1385 - To be collected for share issuance (details of share issuance costs).

When remitting the proceeds from share issuance (after deducting share issuance costs) to the Enterprise Restructuring Support Fund of the Group, Corporation, parent company, or the Enterprise Restructuring Support Fund at the State Capital Investment Corporation, record:

Debit Account 3385 - To be returned for share issuance

Credit Accounts 111, 112.

III. PREPARATION OF FINANCIAL REPORTS AT THE TIME THE JOINT-STOCK COMPANY RECEIVES THE BUSINESS REGISTRATION CERTIFICATE

1. In the case of independent enterprise share issuance

At the time the joint-stock company receives the Business Registration Certificate, the share issuance enterprise must close its books. Within thirty days from the date of receipt of the Business Registration Certificate, the share issuance enterprise must prepare a financial report for the accounting period from the date of determination of the enterprise's value to the date of receipt of the Business Registration Certificate and submit it to the body deciding the enterprise's value and the financial management body at the same level for coordination and verification of the enterprise's value.

The financial report for the accounting period from the date of determination of the enterprise's value to the date of receipt of the business registration certificate must be prepared according to the provisions of the annual financial report under the current enterprise accounting regulations and the guidelines in this Circular.

2. In the case of share issuance of dependent units of independent state-owned enterprises, Groups, Corporations, parent companies, independent accounting subsidiaries of Corporations

At the time when the joint-stock company is issued the Business Registration Certificate, the dependent accounting unit to be equitized must close its books, prepare financial statements for the accounting period from the date of determining the enterprise value to the date of issuance of the Business Registration Certificate.

Independent State-owned enterprises, Groups, Corporations, Parent Companies or independent accounting units of Corporations that have dependent units to be equitized do not need to prepare financial statements for the Group, Corporation, or Company at the time the joint-stock company is issued the Business Registration Certificate but only need to prepare Annual Financial Statements and Interim Financial Statements in accordance with regulations.

IV. TRANSFER OF ASSETS AND CAPITAL TO THE JOINT-STOCK COMPANY

1. In the case of independent enterprise share issuance

In the case of equitization of an independent enterprise, the accountant shall carry out the transfer procedures in accordance with current regulations on the transfer of assets, liabilities, and capital to the joint-stock company. All accounting vouchers, accounting books, and financial statements of the equitized enterprise that are required to be stored shall be transferred to the joint-stock company for continued storage.

2. In the case of share issuance of dependent units of independent state-owned enterprises, Groups, Corporations, parent companies, independent accounting subsidiaries of Corporations

When transferring assets, liabilities, and capital to the joint-stock company, based on the asset transfer record, detailed annexes regarding the transferred assets to the joint-stock company, and related accounting vouchers and books, the accountant shall reflect the reduction in the value of the transferred assets, recording:

Debit Account 411 - Operating capital

Debit Account 214 - Depreciation of Fixed Assets (Already Depreciated Portion)

Debit Accounts 311, 331, 335, 338, 341...

Credit Accounts 111, 112, 121, 131, 152, 153, 154, 155, 156, 211, 213, 221, 222, 241,...

V. ACCOUNTING AT THE JOINT-STOCK COMPANY CONVERTED FROM STATE ENTERPRISES

1. Open New Accounting Books

Upon receiving assets, liabilities, capital, and accompanying documents, the joint-stock company must open new accounting books (including general and detailed accounting books) to reflect the value of received assets and capital.

2. Accounting for the Transfer of Assets, Liabilities, and Capital at the Joint-Stock Company

Upon receiving the transfer of assets, liabilities, and capital, based on the transfer documents and records, the accountant shall record:

Debit Accounts 111, 112, 121, 131, 133, 138, 141, 152, 153, 154, 155, 156, 157, 211, 221, 241...

Credit Accounts 311, 315, 331, 333, 334, 335, 338, 341, 342...

Credit Account 411 - Operating capital.

3. Accounting for the Case of Holding Assets on Behalf of Others: For unused assets, surplus assets, and assets awaiting liquidation that the joint-stock company holds on behalf of the Group, State Corporation, Parent Company, or Independent State Enterprise, the accountant shall record:

Debit Account 002 - Inventory and Goods Held for Processing or Storage.

VI. ACCOUNTING AT GROUPS, CORPORATIONS, COMPANIES WITH SUBSIDIARIES THAT HAVE BEEN EQUITIZED

1. Accounting at the Parent Company of a Group with Equitized Subsidiaries

When a subsidiary of the Group has been equitized, the parent company shall reduce the investment value and operating capital based on the value of the state capital sold outside, recording:

Debit Account 411 - Operating capital

Credit Account 221 - Investment in Subsidiary.

2. Accounting at the Corporation, Company with Directly Affiliated Units That Have Been Equitized

When directly affiliated units of the Corporation, Company have been equitized, the Corporation, Company shall reduce the operating capital at the directly affiliated units based on the value of the state capital sold outside, recording:

Debit Account 411 - Operating capital

Credit Account 1361 - Operating Capital at Directly Affiliated Units.

3. Accounting for the Enterprise Restructuring Support Fund at Groups, Corporations, Parent Companies

a) Adding Account 417 "Enterprise Restructuring Support Fund"

Account 417 "Enterprise Restructuring Support Fund" is used to account for the establishment and utilization of the "Enterprise Restructuring Support Fund".

Revenue from equitization and sale of enterprises used to address policies for redundant labor at member enterprises, subsidiaries is considered revenue and expenditure of the Enterprise Restructuring Support Fund. The enterprise is responsible for reporting and settling accounts with the management agency of the Enterprise Restructuring Support Fund.

Account 417 "Enterprise Restructuring Support Fund" is only applicable to State-owned Groups, Corporations, and Parent Companies operating under the parent-subsidiary model and managing the Enterprise Restructuring Support Fund.

b) Structure and Content Reflected in Account 417

Debit Side:

- Supporting state-owned forestry and agricultural farms, member enterprises, subsidiaries, and dependent units in addressing policies for redundant labor due to enterprise restructuring and conversion, including:

+ Addressing policies for redundant labor as stipulated;

+ Supporting state-owned enterprises with asset values lower than liabilities when implementing transfers, sales, dissolution, or bankruptcy to cover transition costs and social insurance debts of employees.

- Supporting vocational training expenses for redundant employees who wish to learn trades as stipulated;

- Transferring to the State Capital Investment Corporation according to the Prime Minister's decision;

- Supplementing registered capital for State-owned Groups, Corporations, and Parent Companies according to the Prime Minister's approval;

- Investing in important projects according to the Prime Minister's decision.

Credit Side:

- Revenue from equitization of member enterprises, subsidiaries, and dependent units of Groups, Corporations, and Parent Companies;

- Revenue from selling, dissolving, or bankrupting member enterprises, subsidiaries, and dependent units of State-owned Groups, Corporations, and Parent Companies according to government regulations;

- Support funds from the Enterprise Restructuring Support Fund at the State Capital Investment Corporation according to the decision of the competent authority;

- Other increases (if any).

Debit balance:

Reflecting the balance of the "Enterprise Restructuring Support Fund" at the end of the period.

c) Method of Accounting for Related Transactions on Account 417

- At the Parent Company, Group, and State Corporation, reflecting revenue from equitization:

Debit Account 1385 - Receivable from Equitization

Credit Account 417 - Enterprise Restructuring Support Fund.

- Based on the settlement report of expenditures implemented for employees at equitized enterprises and equitization costs prepared by the equitized enterprise, the accountant at the Parent Company, Group, and State Corporation shall reflect the revenue from the difference between income and expenditure from equitization of enterprises and reflect the amount paid to employees and equitization costs, recording:

Debit Accounts 111, 112

Debit Account 417 - Enterprise Restructuring Support Fund.

Credit Account 1385 - Receivable from Equitization.

When disbursing funds from the "Enterprise Restructuring Support Fund" to support surplus labor, based on the decision allocating funds from the Enterprise Restructuring Support Fund to the unit, the accountant records:

Debit Account 417 - Enterprise Restructuring Support Fund

Credit Accounts 111, 112.

When disbursing funds from the "Enterprise Restructuring Support Fund" to support state-owned enterprises with asset values lower than liabilities when implementing transfer, sale, dissolution, bankruptcy to cover conversion costs and social insurance debts of employees, upon disbursement, the accountant records:

Debit Account 417 - Enterprise Restructuring Support Fund

Credit Accounts 111, 112.

When there is approval from the Prime Minister regarding the additional registered capital for State Groups, State Corporations, Parent Companies, the accountant records:

Debit Account 417 - Enterprise Restructuring Support Fund

Credit Account 411 - Operating capital.

Part C

IMPLEMENTATION

1. This Circular takes effect 15 days from the date of publication in the Official Gazette and replaces Circular No. 40/2004/TT-BTC dated May 13, 2004 of the Ministry of Finance guiding accounting when converting state-owned enterprises into joint-stock companies. All previous regulations on accounting when converting state-owned enterprises into joint-stock companies that conflict with this Circular are abolished.

2. The Director of the Accounting and Auditing System Department, the Director of the Corporate Financial Management Department, the Directors of Provincial Departments of Finance and Taxation Bureaus under centrally administered cities are responsible for guiding and supervising the implementation of joint-stock conversion by enterprises in accordance with the provisions of the State.

During the implementation process, if there are any difficulties, it is requested that ministries, sectors, localities, and enterprises undergoing joint-stock conversion report to the Ministry of Finance for study and resolution./.