Decision No. 1062-TC/QÐ/CSTC promulgates the regime for managing, using, and depreciating fixed assets

Pursuant to …;

ON THE ISSUANCE OF REGULATIONS ON MANAGEMENT, USE AND DEPRECIATION OF FIXED ASSETS

THE MINISTER OF FINANCE

Pursuant to Decree No. 15/CP dated March 2, 1993 of the Government stipulating the tasks, powers, and responsibilities for state management of Ministries and ministerial-level agencies;
Pursuant to Decree No. 178/CP dated October 28, 1994 of the Government stipulating the tasks, powers, and organizational structure of the Ministry of Finance;
Pursuant to Decree No. 59/CP dated October 3, 1996 of the Government on the issuance of financial management regulations and accounting for business operations of state-owned enterprises;
To strengthen the work of managing, using and depreciating fixed assets in enterprises; to create conditions for enterprises to accurately calculate and fully deduct depreciation expenses of fixed assets from business costs; to replace and modernize machinery and equipment in accordance with advanced technology and modern techniques suitable for the business requirements of enterprises and the national economy;
Considering the proposals of the Heads of the Department of Financial Policy, the General Director of the State Capital and Asset Management Agency at Enterprises;

Pursuant to …;:

Article 1: Issued together with this Decision is the "Regulations on Management, Use, and Depreciation of Fixed Assets".

These regulations apply to all state-owned enterprises. Enterprises belonging to other economic sectors shall only be required to apply the provisions related to determining costs for tax purposes; other provisions are encouraged to be applied.

Article 2: This Decision takes effect from January 1, 1997.

All previous documents such as Decision No. 507 TC/ĐTXD dated July 22, 1986 of the Minister of Finance, Circulars No. 33 TC/CN and No. 34 TC/CN dated July 31, 1990, Circular No. 31 TC-TCĐN dated July 18, 1992, Circular No. 36 TC/TCDN dated April 27, 1995 of the Ministry of Finance and other decisions on the management, use and depreciation of fixed assets that conflict with this Decision are hereby abolished.

Article 3: The Heads of the Department of Financial Policy, the General Directors of the State Capital and Asset Management Agency at Enterprises, the General Directors of the Tax General Department, and the Heads of units under and directly subordinate to the Ministry of Finance within their respective functions and authorities shall be responsible for organizing the implementation, guiding the execution, and supervising the enforcement of this Decision.

The Board of Directors, General Managers, and Directors of enterprises are responsible for implementing this Decision.

REGULATIONS

MANAGEMENT, USE, AND DEPRECIATION OF FIXED ASSETS
(Issued together with Decision No. 1062 TC/QĐ/CSTC dated November 14, 1996 of the Minister of Finance)

Article 1: Objectives and Scope of Application:

These regulations apply to state-owned enterprises, including: Holding companies, member enterprises of holding companies, and independent enterprises;

For enterprises belonging to other economic sectors such as joint-stock companies, limited liability companies, private enterprises, foreign-invested enterprises..., these regulations shall only be mandatory for determining costs for tax purposes; other provisions in these regulations are encouraged to be applied.

Enterprises shall manage, use, and depreciate fixed assets down to each individual asset under their management and use.

Article 2: The terms used in these regulations shall be understood as follows:

1. Tangible Fixed Assets: are major means of labor having material form (each unit of asset with independent structure or a system consisting of multiple parts of assets interconnected to perform one or several specific functions) with high value and long-term usage, participating in many business cycles but maintaining their original material form such as buildings, structures, machines, equipment...

2. Intangible Fixed Assets: are fixed assets without material form, representing a quantity of invested value directly related to many business cycles of the enterprise such as: establishment costs; land use costs; costs for patents, inventions, copyrights...

3. Leased Fixed Assets:

Leased fixed assets are those fixed assets leased by enterprises from leasing companies if the lease contract satisfies at least one of the following four conditions (as stipulated in Decree No. 64/CP dated October 9, 1995 of the Government):

a. At the end of the lease period according to the contract, the lessee has the right to transfer ownership of the leased asset or continue leasing it upon mutual agreement of both parties;

b. The content of the lease contract specifies: At the end of the lease period, the lessee has the right to choose to purchase the leased asset at a nominal price lower than the actual value of the leased asset at the time of repurchase;

c. The lease term for a type of asset must be at least 60% of the time required to depreciate the leased asset;

d. The total lease payments for a type of asset specified in the lease contract must be at least equivalent to the market price of the asset at the time of signing the contract.

Any lease contract for fixed assets that does not satisfy any of the above four conditions is considered operational lease fixed assets.

4. Original Cost of Fixed Assets: Is the total actual costs incurred to acquire fixed assets until they are put into normal operation, including the actual purchase price of the fixed assets; transportation, handling, installation, testing costs; interest on loans for fixed assets before delivery and use; taxes and stamp duties (if applicable)...

5. Useful Life of Fixed Assets: Is the period during which the enterprise plans to use fixed assets in business activities under normal conditions, consistent with the economic and technical parameters of the fixed assets and other factors related to the operation of the fixed assets.

6. Depreciation of Fixed Assets: Is the gradual decrease in the value of fixed assets due to participation in business activities, natural wear and tear, technological progress... during the operation of the fixed assets.

7. Depreciation of Fixed Assets: This is the systematic calculation and allocation of the original cost of fixed assets into business expenses over the useful life of the fixed assets.

8. Accumulated Depreciation of Fixed Assets: This is the total amount of depreciation allocated into business expenses through various business periods of the fixed assets up to the date of determination.

9. Remaining Value on Accounting Books of Fixed Assets: Is the remaining value of fixed assets reflected on accounting books, determined by the difference between the original cost of fixed assets and the accumulated depreciation of fixed assets up to the date of determination.

10. Repair of fixed assets: refers to maintenance, upkeep, and repair activities aimed at restoring the normal operational capacity of fixed assets that have been damaged during their operation.

11. Upgrade of fixed assets: refers to activities aimed at extending the useful life, increasing productivity, and enhancing the functionality of fixed assets through renovation, construction, installation, and supplementary equipment.

Article 3: State-owned enterprises must register with the capital and asset management agency at the enterprise directly managing them according to the provisions of Clause 3 and Clause 4, Article 15 of these regulations, and simultaneously notify the directly managing tax authority after receiving confirmation from the capital and asset management agency at the enterprise.

Enterprises belonging to other economic sectors must register with the directly managing tax authority according to the provisions of Clause 3, Clause 4, Article 15 of these regulations.

Article 4: Standards and identification of fixed assets:

1. Standards and Identification of Fixed Assets:

Any means of production that is a tangible asset with an independent structure, or a system consisting of multiple individual parts interconnected to perform one or several specific functions, such that if any part is missing, the entire system cannot operate, and which simultaneously meets both of the following criteria:

1. Has a usage period of one year or more;

2. Has a value of five million dong or more; shall be considered fixed assets.

In cases where a system consists of multiple individual parts interconnected, each component having different usage periods, and even if one part is missing, the system can still perform its main operational function, but due to management requirements for fixed assets, it is necessary to manage each part separately, then each part shall be considered an independent tangible fixed asset (for example, seats, frames, and engines in an airplane).

For perennial orchards, each plot of land shall be considered a tangible fixed asset.

2. Standards and identification of intangible fixed assets:

All actual expenses incurred by the enterprise related to all business activities of the enterprise, if they simultaneously meet both conditions specified in Clause 1 of this Article and do not form tangible fixed assets, shall be considered intangible fixed assets. If these expenses do not simultaneously meet both aforementioned standards, they shall be directly recorded or gradually allocated to the enterprise's business costs.

Article 5: Determination of the original cost of fixed assets: 1. Determination of the original cost of tangible fixed assets:

a. Purchased fixed assets:

The original cost of purchased fixed assets (including new and used purchases), includes: the actual purchase price paid (as recorded on the invoice) minus any discounts or rebates (if applicable); interest on borrowed funds for investment in fixed assets before their use; transportation, handling, installation, trial run, tax, and initial registration fee (if applicable)...

b. Constructed fixed assets:

The original cost of constructed fixed assets (both self-built and outsourced) is the actual construction cost of the project according to the current Investment and Construction Regulations, other related costs, and initial registration fee (if applicable).

For working animals and/or long-term crop plots, the original cost is the total actual, reasonable, and legitimate expenses incurred from the formation until the utilization of the animals and plots, as stipulated in the current Investment and Construction Regulations, other related costs, and initial registration fee (if applicable).

c. Fixed assets received or transferred...

The original cost of transferred fixed assets includes: the remaining book value of the fixed assets at the transferring units, or the actual valuation by the Handover Committee; refurbishment costs; repair costs; transportation, handling, installation, trial run, and initial registration fee (if applicable) that the receiving party must incur before putting the fixed assets into use.

Specifically, the original cost of fixed assets transferred between affiliated units within the enterprise reflects the cost at the transferring unit consistent with the asset's file. The receiving unit bases the original cost, accumulated depreciation, remaining book value, and records them in the accounting books. Costs associated with the transfer of fixed assets between affiliated units are not added to the original cost of fixed assets but are recorded as business expenses for the period.

d. Fixed assets received as gifts, donations, joint venture contributions, returned contributions, or discovered surplus...

The original cost of donated, gifted, contributed capital, returned capital, or discovered surplus fixed assets includes: the actual valuation by the Handover Committee; refurbishment and repair costs; transportation, handling, installation, trial run, and initial registration fee (if applicable) that the recipient must incur before use.

2. Determination of the original cost of intangible fixed assets:

a. Land-related costs: are all actual expenses directly related to land use, including: payments for land use rights (including annual or lump-sum land rental fees, if applicable); compensation for land clearance, leveling, and initial registration fee (if applicable)... (excluding costs for constructing buildings on the land).

In cases where the enterprise pays annual or periodic land use fees, these costs are gradually allocated to business expenses over the periods, and are not recorded in the original cost of fixed assets.

b. Business establishment costs: are all actual, reasonable, and necessary expenses incurred by those involved in establishing the enterprise directly related to preparing for the establishment of the enterprise, including research, exploration, investment project planning, project evaluation, establishment meetings... if these costs are recognized by the participants as part of their capital contribution and recorded in the enterprise's charter capital.

c. Research and development costs: are all actual expenses incurred by the enterprise for conducting research, exploration, long-term investment planning... aimed at providing long-term benefits to the enterprise.

d. Costs for patents, copyrights, purchasing copyrights, technology transfers...: are all actual expenses incurred by the enterprise for research projects (including testing production costs, state inspection and acceptance costs) resulting in state-issued patents, copyrights, or costs for purchasing copyrights, trademarks, and technology transfers from organizations and individuals... which serve the direct business operations of the enterprise.

e. Business advantage costs: are expenses for the difference that the enterprise must pay additionally (additional payment difference = purchase price - actual value of assets assessed) beyond the actual value of the assets assessed (fixed assets, current assets...) when the enterprise purchases, receives, merges with another enterprise. This advantage is formed by business location advantages, reputation and credibility with customers, skill level of the workforce, management and organizational capabilities of that enterprise's management board...

3. Determining the original cost of financial lease fixed assets:

The original cost of financial lease fixed assets reflected at the lessee unit is the difference between the total long-term debt minus (-) the total interest amount that the lessee unit must pay (for the lease period) recorded in the asset lease contract.

The determination of the original cost of financial lease fixed assets shall be carried out in accordance with the provisions set forth in Appendix 3 attached to this regime.

Article 6: Expenses incurred by the enterprise to upgrade fixed assets are reflected as an increase in the original cost of those fixed assets and cannot be recorded as operating expenses for the period.

Fixed asset repair costs are considered as expenses and are directly recorded or gradually allocated to operating expenses for the period.

For certain special industries where repair costs of fixed assets occur unevenly between periods and years, if the enterprise wants to pre-record repair costs of fixed assets into operating expenses, it must prepare a plan for pre-recording repair costs of fixed assets and submit it to the Ministry of Finance for consideration and decision; the enterprise must notify the directly managing finance authority after receiving written approval from the Ministry of Finance.

The enterprise must settle the actual repair costs incurred with the pre-recorded repair costs, if the actual repair costs are greater than the pre-recorded amount, the difference will be directly accounted for or gradually allocated to operating expenses in the period, if the actual repair costs are less than the pre-recorded amount, the difference will be accounted for as a reduction in operating expenses in the period.

Enterprises in special industries applying the method of allocating repair costs of fixed assets over subsequent business periods must also prepare a plan for allocating repair costs of fixed assets and notify the directly managing finance authority.

Article 7: All fixed assets in the enterprise must have their own files (the file includes the handover record of fixed assets, contracts, invoices for purchasing fixed assets, and other related documents), they must be monitored, managed, used, and depreciated according to the regulations stipulated in this Regime. Fixed assets must be classified, statistically recorded, numbered, and have individual cards, detailed tracked according to each object recording fixed assets and reflected in the fixed asset tracking ledger.

The enterprise must manage and use fixed assets that have been fully depreciated but still participate in business activities as regular fixed assets.

Periodically at the end of each fiscal year, the enterprise must conduct an inventory of fixed assets, all cases of excess or shortage of fixed assets must be documented, the causes identified, and appropriate measures taken.

Article 8: Classification of fixed assets in the enterprise:

Based on the nature of fixed assets in the enterprise, the enterprise classifies fixed assets according to the following criteria:

1. Fixed assets for business purposes: are those fixed assets used by the enterprise for its business purposes.

a. Intangible fixed assets: enterprises classify them in detail according to each type of intangible fixed assets.

b. Tangible fixed assets: the enterprise classifies them as follows:

Type 1: Buildings, structures: are fixed assets of the enterprise formed through construction processes such as office buildings, warehouses, fences, water towers, parking lots, decorative works for buildings, roads, bridges, railways, ferry crossings, ports...

Type 2: Machinery and equipment: are all types of machinery and equipment used in the enterprise's business activities such as specialized machinery, work equipment, production lines, single machines...

Type 3: Transportation equipment and transmission devices: are various types of transportation equipment including railway, waterway, road, air, pipeline transportation, and transmission devices such as information systems, electrical systems, water pipelines, conveyor belts...

Type 4: Management equipment and tools: are equipment and tools used in the enterprise's management activities such as computers for management purposes; electronic devices; measuring, quality inspection equipment, dehumidifiers, dust extractors, pest control equipment...

Type 6: Other fixed assets: includes all other fixed assets not listed in the above five types such as paintings, artworks...

2. Fixed assets used for welfare, public services, national defense: are fixed assets managed and used by the enterprise for welfare, public services, national defense purposes within the enterprise. These fixed assets are also classified according to the provisions of Clause 1 of this Article.

3. Fixed assets kept on behalf of the State: are fixed assets kept on behalf of other units or the State according to the regulations of authorized state agencies.

Depending on the management requirements of each enterprise, enterprises may classify their fixed assets in more detail within each group as appropriate.

Article 9: The monitoring, management, utilization, and depreciation of fixed assets must comply with the principle of valuation based on original cost, accumulated depreciation, and remaining value on accounting records of fixed assets:

Remaining value on accounting records = Original cost of fixed assets - Accumulated depreciation of fixed assets

in the fixed asset accounting book = fixed asset - acquisition cost of the asset

of fixed fixed assets

The original cost of fixed assets in enterprises can only be changed in the following cases:

1. Revaluation of the value of fixed assets;

2. Upgrading of fixed assets;

3. Dismantling one or several parts of fixed assets;

When changing the original cost of fixed assets, the enterprise must prepare a record detailing the grounds for the change and re-determine the original cost indicators, remaining value on accounting books, accumulated depreciation of fixed assets, and proceed with accounting according to current regulations.

Article 10: According to financial regulations, enterprises have the right to:

- Transfer fixed assets between subsidiaries to serve business purposes more effectively;

- Proactively sell fixed assets to recover capital for more effective business purposes;

- Proactively dispose of obsolete fixed assets that cannot be sold or are damaged beyond repair;

- Lease out idle fixed assets temporarily not in use but ensure that these fixed assets can be monitored and managed. The enterprise and the lessee must prepare a lease contract specifying the type of fixed assets, lease period, rental payments, and responsibilities of the parties involved in the contract...

- Use fixed assets as collateral or mortgage... but still must ensure monitoring and management of these fixed assets.

When transferring fixed assets, both parties must prepare a record regarding the condition of the fixed assets, responsibilities of the parties, and measures to handle any damage or loss of fixed assets.

During the period of pledging, mortgaging, leasing (operational leasing)... fixed assets, the enterprise still must calculate and allocate depreciation of these fixed assets into operating expenses in the period.

When liquidating or selling fixed assets, the enterprise must establish a Committee to determine the recovery value upon liquidation, the sale price of fixed assets, organize the liquidation and sale of fixed assets according to current regulations.

All activities related to leasing, pledging, mortgaging, transferring... of fixed assets must comply strictly with the provisions of the Civil Code and current financial management regulations for enterprises.

Article 11: For fixed assets used under operating leases, the enterprise is responsible for managing and using them in accordance with the provisions of the lease contract. The enterprise does not depreciate these fixed assets; lease costs for fixed assets are recorded as business expenses for the period.

Article 12: For fixed assets used under financial leases, the enterprise must monitor, manage, and use them as if they were owned fixed assets and must fulfill all obligations committed to in the lease contract for fixed assets.

The lessor, as the investor, must monitor, manage, and comply with the provisions of the lease contract.

Article 13: Non-fixed production materials that do not meet the value criteria but have a usage period of one year or more (referred to as small production tools) must be monitored, managed, and used like fixed assets, and their values must be gradually allocated to business expenses over time according to their usage period.

For small production tools whose values have been fully allocated but are still in use, the enterprise must monitor, manage, and use them like regular small production tools without allocating their values to business expenses.

Article 14: For state-owned enterprises engaged in public services, all leasing, pledging, mortgaging, selling, liquidating... of fixed assets must comply strictly with the financial management regulations for state-owned enterprises engaged in public services.

Article 15: Determining the useful life of fixed assets:

1. Based on the following criteria, enterprises determine the useful life of fixed assets appropriately:

- Technical lifespan of fixed assets according to design;

- The condition of the fixed asset (how long the fixed asset has been in use, the generation of the fixed asset, the actual condition of the asset...);

- The purpose and estimated efficiency of the fixed asset.

2. Specifically, for new fixed assets (unused) and used fixed assets with a remaining actual value of 90% or more (compared to the sale price of new fixed assets of the same type or equivalent fixed assets on the market), enterprises must also base on the useful life framework of fixed assets stipulated in Appendix 1 issued together with this Regulation to determine the useful life of the fixed asset appropriately.

In cases where enterprises want to determine the useful life of fixed assets differently from the useful life specified in Appendix 1 issued together with this Regulation (longer or shorter than the prescribed framework) or for fixed assets not defined in Appendix 1, enterprises must prepare a record clearly stating the bases for determining the useful life of such fixed assets and submit it to the Ministry of Finance for consideration and decision.

After receiving the decision of the Ministry of Finance, the enterprise must notify the directly managing financial authority.

3. Enterprises are not allowed to change the useful life of fixed assets already determined and registered with the directly managing financial authority as stipulated above for at least three years (3 years) from the date the useful life of the fixed asset was confirmed by the financial authority.

In cases where factors affecting (such as upgrading or dismantling one or several parts of the fixed asset...) aim to extend or shorten the previously determined useful life of the fixed asset, enterprises must re-determine the useful life of the fixed asset according to the above regulations at the completion of the transaction.

Enterprises must prepare a record clearly stating the bases for changing the useful life and the new useful life of the fixed asset and re-register with the directly managing financial authority.

4. When registering the useful life of fixed assets (determined according to the above regulations) with the directly managing financial authority, enterprises must clearly state the name, type of fixed asset, bases for determining the useful life, useful life of similar fixed assets registered previously...

5. For fixed assets under financial leases, the useful life of the fixed asset is determined as the lease term stated in the lease contract.

Article 16: For intangible fixed assets, the useful life is determined by the enterprise itself appropriately but shall not exceed 40 years and also not less than 5 years.

Article 17: Method of depreciation of fixed assets.

1. Fixed assets in enterprises are depreciated using the straight-line method, as follows:

- Based on the provisions of this Regulation, enterprises determine the useful life of fixed assets and register with the directly managing financial authority;

- Determine the average annual depreciation rate for fixed assets according to the formula below:

Depreciation rate Original cost of fixed assets

average annually =

of fixed assets Usage time

Enterprises are permitted to round off the annual average depreciation rate just determined according to the following rules:

- The first decimal place with a value of 5 or higher is rounded up to one unit value for the units digit (for example: 950,713.5 VND is rounded to 950,714 VND).

- The first decimal place with a value of 4 or lower, the units digit remains unchanged (for example: 950,713.4 VND is rounded to 950,713 VND).

If enterprises depreciate monthly, the annual depreciation amount is divided by 12 months.

2. In cases where the useful life or original cost of fixed assets changes, enterprises must re-determine the average annual depreciation rate of fixed assets by dividing the remaining book value by the re-determined useful life or remaining useful life (determined as the difference between the registered useful life minus the time already used) of the fixed asset.

3. The depreciation rate for the last year of the useful life of fixed assets is determined as the difference between the original cost of fixed assets and the accumulated depreciation already performed on such fixed assets.

Article 18: Increases or decreases in the original cost of fixed assets are reflected at the time of increasing or decreasing fixed assets in the month.

Depreciation or cessation of depreciation of fixed assets is carried out on a full-month basis. Fixed assets added, reduced, or withdrawn from business operations (stored according to state regulations, awaiting liquidation, etc.) in a month will start depreciation or cease depreciation from the first day of the following month.

Article 19: All fixed assets related to business operations of enterprises must be depreciated, and the depreciation rate of fixed assets is recorded as business expenses for the period.

1. Fixed assets not participating in business operations do not need to be depreciated. These include:

Fixed assets that are not in use or have been decided by the competent authority to be placed in storage, preservation, mobilization... for another enterprise.

- Fixed assets under state reserves entrusted to enterprises for management and custody...

- Fixed assets serving welfare activities within enterprises such as kindergartens, clubs, traditional houses, dining halls, etc.; fixed assets of non-business units such as public services, defense, security units (excluding those units implementing economic accounting) within enterprises; fixed assets serving common social needs, not serving the business operations of the enterprise itself such as dikes, bridges, roads, wharfs, etc., which the State entrusts to enterprises for management.

- Other fixed assets not participating in business operations.

2. Enterprises shall manage and monitor fixed assets serving welfare purposes; fixed assets of non-business units such as public services, defense, security units (excluding those units implementing economic accounting) within enterprises; fixed assets serving common social needs, not serving the business operations of the enterprise itself, which the State entrusts to enterprises for management, in the same manner as fixed assets used in business operations. The enterprise shall determine and monitor the depreciation rate of these fixed assets (if applicable), with the annual depreciation rate determined by dividing the original cost by the useful life of the fixed asset as specified in Clause 1, Article 15 of this Regulation.

If these fixed assets participate in business operations, during the period when the fixed assets are involved in business operations, the enterprise shall calculate and allocate depreciation to the business expenses of the enterprise.

Article 20: Enterprises are not allowed to calculate and record depreciation for fixed assets that have been fully depreciated but are still used in business operations.

For fixed assets that have not been fully depreciated but are damaged, enterprises must identify the cause, assign responsibility for compensation, seek damages, and handle losses according to current regulations.

For fixed assets awaiting liquidation decisions, from the time the fixed assets cease to participate in business operations, the enterprise shall cease allocating depreciation according to the provisions of this financial management system.

Article 21: The Acceptance Council, Liquidation Council, Sale Council... of fixed assets in enterprises shall be established by the enterprise and include mandatory members such as the General Director of the enterprise, the Chief Accountant or Head of the Finance and Accounting Department of the enterprise, a technical expert knowledgeable about the type of fixed asset (inside or outside the enterprise), a representative of the party transferring the asset (if any), and other members decided by the enterprise. In special cases or as stipulated by the current financial management regulations, the enterprise may invite representatives of the directly managing financial authorities and the economic-technical management authorities (if any) to participate in these Councils.

Article 22. Enterprises are allowed to use the entire accumulated depreciation of fixed assets for reinvestment, replacement, and modernization of fixed assets; all investment construction activities must comply with the current regulations on investment and construction management stipulated in the Articles of Association.

When there is no immediate need for reinvestment in fixed assets, enterprises have the right to flexibly use the accumulated depreciation to meet their business requirements.

Article 23: In state-owned holding companies, the mobilization of accumulated depreciation of fixed assets of member units must comply strictly with the current state financial management regulations and the financial rules of the Holding Company approved by the Minister of Finance.

Article 24: This regime shall take effect from January 1, 1997.

Article 25: For fixed assets put into use before January 1, 1997, when applying this regime, enterprises must perform the following:

- Base on accounting records and asset files to determine the remaining value index on the accounting books of fixed assets;

- Evaluate the remaining useful life of fixed assets;

- Determine the average annual depreciation rate of fixed assets as prescribed in Article 17 of this regime.

Enterprises continue to monitor, manage, and use these fixed assets according to the original cost indices, remaining values on accounting books, and accumulated depreciation in accordance with the provisions of this regime.

Fixed assets with an original cost under five million dong that do not meet the criteria for fixed assets as stipulated shall be transferred to monitoring, management, and usage, and gradual allocation of remaining values on accounting books as small labor tools in accordance with the provisions of this regime.

Article 26: Units directly under and affiliated with the Ministry of Finance, within their scope of functions and tasks, are responsible for organizing and guiding enterprises to implement this regime correctly.

Article 27: During implementation, if there are difficulties, they should be reported to the Ministry of Finance for study and resolution.

SAMPLE TRAINING CERTIFICATE FOR ARTIFICIAL INSEMINATION AND EMBRYO TRANSFER TECHNIQUES FOR CATTLE, BUFFALO, GOATS, SHEEP, AND HORSES

FRAMEWORK FOR THE USEFUL LIFE OF FIXED ASSETS BY CATEGORY

Note:

(1) Solid houses refer to residential buildings, offices, administrative offices, hotels... classified as having durability Classes I and II according to Circular No. 05/BXD-TT dated February 9, 1993 of the Ministry of Construction.

(2) Other houses refer to residential buildings, offices, administrative offices... classified as having durability Classes III and IV according to Circular No. 05/BXD-TT dated February 9, 1993 of the Ministry of Construction.

APPENDIX II:

EXAMPLES OF CALCULATING AND DEPRICING FIXED ASSETS

Example: Company A purchased a fixed asset (new 100%) with an invoice price of 119,000 thousand dong, purchase discount of 5,000 dong, transportation costs of 3,000 thousand dong, installation and trial operation costs until commissioning of 3,000 thousand dong.

1. Knowing that the technical lifespan of the fixed asset is 12 years, the enterprise's estimated useful life is 10 years (in compliance with Appendix I), the asset was put into use on January 1, 1997.

Original cost of the fixed asset =

119,000 - 5,000 + 3,000 + 3,000 = 120,000 thousand dong

Average annual depreciation rate =

120,000 dong : 10 years = 12,000 thousand dong/year

Monthly depreciation rate =

12,000 thousand dong : 12 months = 1,000 thousand dong

Annually, the enterprise will allocate 12,000 thousand dong as depreciation expense for that fixed asset into operating expenses for the period.

2. In the fifth year of use, the enterprise upgraded the fixed asset with total costs of 10,000 thousand dong, the useful life was reassessed at 7 years (an increase of 2 years compared to the initial registered useful life), completion and commissioning date is January 1, 2002.

Original cost of the fixed asset = 120,000 thousand + 10,000 thousand = 130,000 thousand dong

Accumulated depreciation already allocated = 12,000 thousand X 5 years = 60,000 thousand dong

Remaining value on accounting books = 130,000 thousand - 60,000 thousand = 70,000 thousand dong

Annual depreciation rate = 70,000 thousand : 7 years = 10,000 thousand dong/year

Monthly depreciation rate = 10,000 thousand dong : 12 months = 833 thousand dong

From 2002 onwards, the enterprise will allocate 833 thousand dong as depreciation expense for the upgraded fixed asset each month.

ANNEX III:

METHOD FOR DETERMINING THE ORIGINAL COST OF FINANCED FIXED ASSETS

The original cost of financed fixed assets reflected in the lessee unit is the present value of future payments determined as follows:

1. If the lease agreement specifies the interest rate payable annually, then the original cost of financed fixed assets reflected in the lessee unit is the present value of future payments calculated using the following formula:

1

NG = G x

(1 + L) ^{N |||}

Where:

- NG is the original cost of financed fixed assets

- G is the value of annual payments the lessee must make according to the lease agreement;

- L is the annual interest rate recorded in the lease agreement;

- N is the lease term according to the lease agreement.

If the agreement does not specify the interest rate, it is determined based on the market loan interest rate but not exceeding the ceiling interest rate published by the State Bank of Vietnam for corresponding loan terms.

Example: Financial leasing company A signed a lease agreement for a fixed asset with enterprise B. It is known that:

- Enterprise B leases the fixed asset for 5 years;

- The useful life of the fixed asset is determined to be 6 years;

- The total amount enterprise B must pay to company A over the lease period is 10 million dong (including principal and interest);

- The annual interest rate recorded in the lease agreement is 4%.

1

The lease agreement between company A and enterprise B satisfies the conditions stipulated in Point C, Clause 3, Article 2 of this regime (5 years > 60% x 6 years = 3.6 years), thus, this agreement is considered a financial lease agreement.

(1 + 0,04)⁵

NG = 10 x = 8.219 (million dong)

The original cost of the financed fixed asset reflected in enterprise B is 8,219,000 dong (rounded off).

Total amount payable Interest payable Number of years

cost = under the lease - to be paid x lease

asset lease payment each year

For example, company A enters into a finance lease contract for a fixed asset with company B, stipulating that:

- Enterprise B leases the fixed asset for 5 years;

- The total amount company B must pay to company A over 5 years is 50 million VND, with 10 million VND payable each year, including 8 million VND as the principal payable and 2 million VND as interest payable;

It is known that this is a finance lease contract.

According to the formula above, the original cost of the fixed asset reflected at the lessee's unit is:

Original cost = 50 million VND - (2 million VND x 5 years) = 40 million VND