Circular No. 165/1998/TT-BTC guiding the accounting methods for inventory results and revaluation of fixed assets in the administrative and public service sector as of 00:00 on January 1, 1998.

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 165/1998/TT-BTC ON DECEMBER 18, 1998 GUIDING THE METHODS FOR ACCOUNTING AND AUDITING RESULTS OF FIXED ASSETS IN THE ADMINISTRATIVE AND PUBLIC SERVICE SECTOR AT 0h JANUARY 1, 1998

 

Implementing Decision No. 466/TTg dated July 2, 1997 of the Prime Minister on conducting a comprehensive inventory and revaluation of state-owned fixed assets in the administrative and public service sector at 00:00 on January 1, 1998, the Ministry of Finance guides the accounting methods for the results of inventory and revaluation of fixed assets in the administrative and public service sector as follows:

- The results of the inventory and revaluation of fixed assets of grassroots administrative and public service units must be reviewed and confirmed by the superior management agency regarding the quantity, quality, value, source of formation, and current usage status of each asset. Based on this, the unit shall take measures to improve asset management and accounting practices.

- According to the decision of the competent authority on the handling of each case involving assets, the accounting procedures are as follows:

1- Accounting for excess fixed assets discovered during the inventory:

a- Value of land: Reflect the value of land assets managed and used by administrative and public service units, which have been certified by the competent authority with land use rights certificates such as: land within the compound of offices, land within the scope of management of research stations, experimental fields, prison yards, rehabilitation centers, land within the compound of common welfare facilities, land within the compound of residential areas, etc. (as specified in the plan for conducting the inventory and revaluation of fixed assets dated October 7, 1997 by the Central Steering Committee for Inventory regarding the objects to be inventoried as land).

- The value of land, if not previously recorded in the accounting books, shall be based on Form 02-KK/HCSN and Form 02-BC/KK/HCSN to record in the fixed asset tracking book (Model S31-H) under the category of land, detailing each plot of land. The original cost of each plot of land shall be recorded in the fixed asset book (column 8), divided into two cases as follows:

+ If a new fixed asset accounting book (Model S31-H) was opened in 1998, the value of the land asset according to the inventory (item 5 on Form 02-KK/HCSN) shall be recorded in the original cost column of the fixed asset accounting book;

+ If the unit did not open a new fixed asset accounting book in 1998 but continued to record in the old fixed asset accounting book, a supplementary entry must be made for the difference between the value of the land asset according to the inventory (item 5) minus (-) the cost to obtain land use rights according to the accounting book (item 3) of Form 02-KK/HCSN.

At the same time, based on the total cost to obtain land use rights according to the accounting book (column 2) and the actual value of the land asset according to the inventory (column 6) of Form 02-BC/KK/HCSN, determine the additional value of the land asset to be recorded, prepare an entry to increase the value of the land asset. Based on the entry, the accountant records:

Debit Account 211 - Tangible Fixed Assets (2111)

Credit Account 466 - Source of funds that have formed fixed assets.

b- Tangible fixed assets other than land:

- If tangible fixed assets used in administrative and public services are found to be excess during the inventory and were not previously recorded in the fixed asset accounting book, the accountant shall base on Form 01-KK/HCSN and the fixed asset file to record necessary items in the fixed asset accounting book (Model S31-H). Simultaneously, sum up the total value of all assets not previously recorded, prepare an entry to increase the value of fixed assets according to their original value and remaining value according to the inventory. On this basis, determine the actual depreciation value, the accountant records:

Debit Account 211 - Tangible Fixed Assets (original value according to the inventory)

Credit Account 214 - Depreciation of Fixed Assets (amount already depreciated)

Credit Account 466 - Source of funds that have formed fixed assets

(Based on the remaining value of fixed assets from administrative and public service funds).

- If the excess fixed assets belong to business capital, record:

Debit Account 211 - Tangible Fixed Assets (original value according to the inventory)

Credit Account 214 - Depreciation of Fixed Assets (amount already depreciated)

Credit Account 411 - Business Capital (remaining value according to the inventory).

- If the fixed assets currently being used by the unit belong to international organizations or foreign countries' projects but have not yet been handed over to Vietnam, the entire value of the fixed assets will be treated as leased-out fixed assets and recorded on the debit side of Account 001 "Leased-Out Fixed Assets." After the project ends, if the foreign party hands over the fixed assets to Vietnam, reduce the leased-out fixed assets (credit Account 001 - Leased-Out Fixed Assets). Simultaneously, determine the depreciated value and remaining value of the transferred fixed assets. Based on the decision of the competent authority assigning the fixed assets to a specific unit, that unit shall record an increase in fixed assets according to the information on the transfer document.

- If excess fixed assets cannot be determined in terms of origin or cause, the accountant shall reflect them in accounts payable:

Debit Account 211 - Tangible Fixed Assets (recorded according to the original value of the inventory)

Credit Account 331 - Accounts Payable (3318 - Other Payables).

If excess fixed assets are identified as belonging to another unit, immediately inform the unit owning the assets. If the owner cannot be determined, report to the superior management agency and the same-level financial agency for resolution. During the waiting period, the accountant shall record the assets held in trust in Account 002 - Held Assets (an account outside the balance sheet) for tracking purposes.

2- Accounting for fixed assets found to be missing during the inventory:

Fixed assets found to be missing during the inventory must be traced back to determine the cause and responsible parties, and handled according to the state's management regulations for public assets.

a- Fixed assets used in administrative and public services.

- During the waiting period for the handling decision, the accountant shall record the reduction of fixed assets in the accounting books based on the approved inventory results and the fixed asset files.

Debit Account 466 - Source of funds that have formed fixed assets (remaining value of fixed assets from administrative and public service funds)

Debit Account 214 - Depreciation of Fixed Assets (depreciated amount)

Credit Account 211 - Tangible Fixed Assets (original value).

- Record the value of missing fixed assets that need to be recovered, record:

Debit Account 311 - Accounts Receivable (3118 - Other Receivables) (remaining value of fixed assets or the difference between the compensation amount and the remaining value of fixed assets)

Debit Account 511 - Revenue Accounts (5118 - Other Revenue) (remaining value of Fixed Assets or difference between compensation value higher than remaining value of Fixed Assets).

- When there is a decision to handle, based on each specific case:

+ If permission is granted to eliminate damage due to loss or absence of assets, record:

Debit Account 511 - Revenue Accounts (5118)

Credit Account 311 - Receivables (3118).

+ If the decision requires the responsible party to compensate, when collecting compensation money, record:

Debit Account 152 - Materials and Tools

Credit Account 311 - Receivables (3118)

+ The compensation amount recorded as an increase in operating funds or deposited into the state budget, record:

Debit Account 511 - Revenue Accounts (5118)

Credit Account 461 - Operating Fund (if increasing operating fund)

Credit Account 333 - State Receivables (if depositing into state budget)

b- Fixed Assets used for production and business units

- Based on the inventory results, reduce Fixed Assets:

Debit Account 311 - Receivables (3118) (remaining value)

Debit Account 214 - Depreciation of Fixed Assets (accumulated depreciation)

Credit Account 211 - Tangible Fixed Assets (original cost).

- When there is a decision to handle missing assets, depending on the Handling Decision, record:

Debit Related Account (111,...)

Credit Account 311 - Receivables (3118)

3- Accounting for the result of revaluation of Fixed Assets

Accounting for the result of revaluation of Fixed Assets is accounting for the difference in original cost increases or decreases of existing Fixed Assets of the entity due to revaluation according to the valuation system applied for the inventory and revaluation of Fixed Assets of the state sector at 00:00 on January 1, 1998 compared with the recorded values in the Fixed Asset accounting books. At the same time as revaluing the original cost, it is necessary to reassess the actual depreciation level of Fixed Assets and the difference between actual depreciation and accumulated depreciation on the accounting books.

Accounting for the result of asset revaluation is based on the approval of the competent authority and the results of inventory and revaluation of Fixed Assets.

a- Accounting for the increase in original cost of Fixed Assets:

Based on the total original cost increase data (column 18) (Form 01A - Report/Inventory/Fixed Assets) excluding excess assets not yet recorded as guided in Section 1 - b "Tangible Fixed Assets that are not land", determine the corresponding adjustment increase in residual value and depreciation value of Fixed Assets based on this. Based on the calculated data, prepare an adjustment entry to increase the original cost on the Fixed Asset accounting books:

Debit Account 211 - Tangible Fixed Assets (portion of original cost adjustment increase)

Credit Account 214 - Depreciation of Fixed Assets (adjustment increase in depreciation value)

Credit Account 466 - Source of Operating Funds Formed from Fixed Assets

(Adjustment increase in residual value of Fixed Assets belonging to Operating Funds of the state sector), or

Credit Account 411 - Business Capital

(Adjustment increase in residual value of Fixed Assets belonging to Production and Business Capital)

b- Accounting for the decrease in original cost of Fixed Assets:

Based on the total original cost reduction data (column 19 of Form 1A-Report/Inventory/Fixed Assets), determine the corresponding adjustment reduction in depreciation and residual value based on the portion of original cost reduction, prepare an adjustment entry to reduce the total original cost, record:

Debit Account 466 - Source of Operating Funds Formed from Fixed Assets (adjustment reduction in residual value corresponding to the portion of original cost reduction) (Fixed Assets belonging to Operating Funds of the state sector)

Debit Account 411 - Business Capital (Fixed Assets belonging to Production and Business Capital)

Debit Account 214 - Depreciation of Fixed Assets (adjustment in depreciation value)

Credit Account 211 - Tangible Fixed Assets (adjustment reduction in original cost)

4- Accounting for the transfer of unused Fixed Assets:

- Based on the decision to transfer unused assets by the competent authority, the accountant prepares an entry to reduce Fixed Assets:

Debit Account 214 - Depreciation of Fixed Assets (depreciation determined through inventory)

Debit Account 466 - Source of Operating Funds Formed from Fixed Assets (residual value determined through inventory)

Credit Account 211 - Tangible Fixed Assets (original cost determined through inventory).

Simultaneously, strike out this asset from the Fixed Asset ledger using red ink across columns 1 to 16.

+ For assets being tracked on accounts outside the main ledger, the accountant records the reduction in Fixed Assets (record only the credit side of Account 001 - Leased Assets).

5- Accounting for the conversion of Fixed Assets into durable tools and equipment currently in use:

According to Decision No. 351-TC/QD/CĐKT dated May 22, 1997, Fixed Assets in state-owned enterprises must satisfy both criteria simultaneously:

- Value of VND 5,000,000 (Five million dong) or more;

- Usage period of over one year.

Some assets with value less than VND 5,000,000 but with usage period of over one year are still considered Fixed Assets (as specified).

Based on the results of inventory and revaluation of Fixed Assets, those Fixed Assets that do not meet the criteria for Fixed Assets will be converted into durable tools and equipment currently in use. When converting Fixed Assets into durable tools and equipment currently in use, the accountant must list and aggregate all Fixed Assets to be converted into durable tools and equipment. Based on the approved aggregated results, prepare an entry to reduce Fixed Assets:

Debit Account 214 - Depreciation of Fixed Assets (accumulated depreciation)

Debit Account 466 - Source of Operating Funds Formed from Fixed Assets (residual value of Fixed Assets) (Fixed Assets belonging to Operating Funds of the state sector)

Debit Account 631 - Production and Business Expenses (residual value of Fixed Assets) (Fixed Assets belonging to Production and Business Capital)

Credit Account 211 - Tangible Fixed Assets (original cost of Fixed Assets).

When converting Fixed Assets into durable tools and equipment currently in use, the accountant must record the remaining value of Fixed Assets on the debit side of Account 005 - Durable Tools and Equipment Currently in Use (Account outside the main ledger).

Regarding detailed accounting of Fixed Assets on the Fixed Asset ledger (Model S31-H), it is necessary to strike out Fixed Assets by drawing a red line across columns 1 to 16 for those Fixed Assets converted into durable tools and equipment currently in use.

6- Accounting for the sale or liquidation of Fixed Assets

When there are Fixed Assets to be sold or liquidated, the unit proceeds with the procedures as prescribed, upon completion, the accountant records:

- Reduce Fixed Assets:

Debit Account 214 - Depreciation of Fixed Assets (accumulated depreciation)

Debit Account 466 - Source of Operating Funds Formed from Fixed Assets

(Residual value of Fixed Assets) (Fixed Assets belonging to Operating Funds of the state sector)

Debit Account 631 - Production and Business Expenses

(Residual value of Fixed Assets) (Fixed Assets belonging to Production and Business Capital)

Credit account 211 - Tangible fixed assets.

- Simultaneously reflect the revenue from selling or liquidating Fixed Assets:

Debit Accounts 111, 112

Credit Account 511 - Revenue Accounts

- The amount of revenue or surplus from disposal or sale (after deducting expenses) must be remitted to the State, recorded as follows:

Debit Account 511 - Revenue Items

Credit Account 333 - Amounts Due to the State.

7- Accounting for the receipt of fixed assets transferred from another unit

Based on the handover record of fixed assets, the accountant records the increase in fixed assets:

Debit Account 211 - Tangible Fixed Assets (at remaining value)

Credit Account 466 - Source of funds that have formed fixed assets.

At the same time, record the increase in fixed assets in the fixed asset ledger for monitoring and calculating depreciation of fixed assets

For assets owned by the unit that are leased out or lent, the accountant still needs to monitor them in the books and conduct inventory checks and accounting entries as directed above.

For assets rented or borrowed for use, the value of the assets is monitored under Account 001 - Leased Assets, outside the balance sheet.

The above is guidance on the accounting treatment for the results of inventory and revaluation of fixed assets in the public sector at 00:00 on January 1, 1998. During implementation, if there are any difficulties, please report to the Ministry of Finance for timely resolution.