Circular No. 244/2009/TT-BTC guiding the amendment and supplementation of the Accounting System for Enterprises

 

CIRCULAR

Guidelines for Amending and Supplementing Enterprise Accounting Regulations

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Pursuant to the Accounting Law dated June 17, 2003;

Pursuant to Decree No. 129/2004/NĐ-CP dated May 31, 2004 of the Government detailing and guiding the implementation of certain provisions of the Accounting Law in business operations;

Pursuant to Decree No. 123/2008/NĐ-CP dated December 8, 2008 of the Government detailing and guiding the implementation of certain provisions of the Value Added Tax Law (VAT);

Pursuant to Decree No. 124/2008/NĐ-CP dated December 11, 2008 of the Government detailing and guiding the implementation of certain provisions of the Corporate Income Tax Law (CIT);

The Ministry of Finance issues guidelines for amending accounting practices for certain economic transactions, and supplementing accounting practices for newly emerging economic transactions not yet provided for in the Enterprise Accounting Regulations as follows:

PART I

GENERAL PROVISIONS

Article 1. Scope of Application

This Circular guides accounting practices applicable to all enterprises across various sectors and economic components throughout the country.

Article 2. Accounting regulations for foreign contractors

Foreign organizations and individuals engaged in production and business activities based on contracts, agreements, or commitments with Vietnamese organizations and individuals (referred to as foreign contractors) who have a place of residence in Vietnam must comply with the Accounting Law; the Vietnamese Accounting Standards System; and the Vietnamese Enterprise Accounting Regulations. In cases where there is no need for amendment or supplementation, they are not required to register their accounting regulations with the Ministry of Finance but only need to notify the local tax authority responsible for tax registration.

Article 3. Submission of financial statements for enterprises within export processing zones, industrial parks, and high-tech zones

Enterprises (including both domestic enterprises and foreign-invested enterprises) with headquarters located within export processing zones, industrial parks, and high-tech zones, in addition to submitting annual financial reports to relevant authorities as stipulated in the Financial Reporting Regulations issued pursuant to Decision No. 15/2006/QĐ-BTC, must also submit annual financial reports to the management board of the export processing zone, industrial park, or high-tech zone if requested.

Chapter II

UNIT OF ACCOUNTING CURRENCY

Article 4. Unit of accounting currency

"Unit of accounting currency" refers to the Vietnamese Dong (National symbol: "đ"; International symbol: "VND"), which is used for bookkeeping, preparation, and presentation of financial statements by enterprises. In cases where the accounting unit primarily conducts transactions in foreign currencies, it may choose a foreign currency designated by the Ministry of Finance as the unit of accounting currency for bookkeeping, preparation, and presentation of financial statements.

Article 5. Selection of accounting currency for enterprises and organizations with foreign capital

1. Enterprises and organizations with foreign investment (hereinafter referred to as enterprises) that primarily conduct transactions in foreign currencies shall base their decision to select the accounting currency on the Accounting Law and bear responsibility for such decisions under the law. When selecting the accounting currency, enterprises must inform the directly managing tax authority.

2. When selecting the accounting currency, enterprises must meet the following criteria simultaneously:

- The selected currency must be predominantly used in sales and service provision transactions, significantly influencing product and service prices, and typically being the currency used to determine pricing.

- The selected currency must be predominantly used in purchasing goods and services, and usually serves as the primary currency for calculating revenue, labor costs, and payments for raw materials, goods, and services.

3. Enterprises with foreign parent companies may only select the same accounting currency as their parent company's accounting currency if they fall into one of the following categories:

- The enterprise was established primarily for the purpose of producing and processing products for the parent company, with most raw materials sourced from the parent company and products exported and consumed by the parent company;

- The proportion of the enterprise's activities related to the parent company or the proportion of transactions conducted in the parent company's accounting currency is significant (over 70%).

Article 6. Conversion of financial statements prepared in a foreign currency accounting unit to Vietnamese Dong when submitted to state management agencies

1. Foreign-invested enterprises established and operating in Vietnam that use foreign currencies as their accounting units must, while preparing financial statements according to their accounting currency (foreign currency), also convert these financial statements to Vietnamese Dong when submitting them to state management agencies.

2. Principles for converting financial statements prepared in a foreign currency accounting unit to Vietnamese Dong:

All items on the financial statements of the enterprise (both reported figures and comparative figures) must be converted using the average interbank exchange rate at the end of the accounting period. If there is no average interbank exchange rate on the last day of the accounting period, the nearest previous day's average interbank exchange rate should be used.

Article 7. Audit of financial statements in cases where the accounting currency is a foreign currency

Financial statements prepared in a foreign currency accounting unit must be audited. When converting financial statements prepared in a foreign currency accounting unit to Vietnamese Dong, auditing is not mandatory, but confirmation from the auditor regarding the exchange rate and accuracy of the conversion is required.

Article 8. Change of accounting currency

1. When there is a significant change in management and business operations leading to the currency used in economic transactions no longer meeting the criteria set out in Clause 2, Article 5, Chapter II of this Circular, the enterprise may change its accounting currency. The change from one accounting currency to another can only be implemented at the beginning of a new fiscal year. The enterprise must notify the directly managing tax authority about the change in accounting currency no later than ten working days after the end of the fiscal year.

2. Exchange rate applied to items in the Balance Sheet when changing the accounting currency unit:

Items in the Balance Sheet shall be converted to the new accounting currency unit based on the average inter-bank exchange rate on the date of changing the accounting currency unit.

3. Presentation of comparative information when changing the accounting currency unit

In the first accounting period following the change of the accounting currency unit, enterprises must prepare financial statements according to the new accounting currency unit and restate comparative figures (the "Beginning of Year" column of the Balance Sheet and the "Previous Year" column of the Income Statement and Cash Flow Statement), specifically:

- The "Beginning of Year" column of the Balance Sheet shall be presented based on the Balance Sheet prepared at the beginning of the fiscal year (the date of changing the accounting currency unit) using the average inter-bank exchange rate on the date of changing the accounting currency unit.

- The "Previous Year" column of the Income Statement and Cash Flow Statement shall be presented based on the Income Statement and Cash Flow Statement prepared at the beginning of the previous year using the average inter-bank exchange rate for the previous year immediately preceding the year of changing the accounting currency unit.

Article 9. Explanation of Financial Reports

When converting financial statements (prepared in foreign currency) to Vietnamese Dong or when changing the accounting currency unit, enterprises must clearly state in the Financial Statement Notes the reasons for changing the accounting currency unit and any impacts (if any) on the financial statements due to the conversion of financial statements from foreign currency to Vietnamese Dong or the change of the accounting currency unit.

Chapter III

GUIDELINES FOR IMPLEMENTING THE ACCOUNTING REGIME FOR FOREIGN CONTRACTORS

Article 10. Principles for applying the accounting regime

Foreign contractors must:

1. Base their accounting organization on each Contract Undertaking (each Contract License) according to the provisions of the Accounting Law, the Vietnamese Enterprise Accounting System, and this Circular as a basis for settling contracts and tax settlements with the Vietnamese State.

2. When applying the Vietnamese Accounting System, foreign contractors may choose to apply the account list, vouchers, accounting books, and accounting book formats that suit their operational characteristics and fully meet the management requirements of their own units and the Vietnamese State (especially tax management requirements), specifically as follows:

- In cases where foreign contractors pay VAT and corporate income tax both under the fixed-rate method, they shall base their selection and application of the account list, vouchers, and accounting book formats on the Vietnamese Enterprise Accounting System to meet their own unit's management requirements.

- In cases where foreign contractors pay VAT under the deduction method, corporate income tax under the revenue minus expenses method or the fixed-rate method, they must select and apply accounts reflecting assets, liabilities, capital sources, revenues, expenses, and results related to economic transactions as prescribed by the Vietnamese Enterprise Accounting System to meet the tax management requirements of the Vietnamese State and their own unit's management requirements.

3. If there is a need to supplement or modify (as specified in Article 11 below), foreign contractors must register the content of the modification or supplementation (accompanied by specific explanations) and can only implement it upon written approval from the Ministry of Finance. Within fifteen working days from the date of receipt of all documents, the Ministry of Finance has the responsibility to respond in writing to foreign contractors regarding the registration of modifications or supplements to the Accounting System.

Article 11. Contents of modifications and supplements to the Accounting System that need to be registered with the Ministry of Finance

1. Modification of the content and structure of mandatory accounting vouchers;

2. Supplementing or modifying Level I or Level II accounts regarding name, code, and content, as well as methods of recording special economic transactions;

3. Modification of financial statement indicators or changes in the structure and preparation methods of financial statements.

Article 12. Provisions on the preparation, submission of financial statements, and auditing of financial statements

Foreign contractors must prepare the Account Balance Sheet (Appendix attached) and the Financial Statement Notes. Foreign contractors paying VAT under the deduction method and corporate income tax under the revenue minus expenses method must also prepare the Income Statement. The State encourages foreign contractors to have their financial statements audited for tax purposes (except in cases of declaration and payment of taxes under the fixed-rate method). Financial statements of foreign contractors must be submitted to the local Tax Authority, the issuing authority of the Contract License or Operating License, and the local Statistics Bureau.

Chapter IV

GUIDELINES FOR MODIFYING AND SUPPLEMENTING ACCOUNTING METHODS FOR CERTAIN OTHER ECONOMIC TRANSACTIONS

Article 13. Accounting for stock issuance costs

1. In cases where a joint-stock company converts from a wholly state-owned enterprise, stock issuance costs shall be recorded according to the provisions of Circular No. 106/2008/TT-BTC dated November 18, 2008, issued by the Ministry of Finance.

2. In cases where a joint-stock company issues stocks, accounting records shall recognize direct costs related to the issuance of stocks, debiting:

Account 4112 - Capital Surplus

Credit accounts 111, 112...

Article 14. Accounting for increases and decreases in owners' equity investment at joint-stock companies

1. Accounting for increases in owners' equity investment

1.1. General provisions:

- The increase in owners' equity investment (equity capital) is supplemented in this Circular and includes cases of issuing additional shares to the public without receiving money, such as: Issuing additional shares from surplus capital, from the Development Fund, from undistributed post-tax profits (paying dividends in shares), and from the reward and welfare fund.

- In all cases of issuing additional shares without receiving money, joint-stock companies must complete all procedures as required by law. After obtaining approval from the shareholders' meeting and the competent authority for the issuance of additional shares, joint-stock companies must record in the accounting books to adjust the equity capital according to the approved plan.

1.2. Accounting for specific transactions:

- In the case where a joint-stock company issues additional shares from surplus capital, accounting shall be based on relevant accounting files and vouchers, recording:

Debit Account 4112 - Surplus Capital

Credit Account 4111 - Owner's Investment.

- In the case where a joint-stock company issues additional shares from the Development Fund, record:

Debit Account 414 - Development Fund

Credit Account 4111 - Owner's Investment.

Credit Account 4112 - Surplus Capital (if applicable).

- In the case where a joint-stock company issues additional shares from undistributed post-tax profits (paying dividends in the form of shares), record:

Debit Account 421 - Undistributed Post-Tax Profits

Credit Account 4111 - Owner's Investment.

Credit Account 4112 - Surplus Capital (if applicable).

- In the case where a joint-stock company issues bonus shares from the incentive fund to increase owner's investment, record:

Debit Account 3531 - Incentive Fund

Debit Account 4112 - Surplus Capital (Difference between selling price lower than par value - if applicable)

Credit Account 4111 - Owner's Investment

Credit Account 4112 - Surplus Capital (Difference between selling price higher than par value - if applicable).

2. Accounting for reduction in owner's investment

All cases of reducing owner's investment must comply with all procedures stipulated by law. Upon approval by the shareholders' meeting and authorization by the competent authority, the joint-stock company must update its accounting records to adjust the share capital according to the approved plan. Cases of reducing owner's investment (share capital) such as repurchasing and canceling treasury shares; Canceling treasury shares shall be carried out in accordance with Decision 15/2006/QĐ-BTC dated March 20, 2006, issued by the Minister of Finance.

Article 15. Accounting for the case where investors receive shares due to the joint-stock company increasing owner's investment

1. When investors receive additional shares without payment due to the joint-stock company using surplus capital, funds belonging to owner's equity, and undistributed post-tax profits (dividends in the form of shares) to increase owner's investment, investors only track the number of additional shares received in the financial statement notes, without recognizing the value of the received shares, without recognizing financial income, and without recognizing an increase in the value of the investment in the joint-stock company.

2. The provisions of Clause 1 of this Article apply from the fiscal year 2010 onwards.

Article 16. Recording revenue from management fees

Add Account 5118 - Other Revenue.

This account is used to reflect revenues such as management fees paid by subordinate units and other revenues outside of sales revenue, finished goods revenue, service provision revenue, subsidy revenue, and real estate investment business revenue.

Periodically, the superior unit records revenue from management fees paid by subordinate units, accounting records:

Debit Account 131 - Accounts Receivable (Management fees collected from subsidiaries)

Debit Account 136 - Internal Receivables (Management fees collected from affiliated companies, subordinate units)

Debit various Accounts 111, 112 (If collected immediately)

Credit Account 5118 - Other Revenue.

Article 17. Accounting for Unemployment Insurance

Add Account 3389 - Unemployment Insurance.

This account is used to reflect the situation of contributions and payments for unemployment insurance for employees at the unit in accordance with the laws on unemployment insurance. Enterprises must maintain detailed accounting books to monitor and settle unemployment insurance separately.

Structure, content reflected in Account 3389 - Unemployment Insurance

Debit Side: Amounts of unemployment insurance already paid to the unemployment insurance fund management agency.

Credit Side:

- Contributions to unemployment insurance included in production and business costs;

- Deductions from employee salaries for unemployment insurance contributions;

Credit Side Balance: Amounts of unemployment insurance contributions deducted but not yet paid to the unemployment insurance fund management agency.

Accounting methods for some main economic transactions

- Regularly deduct unemployment insurance contributions from production and business costs, record:

Debit various Accounts 622, 627, 641, 642...

Credit Account 338 - Other Payables, Other Taxes Payable (3389).

- Calculate the amount of unemployment insurance deducted from employee salaries, record:

Debit Account 334 - Employee Payables

Credit Account 338 - Other Payables, Other Taxes Payable (3389).

- When paying unemployment insurance to the unemployment insurance fund management agency, record:

Debit Account 338 - Other Payables, Other Taxes Payable (3389)

Credit Accounts 111, 112.

Article 18. Accounting for the Incentive and Welfare Fund

1. Change the account number 431 - Incentive and Welfare Fund

- Change the account number 431 - "Incentive and Welfare Fund" to Account 353 - Incentive and Welfare Fund;

- Change the account number 4311 - "Incentive Fund" to Account 3531 - Incentive Fund;

- Change the account number 4312 - "Welfare Fund" to Account 3532 - Welfare Fund;

- Change the account number 4313 - "Welfare Fund that has formed Fixed Assets" to Account 3533 - Welfare Fund that has formed Fixed Assets.

The structure, content reflected, and accounting method of Account 353 - "Incentive and Welfare Fund" remain unchanged compared to Account 431.

2. Add Account 3534 - Management and Operation Incentive Fund

Transfer the content reflected "Management and Operation Incentive Fund" from Account 418 - Other Funds Belonging to Owner's Equity to Account 3534 - Management and Operation Incentive Fund. The accounting method for the Management and Operation Incentive Fund on Account 3534 is similar to the accounting method for the Management and Operation Incentive Fund previously specified on Account 418.

Article 19. Accounting for the Science and Technology Development Fund

Add Account 356 - "Science and Technology Development Fund"

This account is used to reflect the current balance and changes in the Science and Technology Development Fund of enterprises. The Science and Technology Development Fund of enterprises can only be used for scientific and technological investments in Vietnam.

When accounting for this account, it is necessary to comply with the following regulations:

- The establishment and use of the Science and Technology Development Fund of enterprises must comply with the provisions of the law.

The Science and Technology Development Fund shall be recorded as part of business management expenses to determine the business results for the period. Annually, the enterprise shall independently determine the level of establishment of the Science and Technology Development Fund in accordance with the provisions of the law and prepare a report on the establishment and use of the Science and Technology Development Fund, declaring the level of establishment and the amount established on the tax return for corporate income tax. The report on the use of the Science and Technology Development Fund shall be submitted together with the tax return for corporate income tax.

Structure and content reflected in Account 356 - "Science and Technology Development Fund":

Debit Side:

- Expenditures from the Science and Technology Development Fund.

- Reduction of the Science and Technology Development Fund that has formed fixed assets (Tangible Fixed Assets - TFA) when calculating depreciation of TFA, residual value of TFA when selling or liquidating, and liquidation costs of TFA formed from the Science and Technology Development Fund.

- Reduction of the Science and Technology Development Fund that has formed TFA when TFA formed from the Science and Technology Development Fund is transferred to serve production and business purposes.

Credit Side:

- Establishment of the Science and Technology Development Fund as part of business management expenses.

- Revenue from the liquidation or sale of TFA formed from the Science and Technology Development Fund that has formed TFA.

Debit balance: The remaining science and technology development fund of the enterprise at the end of the reporting period.

Account 356 - Science and Technology Development Fund consists of two sub-accounts:

Sub-account 3561 - Science and Technology Development Fund: Reflects the current amount and the situation of establishing and spending the Science and Technology Development Fund;

Sub-account 3562 - Science and Technology Development Fund that has formed TFA: Reflects the current amount, increase and decrease in the Science and Technology Development Fund that has formed TFA (Science and Technology Development Fund that has formed TFA).

Accounting methods for some major economic transactions

When establishing the Science and Technology Development Fund during the year, record:

d. Transfer the residual balance of the Unemployment Compensation Reserve Fund as specified in Item 5 of this Circular as follows:

Credit Account 356 - Science and Technology Development Fund.

When spending the Science and Technology Development Fund for research and development purposes, record:

Debit Account 356 - Science and Technology Development Fund

Debit Account 133 - Deductible VAT (if applicable)

Credit Accounts 111, 112, 331...

When investing in or purchasing TFA completed using the Science and Technology Development Fund for research and development purposes, record:

Debit Account 211, 213 (Original Cost)

Debit Account 133 - Deductible VAT (if applicable)

Credit Accounts 111, 112, 331...

Credit Account 466 - Source of Funds Forming Fixed Assets (Installation and testing costs...).

Debit Account 3561 - Science and Technology Development Fund

Credit Account 3562 - Science and Technology Development Fund that has formed TFA.

At the end of the accounting period, when calculating depreciation of TFA invested in or purchased using the Science and Technology Development Fund for research and development purposes, record:

Debit Account 3562 - Science and Technology Development Fund that has formed TFA

Credit Account 214 – Depreciation of TFA.

When liquidating or selling TFA invested in or purchased using the Science and Technology Development Fund:

- Record reduction of TFA being liquidated or sold:

Debit Account 3562 - Science and Technology Development Fund that has formed TFA (Residual Value)

Debit Account 214 – Depreciation of TFA (Depreciation Value)

Credit Account 211, 213.

- Record revenue from the liquidation or sale of TFA:

Debit accounts 111, 112, 131

Credit Account 3561 - Science and Technology Development Fund

Credit Account 3331 - VAT payable (33311).

- Record direct costs incurred related to the liquidation or sale of TFA:

Debit Account 3561 - Science and Technology Development Fund

Debit Account 133 - Deductible VAT

Credit Account 111, 112, 331.

When the process of research and development ends, transferring TFA formed from the Science and Technology Development Fund to serve production and business purposes, the accountant records:

Debit Account 3562 - Science and Technology Development Fund that has formed TFA (Remaining value of TFA formed from the fund not yet fully depreciated)

Credit Account 711 – Other Income.

From the time TFA is transferred to serve production and business purposes, the depreciation of TFA is calculated as part of production and business expenses according to the current accounting regulations for enterprises.

Article 20. Accounting for products, goods, services consumed internally

Products, goods, services consumed internally are products, goods, services provided by the business entity for internal consumption, excluding products, goods, services used to continue the production and business activities of the entity. The determination of deductible VAT, VAT payable, and declaration of VAT, corporate income tax is carried out in accordance with the provisions of the tax laws.

If the product, goods, service subject to VAT under the deduction method is consumed internally to serve the production and business of goods, services subject to VAT under the deduction method, when issuing internal use of products, goods, the accountant reflects internal sales revenue based on production costs or cost of goods sold, record:

Debit various accounts 623, 627, 641, 642 (production costs or cost of goods sold)

Credit Account 512 - Internal Sales Revenue.

At the same time, the accountant declares VAT for products, goods, services consumed internally, record:

Debit Account 133 - Deductible VAT

Credit Account 3331 - VAT payable (33311).

If the product, goods, service subject to VAT under the deduction method is consumed internally to serve the production and business of goods, services not subject to VAT or subject to VAT under the direct payment method, when issuing internal use of products, goods, the accountant reflects internal sales revenue based on production costs or cost of goods sold, record:

Debit various accounts 623, 627, 641, 642... (Production costs or cost of goods sold plus (+) output VAT)

Credit Account 512 – Internal Sales Revenue (Production costs or cost of goods sold)

Credit Account 3331 - VAT payable (33311).

Article 21. Supplementary guidance on the accounting treatment of the difference in asset revaluation when the parent company contributes non-monetary assets to the subsidiary as capital contribution.

When the parent company invests capital into a subsidiary using inventory or fixed assets (not as part of the payment for purchasing a business in a business consolidation transaction), the parent company must recognize the difference between the book value (for inventory) or remaining value (for fixed assets) and the revalued amount of the contributed asset as other income or other expenses; The subsidiary, upon receiving the parent company's contribution, must increase the owner's investment capital and the received asset according to the agreed price between the parties.

- In the case where the book value (for inventory) or remaining value (for fixed assets) of the contributed asset is lower than the revalued amount, accounting reflects the increased valuation difference as other income, recorded as follows:

Debit Account 221 - Investment in Subsidiary

Debit Account 214 - Depreciation of Fixed Assets

Credit Accounts 211, 213, 217 (if contributing with fixed assets or real estate development)

Credit Accounts 152, 153, 155, 156 (if contributing with inventory)

Credit Account 711 – Other Income (Valuation Increase Difference)

- In the case where the book value or remaining value of the contributed asset is higher than the revalued amount, accounting reflects the decreased valuation difference as other expenses, recorded as follows:

Debit Account 221 - Investment in Subsidiary

Debit Account 214 - Depreciation of Fixed Assets

Debit Account 811 – Other Expenses (Valuation Decrease Difference)

Credit Accounts 211, 213, 217 (if contributing with fixed assets or real estate development)

Credit Accounts 152, 153, 155, 156 (if contributing with inventory).

Article 22. Guidelines for amending and supplementing accounting methods for certain transactions between joint venture contributors and jointly controlled operations

Amend and supplement the accounting method when a joint venture contributor contributes non-monetary assets to a jointly controlled operation or sells goods to a jointly controlled operation as follows:

1. On the separate financial statements of the joint venture contributor

1.1. In the case where the joint venture contributor contributes non-monetary assets to a jointly controlled operation

When contributing non-monetary assets (inventory, fixed assets...) to a jointly controlled operation, the joint venture contributor must recognize the entire difference between the revalued amount (agreed by both parties) that is greater than the book value of the contributed non-monetary assets as other income, recorded as follows:

- In the case where the revalued amount of contributed inventory is greater than the book value on the accounting records, record:

Debit Account 222 - Joint Venture Contribution Capital (Revalued Amount)

Credit Accounts 152, 153, 155, 156, 611 (Book Value on Accounting Records)

Credit Account 711 – Other Income (Difference between the revalued amount and the book value on accounting records of contributed inventory).

- In the case where the revalued amount of contributed fixed assets is greater than the remaining value on the accounting records, record:

Debit Account 222 - Joint Venture Contribution Capital (Revalued Amount)

Debit Account 214 – Depreciation of TFA (Depreciation Value)

Credit Accounts 211, 213, 217 (Original Cost)

Credit Account 711 – Other Income (Difference between the revalued amount and the remaining value of contributed fixed assets).

In the case where the revalued amount (agreed by both parties) of contributed non-monetary assets is less than the book value, accounting shall be carried out in accordance with the current enterprise accounting regulations.

1.2. In the case where the joint venture contributor sells inventory or fixed assets to a jointly controlled operation

- Recording sales revenue, cost of goods sold, other income, and other expenses arising from the transaction of the joint venture contributor selling inventory or fixed assets to a jointly controlled operation shall be carried out in accordance with the current enterprise accounting regulations.

- At the end of the period, accounting transfers all sales revenue and other income arising from the transaction of the joint venture contributor selling inventory or fixed assets to a jointly controlled operation (without deferring the corresponding benefit related to its ownership interest in the jointly controlled operation), recorded as follows:

Debit Account 511 – Sales Revenue and Service Revenue

Debit Account 711 – Other Income

Credit Account 911 – Determination of Operating Results.

2. On the consolidated financial statements of the joint venture contributor

2.1. In the case where the joint venture contributor contributes inventory or sells inventory to a jointly controlled operation

a) Recognize unearned revenue corresponding to the profit of the joint venture contributor arising from the transaction of contributing inventory or selling inventory during the period.

At the end of the period, when preparing the consolidated financial statements, the joint venture contributor bases on the value of inventory contributed or sold (with profit) to the jointly controlled operation during the period but the jointly controlled operation has not yet sold the inventory to an independent third party, the joint venture contributor must defer and recognize as unearned revenue the portion of profit from the contribution or sale of inventory corresponding to its interest in the joint venture. The adjusting entry on the Summary of Adjusting Items is made as follows:

- In the case of contributing profitable inventory:

Debit Other Income (Deferred Profit from Contributing Inventory Corresponding to Its Interest in the Joint Venture)

Credit Unearned Revenue.

- In the case of selling profitable inventory:

Debit Sales Revenue and Service Revenue (Deferred Profit from Selling Inventory Corresponding to Its Interest in the Joint Venture)

Credit Unearned Revenue.

b) When the joint venture sells inventory (received as contribution or purchased from the joint venture contributor) to a third party in the subsequent period:

- Recognize unearned revenue at the beginning of the period: Based on the unrealized profit related to the inventory that the jointly controlled operation has not yet sold to a third party at the end of the previous period, accounting recognizes unearned revenue corresponding to the deferred profit related to its interest in the joint venture at the beginning of the period:

Debit Undistributed Post-Tax Profit (Unrealized Profit at the Beginning of the Period)

Credit Unearned Revenue.

- Recognize realized profit during the period: Based on the inventory sold by the jointly controlled operation to a third party during the period, accounting transfers unearned revenue to sales revenue and service revenue or other income to determine the operating results for the period:

Debit Unearned Revenue

Credit Sales Revenue and Service Revenue (For the sale of inventory)

Credit Other Income (For the contribution of inventory).

c) Adjust the impact of deferred corporate income tax:

- Record deferred tax assets due to unearned revenue arising from transactions involving contribution of inventory or sale of inventory to a business entity under common control during the period:

At the end of the accounting period, when preparing consolidated financial statements, accountants base on unearned revenue recognized during the period to record deferred tax assets arising during the period:

Debit Deferred Income Tax Assets

Credit Deferred Corporate Income Tax Expense.

- Record deferred income tax assets at the beginning of the period due to unearned revenue: Based on the amount of unearned revenue at the beginning of the period, accountants record deferred tax assets at the beginning of the period:

Debit Deferred Income Tax Assets

Credit Undistributed Profit After Tax.

- Reverse deferred tax assets due to transfer of unearned revenue arising during the period to the income statement: Based on the amount of unearned revenue transferred to sales revenue or other income due to the business entity under common control selling goods to third parties during the period, accountants reverse deferred tax assets corresponding to the portion of unearned revenue converted to earned revenue during the period:

Debit Deferred Corporate Income Tax Expense

Credit Deferred Income Tax Assets.

2.2. In the case where the joint venture contributor contributes fixed assets or sells fixed assets to a business entity under common control

a) Record unearned revenue corresponding to the profit share of the joint venture contributor arising from transactions involving contribution of fixed assets or sale of fixed assets during the period.

At the end of the period, when preparing consolidated financial statements, the joint venture contributor bases on the profit not yet realized arising from transactions involving contribution of fixed assets or sale (with profit) to a business entity under common control during the period and the depreciation period of fixed assets applied by the business entity under common control, the joint venture contributor must defer and recognize as unearned revenue the profit from contribution or sale of fixed assets corresponding to its interest in the joint venture. The adjusting entry on the Summary of Adjusting Items is made as follows:

Debit Other Income (Deferred profit from contribution of fixed assets corresponding to its interest in the joint venture)

Credit Unearned Revenue.

b) When the joint venture entity under common control depreciates fixed assets received from contribution or purchase from the joint venture contributor in the subsequent period:

- Record unearned revenue at the beginning of the period: Based on the profit not yet realized related to fixed assets received from contribution or purchase from the previous period, accountants record unearned revenue for the deferred profit corresponding to its interest in the joint venture at the beginning of the period:

Debit Undistributed Post-Tax Profit (Unrealized Profit at the Beginning of the Period)

Credit Unearned Revenue.

- Record realized profit during the period: Based on the depreciation period of fixed assets applied by the business entity under common control, accountants allocate gradually the unearned revenue to other income to determine the operating results during the period:

Debit Unearned Revenue

Credit Other Income.

c) Adjust the impact of deferred corporate income tax:

- Record deferred tax assets due to unearned revenue arising from transactions involving contribution of fixed assets or sale of fixed assets to a business entity under common control during the period:

At the end of the accounting period, when preparing consolidated financial statements, accountants base on unearned revenue recognized during the period to record deferred tax assets arising during the period:

Debit Deferred Income Tax Assets

Credit Deferred Corporate Income Tax Expense.

- Record deferred income tax assets at the beginning of the period due to unearned revenue: Based on the amount of unearned revenue at the beginning of the period, accountants record deferred tax assets at the beginning of the period:

Debit Deferred Income Tax Assets

Credit Undistributed Profit After Tax.

- Reverse deferred tax assets due to allocation of unearned revenue arising during the period to the income statement: Based on the unearned revenue allocated to other income due to the business entity under common control depreciating fixed assets during the period, accountants reverse deferred tax assets corresponding to the portion of unearned revenue converted to earned revenue during the period:

Debit Deferred Corporate Income Tax Expense

Credit Deferred Income Tax Assets.

Article 23. Supplementary guidance on the valuation adjustment accounting method and conversion of balances on accounting records when changing the form of enterprise ownership

1. In the case of a state-owned enterprise with 100% state capital being converted into a joint-stock company

The enterprise accounts according to the provisions of Circular No. 106/2008/TT-BTC dated November 18, 2008 of the Ministry of Finance "Guidelines for Accounting when Converting a State-Owned Enterprise with 100% State Capital into a Joint-Stock Company".

2. Other cases of changing the form of enterprise ownership

2.1. Valuation adjustment accounting

In the case where the enterprise is permitted to re-determine the value of the enterprise at the time of change according to the law, accountants record the difference in asset valuation as other income or other expenses, recorded as follows:

- For assets valued higher, record:

Debit relevant accounts

Credit Account 711 – Other Income.

- For assets valued lower, record:

Debit Account 811 - Other Expenses

Credit relevant accounts.

The determination of taxable income and deductible expenses for corporate income tax is carried out in accordance with the law on corporate income tax.

2.2. Conversion of balances on accounting records and presentation of financial statements

When changing the form of ownership, the enterprise must lock the accounting books, prepare financial statements in accordance with the law. In the first accounting period after the change, the enterprise must record in the accounting books and present financial statements according to the following principles:

- For accounting books reflecting assets, liabilities, and owner's equity: All balances of assets, liabilities, and owner's equity on the old enterprise's accounting books are recorded as opening balances on the new enterprise's accounting books. The opening balance row on the new enterprise's accounting books has no figures.

- For the Balance Sheet: All balances of assets, liabilities, and owner's equity inherited from the old enterprise before the change are recorded as opening balances of the new enterprise and presented in the "End of Year" column. The "Beginning of Year" column has no figures.

- For the Income Statement: Only figures from the date of change to the end of the first reporting period are presented in the "This Year" column. The "Last Year" column has no figures.

- For the Cash Flow Statement: Only figures from the date of change to the end of the first reporting period are presented in the "This Year" column. The "Last Year" column has no figures.

Article 24. Amend Part Two - Financial Reporting System of the Accounting Regulations for Enterprises issued together with Decision No. 15/2006/QĐ-BTC dated March 20, 2006 of the Minister of Finance

1. Amend and supplement some items on the Balance Sheet

- Change the code number of the "Reward and Welfare Fund" indicator - Code number 431 on the Balance Sheet to Code number 323 on the Balance Sheet. The data to be recorded in the "Reward and Welfare Fund" indicator is the credit balance of Account 353 - "Reward and Welfare Fund" on the General Ledger or Journal General Ledger.

- Add the "Unrealized Revenue" indicator - Code number 338 on the Balance Sheet. This indicator reflects the amounts of revenue not yet realized at the reporting date. The data to be recorded in the "Unrealized Revenue" indicator is the credit balance of Account 3387 - "Unrealized Revenue" on the detailed accounting ledger of Account 3387.

- Amend the "Advance Payment from Buyer" indicator - Code number 313 on the Balance Sheet. The advance payment from buyer indicator reflects the total amount of advance payments made by buyers to purchase assets, goods, investment real estate, services at the reporting date. This indicator does not reflect unrealized revenues (including advance receipts). The data to be recorded in the "Advance Payment from Buyer" indicator is the detailed credit balance of Account 131 - "Receivables from Customers" opened for each customer on the detailed accounting ledger of Account 131.

- Add the "Science and Technology Development Fund" indicator - Code number 339 on the Balance Sheet. This indicator reflects the Science and Technology Development Fund not yet utilized at the reporting date. The data to be recorded in the "Science and Technology Development Fund" indicator is the credit balance of Account 356 - "Science and Technology Development Fund" on the accounting ledger of Account 356.

- Add the "Enterprise Restructuring Support Fund" indicator - Code number 422 on the Balance Sheet. This indicator reflects the Enterprise Restructuring Support Fund not yet utilized at the reporting date. The data to be recorded in the "Enterprise Restructuring Support Fund" indicator is the credit balance of Account 417 - "Enterprise Restructuring Support Fund" on the accounting ledger of Account 417.

2. Amend and supplement the Notes to Financial Statements

2.1. When enterprises use foreign currency for bookkeeping, preparing and presenting financial statements, enterprises must convert the financial statements into Vietnamese Dong according to the guidelines set out in Chapter II of this Circular. In the notes to the financial statements, for indicators that require explanation of the beginning-of-year figure, the year's transactions, and the end-of-year figure, if there is a difference due to exchange rate fluctuations leading to the beginning-of-year figure (converted using the opening period exchange rate) plus (or minus) the year's transactions (converted using the transaction date exchange rate) differing from the end-of-year figure (converted using the closing period exchange rate), additional information about the exchange rate differences directly related to the item being explained must be presented.

2.2. Amend and supplement Point 2 "Short-term Financial Investments" - Section V - Notes to Financial Statements as follows:

2.3. Amend and supplement Point 13 "Other Long-term Investments" - Section V - Notes to Financial Statements to explain Indicator Code number 250 on the Balance Sheet as follows:

Chapter V

IMPLEMENTATION

Article 25. This Circular takes effect 45 days from the date of signature. Parts of accounting not covered but relevant to this Circular shall be implemented according to the Accounting System for Enterprises issued pursuant to Decision No. 15/2006/QD-BTC dated March 20, 2006 of the Minister of Finance. The Accounting System for Construction Units issued pursuant to Decision No. 1864/1998/QD-BTC dated December 16, 1998 of the Minister of Finance; the accounting regulations for enterprises and organizations with foreign capital stipulated in Circular No. 55/2002/TT-BTC dated June 26, 2002 and Circular No. 122/2004/TT-BTC dated December 22, 2004 of the Ministry of Finance are no longer applicable.

Article 26. State Corporations, Companies with special accounting systems already issued by the Ministry of Finance through separate Circulars or approved must base their guidance and supplements on this Circular.

Article 27. Ministries, sectors, People's Committees, Departments of Finance, Tax Departments of Provinces and Cities under Central Government have the responsibility to guide enterprises to implement this Circular. During implementation, if there are difficulties, please report to the Ministry of Finance for research and resolution./.