Circular No. 27-TC/CĐKT of the Ministry of Finance guiding accounting for the results of comprehensive inventory and revaluation of fixed assets at 00:00 on October 1, 1985

CIRCULAR

ISSUED BY THE MINISTRY OF FINANCE DECREE NO. 27-TC/CĐKT ON MAY 29, 1985 GUIDING
ACCOUNTING FOR THE RESULTS OF THE COMPREHENSIVE INVENTORY AND REVALUATION OF FIXED ASSETS
AT 0 O'CLOCK ON OCTOBER 1, 1985

Pursuant to Decision No. 157-HĐBT dated December 16, 1983 and Decision No. 125-HĐBT dated April 23, 1985 of the Council of Ministers on the comprehensive inventory and revaluation of fixed assets at production and business units at 0 o'clock on October 1, 1985, the Ministry of Finance guides accounting for the results of the comprehensive inventory and revaluation of fixed assets as follows:

I. ACCOUNTING FOR THE RESULTS OF THE COMPREHENSIVE INVENTORY

1. Accounting for excess fixed assets discovered during the comprehensive inventory.

a) If excess fixed assets of the unit discovered during the comprehensive inventory are not recorded in the books, immediately after the report on the results of the comprehensive inventory is approved by the head of the unit, the accountant must base on the surplus fixed asset record and the fixed asset file to establish a fixed asset card, record in the fixed asset ledger, and increase the value of fixed assets and fixed capital according to the original price recorded in the file:

Debit Account 01 "Fixed Assets"

Credit Account 85 "Basic Capital" (85.1 - Fixed Capital)

b) If the excess fixed assets mentioned above are currently being used, the accountant must base on the original price and depreciation rate to determine the basic depreciation and major repair depreciation during the usage period to add to the cost of goods sold or circulation expenses for the period:

Debit: Various production cost accounts or circulation fee accounts

Credit Account 86 "Depreciation Capital"

(Basic Depreciation and Major Repair Depreciation)

At the same time, account for the depreciation value of fixed assets according to the determined basic depreciation:

Debit Account 85 "Basic Capital" (85.1 - Fixed Capital)

Credit Account 02 "Depreciation of Fixed Assets"

c) If the excess fixed assets discovered during the comprehensive inventory are determined to be the fixed assets of another unit, the accountant must immediately inform the owner unit of such assets. If the owner unit cannot be identified, the accountant must immediately report to the superior management authority and the same-level financial authority for handling. The accountant bases on the inventory records to account for outside the summary sheet of assets for monitoring.

2. Accounting for missing fixed assets discovered during the comprehensive inventory.

Missing fixed assets discovered during the comprehensive inventory must be traced for causes, responsibility determined, and handled according to regulations; simultaneously, a report with recommendations is sent to the superior management authority for consideration and decision. While waiting for resolution, the accountant bases on the approved shortage fixed asset record by the unit head and the fixed asset file to immediately reduce the value of fixed assets and fixed capital according to the original price and basic depreciation already recorded in the accounting books:

+ Debit Account 85 "Basic Capital" (85.1 - Fixed Capital)

Credit Account 01 "Fixed Assets"

+ Debit Account 02 "Depreciation of Fixed Assets"

Credit Account 85 "Basic Capital" (85.1 - Fixed Capital)

Simultaneously transfer the remaining value (original price - basic depreciation already recorded) of the missing fixed assets to the "Damaged, Shortage or Surplus Assets Awaiting Resolution" account:

Debit Account 84 (84.1) "Damaged, Shortage or Surplus Assets Awaiting Resolution"

Credit Account 85 "Basic Capital" (85.2 - Current Capital)

Upon receiving the decision from the competent authority, the accountant records according to the general provisions:

- If the person at fault compensates, record:

Debit Account 75 "Compensation Payments"

Credit Account 84 "Damaged, Shortage or Surplus Assets Awaiting Resolution"

- If the capital is reduced, record:

Debit Account 85 "Basic Capital" (85.2 - Current Capital)

Credit Account 84 "Damaged, Shortage or Surplus Assets Awaiting Resolution" (84.1)

- If it is transferred to loss, record:

Debit Account 99 "Profit and Loss"

Credit Account 84 (84.1) "Damaged, Shortage or Surplus Assets Awaiting Resolution".

II. ACCOUNTING FOR THE RESULTS OF THE REVALUATION OF FIXED ASSETS

Accounting for the results of the revaluation of fixed assets involves accounting for the difference in the increased original value of existing fixed assets due to revaluation based on the restored price system. Additionally, due to the reassessment of the actual depreciation of fixed assets, there is also accounting for the difference between the actual depreciation value calculated based on the restored price and the depreciation value recorded in the books.

Accounting for the results of the revaluation of fixed assets is carried out according to the State's decision after reviewing the results of the comprehensive inventory and revaluation of fixed assets.

1. Accounting for the difference in the increased original value of fixed assets due to revaluation:

The difference in the increased original value of fixed assets due to revaluation may be recorded as an increase in the value of fixed assets and fixed capital in the accounting books when there is a decision from the State:

Debit Account 01 "Fixed Assets"

Credit Account 85 "Basic Capital" (85.1 - Fixed Capital)

When increasing the value of fixed assets and fixed capital according to the revalued price (restored price), the new original price (restored price) must be reflected on the ledger and fixed asset card simultaneously.

During the period when the State has not decided to record an increase in the value of fixed assets and fixed capital according to the new original price (restored price), transactions involving the transfer, sale, or liquidation of fixed assets after the comprehensive inventory and revaluation of fixed assets at 0 o'clock on October 1, 1985, are reflected on the original voucher according to two prices (old original price and new original price). The transferring unit records a decrease in the value of fixed assets and fixed capital, while the receiving unit records an increase in the value of fixed assets and fixed capital according to the old original price; simultaneously, monitor separately the difference due to revaluation of those transferred or reduced fixed assets to adjust the accounting books according to the revalued price (restored price) when there is a State decision to increase or decrease capital at each unit.

Example 1: According to the inventory records at 0 o'clock on October 1, 1985, of Enterprise A, the total difference in the increased original value of various types of fixed assets due to revaluation is 8,000,000 dong, and the total difference in actual depreciation compared to book depreciation (basic depreciation already recorded) is 2,000,000 dong. During the period from the inventory date to the State decision to record an increase in the value of fixed assets and fixed capital, Enterprise A sells a fixed asset with an old original price of 10,000 dong, a new original price (restored price) of 25,000 dong, and basic depreciation already recorded in the books of 5,000 dong, with actual depreciation determined through the inventory of 9,000 dong.

Accounting entries are made as follows:

- When transferring fixed assets for sale: based on the accounting record of the sale of fixed assets, the accounting entries shall be recorded in the fixed asset card, the fixed asset ledger, and the reduction of the original value of the fixed asset capital according to its original cost:

+ Debit Account 85 - "Basic Capital": 10,000 dong

(85.1 - Fixed Capital)

Credit Account 01 - "Fixed Assets": 10,000 dong + Debit Account 02 - "Depreciation of Fixed Assets": 5,000 dong Credit Account 85 - "Basic Capital": 5,000 dong

(85.1 - Fixed Capital)

At the same time, the accounting entry for the sale of fixed assets shall be processed according to the current regulations.

When there is a State decision allowing the reflection of the results of revaluation of fixed assets in the books, the accounting entries shall be made as follows:

+ The difference in original cost:

Debit Account 01 - "Fixed Assets": 8,000,000 dong Credit Account 85 - "Basic Capital": 8,000,000 dong

(85.1 - Fixed Capital)

+ The difference in depreciation of fixed assets:

Debit Account 85 - "Basic Capital": 2,000,000 dong

(85.1 - Fixed Capital)

Credit Account 02 - "Depreciation of Fixed Assets": 2,000,000 dong

At the same time, adjust the accounting records of fixed assets for the difference in original cost and the difference between actual depreciation value and book depreciation value (basic depreciation already accrued) of the transferred fixed assets:

- Debit Account 85 - "Basic Capital": 15,000 dong (25,000 - 10,000)

(85.1 - Fixed Capital)

Credit Account 01 - "Fixed Assets": 15,000 dong

- Debit Account 02 - "Depreciation of Fixed Assets": 4,000 dong (9,000 - 5,000)

Credit Account 85 - "Basic Capital": 4,000 dong

(85.1 - Fixed Capital)

2. Accounting for the difference between the actual depreciation value calculated based on the restored price and the book depreciation value (basic depreciation already accrued) of fixed assets.

The difference between the actual depreciation value and the book depreciation value of fixed assets is determined for each item recorded in the fixed asset ledger and reflected on the inventory sheet of fixed assets. This difference is determined by multiplying the actual depreciation rate of each fixed asset identified during the comprehensive inventory by (x) the restored value (new original cost) of that fixed asset to calculate the actual depreciation value of each fixed asset, then summing up all fixed assets, comparing the actual depreciation value with the book depreciation value (basic depreciation already accrued) to derive the increase or decrease in depreciation value for each fixed asset and all fixed assets.

Example 2: According to the comprehensive inventory report of Factory B, a fixed asset has a value (based on the old original cost) of 1,000,000 dong, new original cost of 3,000,000 dong, basic depreciation already accrued of 500,000 dong, and the actual depreciation rate determined during the comprehensive inventory is 60%.

Therefore, the actual depreciation value calculated based on the restored price is:

3,000,000 x 60% = 1,800,000 dong

The increase difference between the actual depreciation value calculated based on the restored price and the book depreciation value (basic depreciation already accrued) of the aforementioned fixed asset is:

1,800,000 dong - 500,000 dong = 1,300,000 dong

Accounting entries are made as follows:

+ The difference in original cost (3,000,000 - 1,000,000)

Debit Account 01 "Fixed Assets" 2,000,000 Credit Account 85 "Basic Capital" 2,000,000

(85.1 - Fixed Capital)

+ The difference in depreciation of fixed assets.

Debit Account 85 "Basic Capital": 1,300,000

(85.1 Fixed Capital)

Debit Account 02 "Depreciation of Fixed Assets": 1,300,000

The entire increase or decrease difference between the actual depreciation value and the book depreciation value of fixed assets is reflected in the accounting records simultaneously with the results of the revaluation of fixed assets when there is a State decision:

If the difference increases, record:

Debit Account 85 "Basic Capital":

(85.1 - Fixed Capital)

Credit Account 02 "Depreciation of Fixed Assets":

If the difference decreases, record:

Debit Account 02 "Depreciation of Fixed Assets":

Credit Account 85 "Basic Capital":

(85.1 - Fixed Capital) (See Example 1 Section II)

Additionally, it is necessary to determine the difference in basic depreciation and major repair depreciation accrued according to the old original cost from the revaluation date of 0 hours on October 1, 1985, to the date of capital increase or decrease to record the increase or decrease in the depreciation value of fixed assets and supplement production costs or circulation expenses for the period according to the State's decision.

This difference is determined by multiplying the basic depreciation rate and major repair depreciation by (x) the new original cost (restored value) of the fixed asset, and comparing the result with the depreciation already accrued according to the old original cost during the above period. If this difference is allowed by the State to be supplemented into production costs or circulation expenses, record:

Debit: Various production cost accounts or circulation fee accounts

Credit Account 86 - "Depreciation Capital":

As for the difference in basic depreciation during the above period, it is recorded to increase or decrease the depreciation value of fixed assets:

If the difference increases, record:

Debit Account 85 - "Basic Capital":

(85.1 - Fixed Capital)

Credit Account 02 - "Depreciation of Fixed Assets":

If the difference decreases, record:

Debit Account 02 - "Depreciation of Fixed Assets":

Credit Account 85 - "Basic Capital":

(85.1 - Fixed Capital)

III. SOME MATTERS TO BE DONE TO REGULATE THE ACCOUNTING OF FIXED ASSETS AFTER COMPREHENSIVE INVENTORY AND REVALUATION OF FIXED ASSETS
ACCOUNTING FOR FIXED ASSETS TRANSFERRED TO LABOR TOOLS UNDER CURRENT STANDARDS AFTER COMPREHENSIVE INVENTORY AND REVALUATION OF FIXED ASSETS

1. Accounting for fixed assets transferred to labor tools under current standards.

According to Article II of Circular No. 13-TC/DTXD dated March 10, 1985 of the Ministry of Finance "guiding the establishment and use of the basic depreciation reserve left for enterprises and amending some points in the depreciation system of fixed assets," the standard for fixed assets (which differs from the provisions in Decision No. 215-TC/CDTCT dated October 2, 1985 of the Ministry of Finance) must meet the following two conditions:

- Having a value of 10,000 dong or more.

- Usage period of over one year.

Based on the above standard, from January 1, 1985, construction materials or purchases that meet the above two conditions shall be accounted for as fixed assets. For construction materials or purchases before January 1, 1985, enterprises must base their accounts on the results of the comprehensive inventory and revaluation according to the restored value, review and exclude those materials that do not meet either of the two conditions mentioned above (except for certain types specified according to industry characteristics) and transfer them to labor tools under current circulating assets.

The accounting department bases on the inventory check sheet, asset card (or fixed asset book) to prepare a list of fixed assets converted into tools for labor under current assets, file the old fixed asset cards into the archive, reduce the number of fixed assets of the enterprise, simultaneously decrease the value of fixed assets and fixed capital, increase the value of tools for labor under current assets, and increase working capital when there is a decision from the State: Debit Account 12 "Tools for labor under current assets"

Debit 12.1 - If the asset has not been used and is still in storage.

Debit 12.2 - If the asset is currently in use.

Credit Account 01 - "Fixed Assets":

(Record the original cost of fixed assets)

Simultaneously, the accountant records:

Debit Account 85 (85.1) - "Basic Capital" (Fixed Capital)

Credit Account 85 (85.2) - "Basic Capital" (Working Capital)

If the fixed asset that is currently in use and has been depreciated is transferred to tools for labor under current assets, then when transferring from fixed capital to working capital, only the remaining value of the asset (original cost - accumulated depreciation) is transferred. The accumulated depreciation is transferred to the value of tools for labor under current assets and recorded:

Debit Account 02 - "Depreciation of Fixed Assets":

Credit Account 13 - "Allocation of Tools for Labor Under Current Assets".

The accounting department proceeds to record the quantity and value of tools for labor in use according to the using units.

2. Organize the arrangement and preservation of the original file of fixed assets collected and completed during the comprehensive inventory.

The original file of fixed assets includes:

- Technical files including: technical design documents, performance guide, function, usage instructions, etc... (responsible by the technical department). - Accounting files including: documents such as budgeted price, invoices, transportation costs, asset transfer receipts, major repairs, installation, trial operation, etc... (responsible by the accounting department).

Each fixed asset's file must be arranged in a separate envelope and stored neatly in the file cabinet according to type and fixed asset register order.

3. Review the entire recording reflecting the results of the comprehensive inventory and re-evaluate fixed assets.

On detailed and consolidated accounting books from now on, enterprises must adjust and maintain the system of initial documents issuance and circulation regarding fixed assets. Adjust the recording and card of fixed assets according to the prescribed regulations, organize the filing cabinet for fixed assets, establish procedures for the circulation of initial documents and accounting of fixed assets within the enterprise and subordinate units, organize regular inspections of the management and use of fixed assets and accounting work at the accounting department as well as at the using units. Regularly organize analysis of the situation and effectiveness of fixed asset utilization.

Above is the Ministry of Finance's guidance on accounting for the results of the comprehensive inventory and re-evaluation of fixed assets as of 00:00 on October 1, 1985. In the course of implementation, if there are difficulties, please report to the Ministry of Finance for resolution.