Decision No. 351-TC/QÐ/CÐKT on the issuance of management, use, and depreciation rate frameworks for fixed assets in administrative and public service units.

1 - Scope of Application

Article 1:

These regulations apply to all administrative and public service units (HCSN) under Ministries, agencies at the level of Ministries, government agencies, and provinces and centrally-administered cities, social organizations managed by central and local authorities, and armed forces operating with state budget funds or other sources of funding.

Administrative and public service units that are subsidiaries of enterprises (underholding corporations) if they operate with state budget funds and use state-owned fixed assets are mandatory subjects of these regulations.

2 - Application Provisions

Article 2:

During their operations, administrative and public service units within the scope of application as stipulated in Article 1 must strictly comply with all provisions regarding management, use and depreciation of fixed assets as set out in these regulations.

Special fixed assets in the fields of national defense and security shall be regulated by the Ministry of Defense and the Ministry of Interior and can only be applied after obtaining written agreement from the Ministry of Finance.

Fixed assets of administrative and public service units used for production, business, service activities, non-profit activities (dedicated or combined use) or for lease (with permission from the financial authority) must calculate and accrue depreciation according to the "Regulations on Management, Use and Accrual of Depreciation of Fixed Assets" (Decision No. 1062-TC/QĐ/CSTC dated November 14, 1996 of the Minister of Finance) depending on the degree of use.

1 - Standards and Identification of Tangible Fixed Assets

Article 3:

Standards and Identification of Tangible Fixed Assets

Tangible fixed assets are material assets with independent structure, or a system consisting of multiple separate parts linked together to perform one or several specific functions (if any part is missing, the entire system cannot function), satisfying both of the following criteria simultaneously:

- Having a usage period of one year or more.

- Having a value of 5,000,000 VND (five million dong) or more;

Article 4:

In administrative and public service units, certain types of fixed assets are specified as follows:

1/ The following types of labor materials with a usage period of over one year but not meeting the value standard (less than five million dong) are still considered fixed assets, specifically including:

a - Machinery, equipment, office management means, such as: Computer systems, peripheral devices of computers (stabilizers, power supplies,...), video players, telephones, research and study tools, laser printers or other printers (bought separately from computers), radio and television sets, refrigerators, typewriters (OPTINA, ..), calculators (NISSA, ..), safes, metal shelves for documents, measuring equipment (various scales: table scales, analytical balances, electronic scales,...), sofa sets with foam cushions, leather (or fabric) covers;...

b - Transportation and travel means: Motorcycles (types valued less than 5 million dong) and other transportation and travel means;

c - High-quality wooden, rattan, bamboo, plastic items: Desks, wardrobes, filing cabinets, various bookshelves, stationery, etc.;

d - Working animals, animals for products, ornamental animals: Cattle, buffalo, horses, donkeys, elephants, police dogs... and wild animals kept in parks, zoos.

đ - Precious collections of books on specialized, scientific, historical topics, etc., in research institutes, libraries, museums, etc.

e - Documents, maps, and other materials for investigation, survey, planning, measurement, and exploration of national resources must be stored and kept on behalf of the State.

g - Artistic works, historical relics, commemorative items, etc., with high historical and artistic value.

h - Types of books and materials serving the specialized work of each unit.

i - Types of temporary houses made of bamboo, reed, palm leaves, such as classrooms in general education schools, working houses, etc. Architectural structures made of various materials, such as fences, drainage channels, retaining walls, courtyards, sidewalks, flower pots, etc.

2/ The following labor materials, although meeting the criteria of value (from five million dong upwards), are easily damaged or broken and therefore are not considered fixed assets:

- Glass and porcelain items (except experimental and scientific research equipment)

Ministries, sectors, central-level social organizations, and provincial finance departments have the responsibility to specify the detailed list of special fixed assets and can only implement this when they receive written agreement from the Ministry of Finance (State Asset Management Department).

Article 5:

The method of determining the object to be recorded for a type of specific fixed asset as a basis for monitoring, management, and recording in the fixed asset accounting book:

- For systems consisting of multiple individual property parts interconnected, where each component has a different usage period and operates independently, and requires separate management of each part, each part is considered an independent fixed asset recording object.

- For working animals, ornamental animals, or animals producing products, each individual animal is considered a fixed asset recording object.

- For perennial tree gardens, each plot of trees (or group of trees) is considered a fixed asset recording object.

Article 6:

Priceless fixed assets include special properties that cannot be valued but require strict physical management (such as antiques, ancient books, museum exhibits, mausoleums, etc.).

Central ministries, sectors, social organizations, and provincial finance departments are responsible for compiling a list of priceless fixed assets and reporting it to the Ministry of Finance (State Asset Management Department).

Article 7:

Criteria and identification of intangible fixed assets

Any actual expenses incurred by the unit related to its activities, if simultaneously meeting both criteria of fixed assets without forming tangible fixed assets, are considered intangible fixed assets. If these expenses do not simultaneously meet both criteria, they are not recorded as increases in intangible fixed assets.

2 - Classification of Fixed Assets

Article 8:

Fixed assets in public service units are mainly classified according to their structure, aiming to determine the proportion of each type of fixed assets in each unit, while also serving as a basis for comprehensive classification in the national economy. Under this classification, fixed assets of public service units include the following types:

a/ Buildings and architectural structures, including:

+ Buildings: Working buildings, theaters, museums, libraries, conference halls, clubs, cultural centers, sports arenas, research and laboratory rooms, practical training rooms, classrooms, kindergartens, medical examination and treatment buildings, rest houses, livestock sheds, warehouses, parking lots for machines and equipment, etc.

+ Architectural structures: Including wells, playgrounds, drying yards, bridges, drainage systems, dikes, dams, roads (constructed by the unit), stadiums, swimming pools, shooting ranges, mausoleums, monuments, surrounding walls, etc.

b/ Machinery and equipment: Various types of machinery and equipment used in the unit's specialized work, such as machinery and equipment for cultural, information, propaganda services, research, practical training, experiments, medical diagnosis and treatment, teaching, exploration, surveys, production, business operations, and welfare needs of the unit.

c/ Transportation and transmission means: Means of transportation and transmission used for the unit's specialized work (including motorcycles, bicycles, cars, trains, ships, ox carts, horse carriages, motorized rickshaws, pipelines, and other transmission devices (for information, water, electricity, etc.) and other unit activities (production, business, welfare).

d/ Management equipment: Equipment used in management and office work, such as computers, ceiling fans, desk fans, desks and chairs, measuring and quality inspection equipment, dehumidifiers, dust extractors, pest control equipment, etc.

đ/ Other fixed assets: Other types of fixed assets not covered above (mainly special fixed assets) such as artworks, scientific and technical journals in libraries, books and newspapers serving specialized work, exhibits in museums, design samples provided by the unit to other units for rent; Living fixed assets such as perennial trees, working animals, ornamental animals, and animals for products, ornamental gardens, etc.

Article 9:

Fixed assets of public service units are also classified based on their usage and utility to determine the actual status of fixed assets used for the unit's activities. Under this classification, fixed assets of the unit include the following types:

- Fixed assets used for public service activities;

- Fixed assets used for program, project, and topic activities;

- Fixed assets specifically used for production, business, and service activities;

- Fixed assets used for welfare purposes;

- Fixed assets awaiting disposal (no longer needed or no longer usable);

3 - Principles and methods for determining the original cost of fixed assets

Article 10:

In principle, the original cost of fixed assets is determined based on the actual formation cost of the fixed assets.

Article 11:

Depending on different sources of formation, the original cost of tangible fixed assets is determined as follows:

a/ Purchased fixed assets:

The original cost of purchased fixed assets (including new and used purchases) includes: Actual purchase price (as stated on the invoice) minus (-) discounts and purchase allowances (if any) and plus (+) transportation costs, loading and unloading fees, repair and improvement costs before the fixed asset is put into use, installation and trial operation costs, taxes, and registration fees (if any).

b/ Constructed fixed assets:

The original value of fixed assets of the investment construction type (both self-made and outsourced) is the actual price of the construction project approved in the final settlement according to the current Investment Management and Construction Regulations, related costs, and stamp duty (if applicable).

For fixed assets that are working animals, ornamental animals, and animals for products and perennial orchards, the original value is the total of all actual, reasonable, and legitimate expenses incurred from the formation until the commencement of operation and use of such animals or orchards, according to the current Investment Management and Construction Regulations, related costs, and stamp duty (if applicable).

c/ Fixed assets received through allocation or transfer.

The original value of fixed assets received through allocation or transfer... is the value recorded in the handover document (original value, remaining value) or the actual valuation by the handover committee, plus repair, renovation, and upgrade costs; transportation, unloading, installation, trial run costs, and stamp duty (if applicable) that the receiving party must bear before putting the fixed asset into use.

d/ Fixed assets received through sponsorship, aid, gifts, donations... is the value calculated by the financial authority for budget revenue and expenditure records or the actual valuation by the handover committee, plus repair, renovation, and upgrade costs, transportation, unloading, installation, trial run costs, and stamp duty (if applicable) that the receiving party must bear before putting them into use.

đ/ Special assets (priceless assets) are recorded in accounting books based on agreed-upon prices, but not included in the total value of fixed assets of the entity. Agreed-upon prices are determined based on market prices or the values of similar assets.

Article 12:

The original value of intangible fixed assets is determined specifically as follows:

- Land: Is the total of all actual expenses directly related to the land being used.

- Patent rights: The value of patent rights is determined by the costs incurred by the entity for research and experimental production projects awarded patent rights by the State or for purchasing patent rights from domestic and foreign researchers.

- Copyrights: Is the total amount paid as remuneration to the author recognized by the State for exclusive rights to publish and sell the work.

- Computer software costs: Are the payments made for programming services or the purchase of computer software according to the programs of the entity (for entities using computers for record-keeping and management).

4 - Specific regulations on fixed asset management

Article 13:

All fixed assets in public institutions must have their own files (the file includes the handover document of fixed assets, contracts, invoices for purchasing fixed assets, and other relevant documents) and must be monitored, managed, used, and depreciated strictly in accordance with the provisions of this system. Fixed assets must be classified, statistically recorded, numbered, and detailed tracked according to each object recorded as fixed assets and reflected in the fixed asset tracking book.

Fixed assets that have been fully depreciated but are still usable and participating in the activities of the entity shall not be removed from the fixed asset records and shall continue to be managed like other fixed assets.

Periodically at the end of each fiscal year, or irregularly (in cases of handover, division, merger, dissolution of the entity, or comprehensive inventory and revaluation of fixed assets according to the State's policy), public institutions must conduct an inventory of fixed assets. Any surplus or shortage of fixed assets discovered must be clearly recorded in the inventory report, with the cause identified, responsibility determined, remedial measures proposed, and promptly recorded in the relevant accounting books according to the current public institution accounting regulations.

Article 14:

All fixed assets in public institutions must be managed both physically and in terms of value (including special and priceless fixed assets). Regular and irregular reporting systems for fixed assets must be implemented according to State regulations. Fixed assets formed through aid, gifts, donations, or contributions must be appraised, their original value determined, and depreciation calculated similarly to fixed assets formed from State budget funds or with origins from the State budget.

For fixed assets requiring registration for use or circulation, when they are accepted for management and use, timely registration must be carried out. When they are no longer needed (liquidation, sale, transfer to another unit), the registration must be terminated or transferred immediately to the receiving unit. Fixed assets of agencies and units may not be used for personal purposes, leasing, production, business, or services without permission from the competent authority.

Article 15:

The monitoring, management, use, and depreciation of fixed assets must follow the principle of valuing according to the original value, accumulated depreciation, and remaining value on the fixed asset accounting book:

Remaining value = Original value - Accumulated depreciation

of fixed assets fixed assets fixed assets

The original value of fixed assets in public institutions can only be changed in the following cases:

- Revaluation of fixed asset value;

- Renovation and upgrading of fixed assets increasing capacity or extending their useful life;

- Dismantling one or more parts of fixed assets;

- Adding one or more parts to fixed assets.

When changing the original value of fixed assets, the entity must prepare a document detailing the grounds for change and recalculating the original value, remaining value, and accumulated depreciation of fixed assets on the accounting books and proceed with accounting according to current regulations.

Article 16:

The reallocation, sale, or liquidation of fixed assets among public institutions must comply with the following regulations:

- Only unused or unusable fixed assets can be reallocated, sold, or liquidated upon decision by the competent authority in accordance with the current State regulations on fixed asset management (Guidelines for accepting and transferring fixed assets; Regulations on managing unused and unusable fixed assets in public institutions).

When liquidating or selling unused and unusable fixed assets, public institutions must complete all necessary procedures, basing the reduction of fixed assets on the handover document, liquidation document, disposal document, and related vouchers according to the current public institution accounting regulations.

In all cases where fixed assets (TSCĐ) are lost or damaged due to subjective reasons of the manager or user, the unit must report clearly to the directly managing financial authority, the superior supervising body, and must clearly identify the cause and strictly determine the material responsibility of the relevant collective and individual according to the current regulations of the State on the material responsibility system for employees regarding state property.

Article 17:

Tools and equipment with a unit value of 500,000.00 dong or more and with a usage period exceeding one year, but not classified as fixed assets, shall be categorized under durable tools and equipment. The unit must closely monitor and manage each item of durable tools and equipment from the time they are put into use until they are reported as damaged (On Account 005 - Durable Tools and Equipment in Use and Property Tracking Register at the Place of Use).

1- Provisions on the useful life and depreciation rate

Article 18:

General mandatory provisions: In principle, the useful life of fixed assets is determined based on the following criteria:

- 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.

Based on applying these criteria, the State mandates a uniform framework for the useful life and depreciation rate for each type of fixed asset present in the unit (Annex 1 attached).

Article 19:

Provisions applicable in special cases:

- In cases where the unit wishes to re-determine the useful life of fixed assets (different from the provisions in Annex 1: longer or shorter than the prescribed period), or to determine the useful life of fixed assets not specified in Annex 1, the unit must prepare a record detailing the criteria used as the basis for determining the useful life of such fixed assets and submit it for review and decision by the directly managing financial authority.

- In cases where factors affecting (such as renovation, upgrading, or dismantling parts of fixed assets...) aim to extend or shorten the previously determined useful life of fixed assets, the unit must re-determine the useful life of the fixed assets according to the above provisions at the completion of the related transactions. The unit must prepare a record detailing the grounds for changing the useful life and the new useful life of the fixed assets and register this with the directly managing financial authority.

Article 20:

For intangible fixed assets, the useful life is determined by the unit itself, but it should not exceed 20 years and should not be less than 3 years.

2- Object and scope of fixed assets subject to depreciation

Article 21:

All fixed assets managed and used by the unit must be depreciated annually.

The following types of fixed assets do not need to be depreciated:

- Special fixed assets (priceless assets).

- Fixed assets leased temporarily by the unit.

- Fixed assets kept in custody for the state.

Article 22:

Depreciation of fixed assets is calculated once a year in December.

Article 23:

Fixed assets that have been fully depreciated but are still in use do not need further depreciation.

Article 24:

Fixed assets that have not been fully depreciated but are no longer usable do not need further depreciation.

3- Methods of calculating depreciation of fixed assets are stipulated as follows:

Article 25:

The annual depreciation amount of each fixed asset within the aforementioned scope is calculated using the following formula:

Annually, based on the determination of the increase and decrease in depreciation for the year, the unit calculates the total depreciation for the year using the following formula:

Where:

Article 26:

If the useful life or original cost of the fixed asset changes, the unit must recalculate the average annual depreciation amount of the fixed asset by dividing the remaining book value by the revised useful life or the remaining useful life (determined as the difference between the prescribed useful life minus the time already used).

Article 27:

The depreciation amount for the final year of the useful life of the fixed asset is determined as the difference between the original cost of the fixed asset and the cumulative depreciation already performed.

Article 28:

All fixed assets of administrative units mobilized for use in production and business activities, income-generating public service activities, or leasing activities must be depreciated.

In cases where the unit mobilizes fixed assets from administrative unit funds for use in these activities, the depreciation amount is calculated and allocated based on the ratio of the quantity of time, number of uses, or volume of work completed within a unit of time of the fixed asset. Depreciation of fixed assets is recorded as part of production and business costs or income-generating public service expenses for the period.

The depreciation amount of fixed assets formed from budgeted funds must be remitted to the State Budget according to the current financial management regulations. The depreciation amount of fixed assets formed from other sources (raised, borrowed, etc.) can be used by the unit for the renewal, replacement, or modernization of fixed assets or to repay loans.

ANNEX 1

FRAMEWORK FOR USEFUL LIFE AND DEPRECIATION RATE OF FIXED ASSET TYPES

ANNEX 1

EXAMPLE OF FIXED ASSET DEPRECIATION CALCULATION

(Issued together with Decision No.: 351 - TC/QĐ/CĐKT, dated May 22, 1997, by the Minister of Finance)

Example: Unit A purchases a new fixed asset (100%) with the invoice price being 10,000,000 VND, purchase discount is 1,000,000 VND, transportation cost is 300,000 VND, installation and trial operation costs until it is put into use is 2,000,000 VND. The useful life of the fixed asset is 10 years (in accordance with Appendix No. 1), the asset was put into use on January 1, 1997.

Original cost of the fixed asset = 10,000,000 VND - 1,000,000 VND + 300,000 VND + 2,000,000 VND = 11,300,000 VND

Annual average depreciation rate = 11,300,000 VND x 10% = 1,130,000 VND/year

Each year, the unit depreciates 1,130,000 VND, reducing the formation expenses of the fixed asset.

In the fifth year of use, the unit upgrades the fixed asset with total costs of 5,000,000 VND, the useful life is reassessed to be 7 years (increased by 2 years compared to the originally registered useful life), the completion and commissioning date is January 1, 2002.

Original cost of the fixed asset = 11,300,000 VND + 5,000,000 VND = 16,300,000 VND

Accumulated depreciation already calculated = 1,130,000 VND x 5 years = 5,650,000 VND

Remaining value on accounting records = 16,300,000 VND - 5,650,000 VND = 10,650,000 VND

Annual depreciation amount = 10,650,000 VND : 7 years = 1,521,000 VND

From 2002 onwards, the unit calculates annual depreciation of 1,521,000 VND for the upgraded fixed asset (In the final year, full remaining value will be depreciated).