Circular No. 40/2004/TT-BTC guides accounting when state-owned enterprises (SOEs) are converted into joint-stock companies, including provisions on asset accounting, capital sources, receivables, shareholding costs, and the transfer of assets to joint-stock companies. This Circular takes effect from the date of publication in the Official Gazette.

CIRCULAR

Regarding the guidance on accounting when converting

state-owned enterprises into joint-stock companies

__________________

Pursuant to the Accounting Law No. 03/2003/QH11 dated June 17, 2003;

Pursuant to Decree No. 64/2002/NĐ-CP dated June 19, 2002 of the Government on the conversion of state-owned enterprises into joint-stock companies;

Pursuant to Circular No. 76/2002/TT-BTC dated September 9, 2002 of the Ministry of Finance guiding financial issues when converting state-owned enterprises into joint-stock companies;

Pursuant to Decision No. 1141 TC/QĐ-CĐKT dated November 1, 1995 on the issuance of accounting regulations for enterprises, Decision No. 167/2000/QĐ-BTC dated October 25, 2000 on the issuance of financial reporting regulations, and Circulars guiding amendments and supplements to the accounting regulations for enterprises issued by the Ministry of Finance;

Pursuant to Decision No. 1177 TC/QĐ-CĐKT dated December 23, 1996 on the issuance of accounting regulations for small and medium-sized enterprises, Decision No. 144/2001/QĐ-BTC dated December 21, 2001 on the amendment and supplementation of accounting regulations for small and medium-sized enterprises issued by the Ministry of Finance;

The Ministry of Finance guides accounting when converting state-owned enterprises into joint-stock companies as follows:

I. GENERAL PROVISIONS

1. The subjects to which this Circular applies are state-owned enterprises (SOEs) before their conversion into joint-stock companies; joint-stock companies established from the conversion of SOEs; and holding companies, companies with affiliated units that convert into joint-stock companies.

2. This Circular only guides accounting transactions when converting SOEs into joint-stock companies. Accounting matters not covered in this Circular shall be carried out according to current accounting regulations.

3. Upon receiving the decision on equitization from the competent authority, SOEs have the responsibility to organize the closing of accounting books, inventory of assets, determination of unpaid debts, unnecessary assets, and revaluation of necessary assets to determine the enterprise value for equitization.

4. When transferring assets and capital to the joint-stock company, SOEs must prepare asset transfer and capital transfer documents in accordance with Section VII, Part Two, Circular No. 76/2002/TT-BTC dated September 9, 2002 of the Ministry of Finance on guiding financial issues when converting SOEs into joint-stock companies, and in accordance with this Circular.

5. Upon receiving transferred assets and capital from SOEs, the joint-stock company must open new accounting books (including general ledger and detailed ledgers) to reflect the value of received assets and capital.

6. For receivable debts and unnecessary assets excluded from the enterprise value and handed over to the joint-stock company or to the company responsible for purchasing, selling debts, and managing surplus assets of the enterprise to recover debts and continue selling off and liquidating assets on behalf of the State, the joint-stock company or the company responsible for purchasing, selling debts, and managing surplus assets of the enterprise must annually prepare a "Report on Settlement of Debts Collected on Behalf of the State and Assets Held on Behalf of the State" and submit it to the Department of Finance (for enterprises equitized at the local level), the Department of Enterprise Finance - Ministry of Finance (for centrally equitized enterprises), and the equitization decision-making body or holding company, as stipulated in the establishment of the Fund for Supporting Restructuring and Equitization of SOEs.

II. GUIDANCE ON ACCOUNTING WHEN CONVERTING SOEs INTO JOINT-STOCK COMPANIES

A. ACCOUNTING AT SOEs BEFORE CONVERSION INTO JOINT-STOCK COMPANIES

1. Accounting for inventory results

1.1. Based on the report on inventory results, reflecting the value of excess assets found during inventory, record:

Debit accounts 111, 152, 155, 156, 211...

Credit account 3381 - Excess assets awaiting resolution.

1.2. Based on the report on inventory results, reflecting the value of missing assets found during inventory, record:

Debit account 1381 - Missing assets awaiting processing

Credit accounts: 111, 152, 155, 156, 211...

1.3. Based on the result of asset revaluation to determine the enterprise value

- In case the revalued asset value is higher than the value reflected in the accounting books, the increase due to asset revaluation, record:

Debit accounts 152, 153, 154, 155, 156, 211...

Credit account 412 - Asset revaluation difference.

- In case the revalued asset value is lower than the value reflected in the accounting books, the decrease due to asset revaluation, record:

Debit account 412 - Asset revaluation difference

Credit accounts 152, 153, 154, 155, 156, 211...

2. Accounting for financial issues before determining the enterprise value

2.1. Accounting for inventory results:

- Based on the minutes of handling missing assets found during inventory, record:

Debit accounts 111, 331, 334... (Portion to be compensated by organizations and individuals)

Debit account 811 - Other expenses (Portion of missing assets after deducting compensation from organizations and individuals)

Credit account 1381 - Missing assets awaiting processing.

- Based on the minutes of handling excess assets found during inventory, record:

Debit account 3381 - Excess assets awaiting resolution.

Credit account 331 - Amounts payable to sellers (If excess assets belong to sellers)

Credit account 338 - Other payables (3388)

(Excess assets belonging to other entities)

Credit account 711 - Other income (For excess assets whose source cannot be determined and whose owner cannot be identified).

2.2. Based on the results of handling unnecessary assets, stagnant assets, and assets awaiting liquidation before determining the enterprise value

2.2.1. In case of transferring assets to other units, based on the asset transfer receipt according to the authorized decision to transfer assets, handle as follows:

- For inventory transferred to other units, record:

Debit account 411 - Business capital

Credit accounts 152, 153, 155, 156.

- For fixed assets transferred to other units, record:

Debit account 411 - Business capital (Remaining value)

Debit account 214 - Depreciation of fixed assets

Credit account 211 - Tangible fixed assets.

2.2.2. In case of selling off and liquidating unnecessary assets and stagnant assets:

- Reflecting revenue from selling off and liquidating unnecessary fixed assets and fixed assets awaiting liquidation, record:

Debit accounts 111, 112, 131

Credit account 3331 - VAT payable (if applicable)

Credit account 711 - Other income.

- Reflecting revenue from selling off stagnant inventory and unnecessary inventory, record:

Debit accounts 111, 112, 131

Credit account 3331 – VAT payable

Credit account 511 – Revenue from sales and service provision.

- Reflecting expenses for selling off and liquidating unnecessary fixed assets and fixed assets awaiting liquidation, record:

Debit account 811 - Other expenses

Debit account 133 - VAT deductible (if applicable)

Credit accounts 111, 112, 331.

- Reflecting reduction in fixed assets sold off and liquidated, record:

Debit account 811 - Other expenses (Remaining value)

Debit account 214 - Depreciation of fixed assets

Credit account 211 - Tangible fixed assets.

Record the cost of inventory that is stagnant and not needed for sale or liquidation as follows:

Debit Account 632 - Cost of Goods Sold

Credit Accounts 152, 153, 154, 155, 156.

2.3 Accounting treatment of doubtful receivables before determining the enterprise value to convert into a Joint Stock Company

For receivables that have sufficient evidence to prove they cannot be recovered according to regulations, accounting shall record based on relevant documents such as decisions to write off debts, decisions to hold responsible organizations and individuals accountable for compensation, as follows:

Debit Accounts 111, 112, 331, 334 (Portion for organizations and individuals required to compensate)

Debit Account 139 - Provision for Doubtful Receivables (Portion using the provision for doubtful receivables to offset after deducting the compensation portion)

Debit Account 642 - Business Management Expenses (Portion included in expenses if the provision for doubtful receivables is insufficient)

Debit Account 411 - Operating Capital (Portion deducted from state capital at the enterprise before shareholding conversion - if the above sources are insufficient)

Credit Accounts 131, 138,...

For overdue receivables, enterprises may sell them to economic organizations with the function of buying and selling debts at agreed prices. When selling overdue receivables, record as follows:

Debit Accounts 111, 112 (At the agreed selling price)

Debit Account 139 - Provision for Doubtful Receivables

(Portion using the provision for doubtful receivables to offset)

Debit Account 642 - Business Management Expenses (Portion included in expenses if the provision for doubtful receivables is insufficient)

Debit Account 411 - Operating Capital (Portion deducted from state capital at the enterprise before shareholding conversion if the above sources are insufficient)

Credit Accounts 131, 138,...

2.4 Accounting treatment of payable debts before converting into a Joint Stock Company

For payable debts that do not need to be paid or whose creditors cannot be identified, these are recorded as other income, as follows:

Debit Accounts 311, 331, 338, 341, 342, 344,...

Credit account 711 - Other income.

For tax debts and other amounts payable to the State Treasury that are allowed by competent state authorities to be written off up to the cumulative loss amount at the valuation date, based on the decision to write off tax debts and other amounts payable to the State Treasury of the competent state authority, record as follows:

Debit Account 333 - Taxes and Other Amounts Payable to the State

Credit account 711 - Other income.

For overdue bank loans from state commercial banks that can be considered for debt write-off or deferral by the General Director of the state commercial bank. In cases where enterprises suffer losses and are unable to pay, interest on loans can be written off, including accrued interest, up to the remaining loss amount. Based on the decision to write off loan interest, record as follows:

Debit Accounts 311, 315, 335, 341...

Credit account 711 - Other income.

For social insurance debts and employee debts, enterprises must settle these debts completely before shareholding conversion to ensure workers' rights. When settling social insurance debts and employee debts, record as follows:

Debit Account 338 - Other Payables

Debit Account 334 - Employee Payables

Credit Accounts 111, 112.

2.5 Accounting treatment of provisions and exchange rate differences before determining the enterprise value, before the enterprise converts into a Joint Stock Company

2.5.1 The balance of provisions for doubtful receivables (After processing the write-off of doubtful receivables at the time of determining the enterprise value), the balance of inventory valuation provisions, short-term investment valuation provisions, and long-term investment valuation provisions are restored to enterprise income, as follows:

Debit Account 129 - Short-Term Investment Valuation Provisions

Debit Account 139 - Provision for Doubtful Receivables

Debit Account 159 - Inventory Valuation Provisions

Debit Account 229 - Long-Term Investment Valuation Provisions

Credit account 711 - Other income.

2.5.2 Accounting treatment of exchange rate difference balances before determining the enterprise value

a) For unfinished construction projects if there is an exchange rate difference, after offsetting increases and decreases, the exchange rate difference balance is included in the project value when determining the enterprise value and treated as follows:

- If Account 413 "Exchange Rate Differences" has a Credit Balance (Detail of exchange rate differences for unfinished construction projects), the exchange rate difference balance, record as follows:

Debit Account 413 - Exchange Rate Differences

Credit Account 241 - Unfinished Construction Projects.

- If Account 413 "Exchange Rate Differences" has a Debit Balance (Detail of exchange rate differences for unfinished construction projects), the exchange rate difference balance, record as follows:

Debit Account 241 - Unfinished Construction Projects

Credit Account 413 - Exchange Rate Differences.

b) Exchange rate differences of business operations are recorded as financial expenses or financial revenue and treated as follows:

- If Account 413 "Exchange Rate Differences" has a Credit Balance (Detail of exchange rate differences for business operations), the exchange rate difference balance is recorded as financial revenue, as follows:

Debit Account 413 - Exchange Rate Differences

Credit Account 515 - Financial Revenue.

- If Account 413 "Exchange Rate Differences" has a Debit Balance (Detail of exchange rate differences for business operations), the exchange rate difference balance is recorded as financial expenses, as follows:

Debit Account 635 - Financial Expenses

Credit Account 413 - Exchange Rate Differences.

2.5.3 Accounting treatment of the balance of the "Fund for Unemployment Benefits"

The balance of the "Fund for Unemployment Benefits" is retained to address surplus labor policies under current regulations. If the "Fund for Unemployment Benefits" is not needed or is not fully utilized, it must be restored to post-tax income of the enterprise, as follows:

Debit Account 335 - Expenses Payable (Detail Fund for Unemployment Benefits), or

Debit Account 416 - Fund for Unemployment Benefits (In case the unit reflects the Fund for Unemployment Benefits in Account 416)

Credit account 711 - Other income.

2.5.4 Accounting treatment of the balance of the "Financial Reserve Fund"

The balance of the "Financial Reserve Fund" is used to offset remaining losses of assets and losses (if any) of the enterprise during the business period until the determination of the enterprise value. The remaining balance of the "Financial Reserve Fund" is restored to post-tax income of the enterprise, as follows:

Debit Account 415 - Financial Reserve Fund

Credit account 711 - Other income.

2.6 Accounting treatment of foreign joint venture capital contributions before determining the enterprise value to convert into a Joint Stock Company

2.6.1. In cases where joint venture activities are not inherited by enterprises undergoing shareholding reform, they must prepare a report to submit to the competent authority deciding on the shareholding reform for examination, decision, and handling of joint venture capital contributions.

If the competent authority deciding on the shareholding reform permits the transfer of joint venture capital contributions, when transferring (selling) the joint venture capital contribution to another entity, it shall be handled as follows:

- In case the transfer price is higher than the value of the capital contribution, record:

Debit accounts 111, 112, 131 (Total amount received according to the selling price)

Credit account 222 - Joint venture capital contribution (Amount already contributed)

Credit account 515 - Financial operation revenue (Profit)

(The difference between the selling price and the value of the joint venture capital contribution).

- In case the transfer price is lower than the value of the joint venture capital contribution, record:

Debit accounts 111, 112 (Total amount received according to the selling price)

Debit account 635 - Financial expenses (Difference between the value of the joint venture capital contribution and the selling price)

Credit account 222 - Joint venture capital contribution (Amount already contributed).

- For costs arising from the transfer (sale) of the joint venture capital contribution (if any), record:

Debit Account 635 - Financial Expenses

Credit accounts 111, 112...

- For transferring income from the transfer of joint venture capital contribution (if any), record:

Debit account 515 - Financial operation revenue

Credit account 911 - Determining business results.

- For transferring costs related to the transfer of joint venture capital contribution (if any), record:

Debit account 911 - Determining business results

Credit account 635 - Financial expenses.

2.6.2. In cases where the joint venture capital contribution is transferred to another enterprise as a partner according to the decision of the competent authority, record:

Debit account 411 - Business capital

Credit account 222 - Joint venture capital contribution (Amount already contributed).

2.6.3. In cases where the joint venture ceases operations, the parties contributing to the joint venture are responsible for establishing a liquidation committee to carry out liquidation, implement the asset distribution plan, and handle assets and capital in accordance with the articles of association and the joint venture contract.

When the joint venture ceases operations, the Vietnamese partner enterprise shall handle based on the value of assets received from the division of joint venture assets as follows:

- In case the value of assets received (divided) is less than the value of the joint venture capital contribution, record:

Debit accounts 111, 112, 152, 155, 156, 211, 213... (Value of assets divided)

Debit account 635 - Financial expenses (Difference between the value of the joint venture capital contribution and the value of assets divided)

Credit account 222 - Joint venture capital contribution (Amount already contributed).

- In case the value of assets received (divided) is greater than the value of the joint venture capital contribution, record:

Debit accounts 111, 112, 152, 155, 156, 211, 213... (Value of assets divided)

Credit account 222 - Joint venture capital contribution (Amount already contributed)

Credit account 515 - Financial operation revenue (Difference between the value of assets divided and the value of the joint venture capital contribution).

2.7. Accounting treatment of surplus funds in the reward fund and welfare fund before determining the enterprise's value

2.7.1. The portion of the reward and welfare fund distributed to employees listed in the regular roster of the enterprise at the time of shareholding reform, record:

Debit account 431 - Reward and welfare fund

Credit account 334 - Payable to workers and staff.

When disbursing money from the "Reward and Welfare Fund" to employees, record:

Debit Account 334 - Employee Payables

Credit Accounts 111, 112.

2.7.2. In cases where the enterprise has exceeded the source of the "Reward and Welfare Fund" (Account 431 has debit balance), the enterprise must report to the financial authority and the authority deciding on the shareholding reform of the enterprise for examination and handling as a non-recoverable debt. Based on the decision of the competent authority regarding the excess expenditure from the reward and welfare fund, record:

Debit accounts 111, 112, 334... (Amount that collective bodies and individuals must compensate)

Debit account 139 - Provision for doubtful debts (Amount used from the provision for doubtful debts to offset after deducting compensation)

Debit account 642 - Administrative expenses (Amount included in administrative expenses if the provision for doubtful debts is insufficient)

Debit account 411 - Business capital (Amount deducted from state capital at the enterprise before shareholding reform)

Credit account 431 - Reward and welfare fund.

3. Accounting related to financial handling from the time of determining the enterprise's value to the time when the SOE officially becomes a joint-stock company

3.1. Accounting for the difference between the actual value of state capital at the time the SOE transfers to a joint-stock company compared to the actual value of state capital at the time of determining the enterprise's value

a) In cases where the difference between the actual value of state capital at the time the enterprise becomes a joint-stock company is greater than the actual value of state capital at the time of determining the enterprise's value, the increase (profit) must be paid into the State Enterprise Restructuring and Shareholding Support Fund, record:

Debit account 421 - Undistributed profits

Credit account 338 - Other payables (3385 - Payable for shareholding).

When paying money into the Central State Enterprise Restructuring and Shareholding Support Fund or the Provincial State Enterprise Restructuring and Shareholding Support Fund, or into the State Enterprise Restructuring and Shareholding Support Fund of State-owned Corporations, record:

Debit account 338 - Other payables (3385 - Payable for shareholding).

Credit Accounts 111, 112.

b) In cases where the difference between the actual value of state capital at the time the enterprise transfers to a joint-stock company is less than the actual value of state capital at the time of determining the enterprise's value, the decrease (loss) shall be recorded as follows:

- In cases where collective bodies and individuals must compensate, record:

Debit account 138 - Other receivables (1388)

Credit account 421 - Undistributed profits.

When receiving payment from collective bodies and individuals for compensation, record:

Debit Accounts 111, 112

Credit account 138 - Other receivables (1388).

- The entire difference after deducting material compensation (if any), if supplemented with capital to ensure the required state shareholding ratio in the charter structure of the joint-stock company, upon receipt of supplementary capital, record:

Debit Accounts 111, 112

Credit account 411 - Business capital.

3.2. Accounting for the sale of state-owned shares and accounting for amounts collected from receivables and proceeds from the sale of excluded assets to be paid into the State Enterprise Restructuring and Shareholding Support Fund

During the period from the time of determining the enterprise's value until the enterprise officially becomes a joint-stock company, the SOE is responsible for continuing to monitor and organize the collection of receivables, liquidation, sale of excluded assets not counted in the enterprise's value, and depositing all proceeds into the State Enterprise Restructuring and Shareholding Support Fund.

a) Based on the decision of the competent authority regarding receivables and excluded assets not counted in the enterprise's value, record:

Debit account 411 - Business capital

There are accounts 131, 138, 152, 153, 155, 156, 211, 213...

At the same time, the accounting unit is responsible for monitoring and posting to the Debit side of Account 002 "Materials, goods held in custody, processed on behalf of others," outside the Balance Sheet regarding materials, goods, state-held assets excluded from the enterprise value.

b) To reflect the amount of money received from selling shares belonging to state capital, the amount of money recovered from receivables, and the amount of money received from transferring and liquidating assets excluded from the enterprise value that must be paid into the "Fund for Enterprise Restructuring and Shareholding Reform," the accountant uses Account 3385 - "To be returned for shareholding reform."

Account 3385 is used to reflect the amount to be returned from the proceeds of selling shares belonging to state capital, proceeds collected on behalf of receivables, and proceeds from transferring assets excluded from the enterprise value.

Structure and content reflected in Account 3385

Debit Side:

- Pay into the Fund for Enterprise Restructuring and Shareholding Reform the amount of money recovered from receivables already collected and proceeds from transferring and liquidating assets excluded from the enterprise value;

- Transfer expenses for shareholding reform by subtracting (-) the amount of money from selling shares belonging to state capital;

- Pay into the Fund for Enterprise Restructuring and Shareholding Reform the difference between the amount of money received from selling shares belonging to state capital and the shareholding reform expenses;

- Joint-stock companies pay 90% of the total amount of money collected on behalf of receivables and proceeds from selling state-held assets into the Fund for Enterprise Restructuring and Shareholding Reform;

- Joint-stock companies set aside 10% of the total amount of money collected on behalf of receivables and proceeds from transferring state-held assets to cover expenses;

Credit Side:

- State-owned enterprises reflect the amount of money to be returned for the entire amount of money recovered from receivables and proceeds from transferring and liquidating assets excluded from the enterprise value;

- Joint-stock companies reflect the amount of money to be returned for the total amount of money collected on behalf of receivables and proceeds from transferring state-held assets (Excluded from the enterprise value);

- Reflect the total amount of money received from selling shares belonging to state capital.

Debit balance:

- Reflect the amount of money State-owned Enterprises still have to return for the amount of money collected on behalf of receivables and proceeds from transferring state-held assets excluded from the enterprise value at the end of the accounting period;

- Reflect the amount of money Joint-stock Companies still have to return for the amount of money collected on behalf of receivables and proceeds from transferring state-held assets at the end of the accounting period;

- Reflect the amount of money received from selling shares belonging to state capital still to be returned at the end of the accounting period.

Content and accounting method for Account 3385

- Accounting at State-owned Enterprises

- From the point of determining the enterprise value to the point when State-owned Enterprises officially convert to Joint-stock Companies, if they collect amounts from receivables and proceeds from transferring assets excluded from the enterprise value, accounting reflects the entire amount collected and must be paid into the Fund for Enterprise Restructuring and Shareholding Reform, record:

Debit Accounts 111, 112

Credit Account 3385 - To be returned for shareholding reform.

At the same time, post to the Credit side of Account 002 "Materials, goods held in custody, processed on behalf of others," outside the Balance Sheet regarding materials, goods, state-held assets excluded from the enterprise value that have been sold.

- When paying the recovered receivables and proceeds from transferring assets excluded from the enterprise value into the Central Fund for Enterprise Restructuring and Shareholding Reform (For cases where the enterprise belongs to a Ministry, agency equivalent to a Ministry, or government agency) or into the provincial fund (For cases where the enterprise belongs to a provincial-level city) or into the State-Owned Enterprise Group Fund for Enterprise Restructuring and Shareholding Reform (For cases where the enterprise belongs to a State-Owned Enterprise Group) according to current regulations, record:

Debit Account 3385 - To be returned for shareholding reform

Credit Accounts 111, 112.

- When selling shares belonging to state capital to shareholders, record:

Debit Accounts 111, 112

Debit Account 1385 - To be received for shareholding reform

(In case of deferred payment to the poor)

Credit Account 3385 - To be returned for shareholding reform.

- When the shareholding reform process ends, the enterprise must report and settle the shareholding reform costs with the authority deciding on the shareholding reform. The total cost is deducted (-) from the proceeds from selling shares belonging to state capital at the enterprise. The accountant transfers the approved shareholding reform costs, record:

Debit Account 3385 - To be returned for shareholding reform (Details of proceeds from selling shares belonging to state capital)

Credit Account 1385 - To be received for shareholding reform (Details of shareholding reform costs).

- When paying the difference between the total proceeds from selling shares belonging to state capital and the shareholding reform costs into the Fund for Enterprise Restructuring and Shareholding Reform, record:

Debit Account 3385 - To be returned for shareholding reform

Credit Accounts 111, 112.

- Accounting at Joint-stock Companies converted from State-owned Enterprises

- When Joint-stock Companies collect money on behalf of receivables and proceeds from transferring state-held assets (Assets excluded from the enterprise value), record:

Debit Accounts 111, 112

Credit Account 3385 - To be returned for shareholding reform (Details of proceeds collected on behalf of receivables and proceeds from transferring state-held assets).

- When paying 90% of the total amount of money collected on behalf of receivables and proceeds from transferring state-held assets (Excluded from the enterprise value) into the Fund for Enterprise Restructuring and Shareholding Reform, record:

Debit Account 3385 - To be returned for shareholding reform

Credit Accounts 111, 112.

- When setting aside 10% of the total amount of money collected on behalf of receivables and proceeds from transferring state-held assets, the Joint-stock Company accountant records:

Debit Account 3385 - To be returned for shareholding reform

Credit account 711 - Other income.

3.3. Accounting for shareholding reform costs

Shareholding reform costs of State-owned Enterprises include:

- Costs for preparing the shareholding reform plan, drafting the organizational and operational charter of the Joint-stock Company;

- Printing costs, inventory costs, asset valuation costs;

- Consulting fees, auditing fees;

- Publicity and information dissemination costs related to shareholding reform;

- Costs for the Workers' and Staffs' Congress to implement shareholding reform, costs for the first General Meeting of Shareholders;

- Costs for organizing the sale of shares;

- Other costs related to shareholding reform.

To account for shareholding reform costs of State-owned Enterprises, the accountant uses Account 1385 "To be received for shareholding reform."

Account 1385 is used to reflect the amount to be received for shareholding reform costs that the enterprise has incurred, and for proceeds from selling shares to the poor on deferred payment terms.

Structure and content reflected in Account 1385

Debit Side:

- Reflect the amount to be received for shareholding reform costs of State-owned Enterprises;

- Amount to be received for proceeds from selling shares to the poor on deferred payment terms.

Credit Side:

- Transfer of expenses for equitization;

- Receive money from shareholders returning capital paid for shares purchased on credit;

Debit Balance:

- Reflect untransferred equitization expenses at the end of the period;

- Amount still to be collected from sales of shares sold on credit at the end of the period;

Contents and accounting methods for Account 1385;

- When equitization expenses of SOEs occur, record:

Debit Account 1385 - Receivables for Equitization (Details of equitization expenses);

Credit Accounts 111, 112, 152, 331...

- At the end of the equitization process, the enterprise must report and settle equitization expenses with the equitization decision-making authority. The total equitization expenses are deducted from the proceeds from selling state-owned shares, and the approved equitization expenses are transferred, recorded as follows:

Debit Account 3385 - Payables for Equitization (Details of proceeds from selling state-owned shares);

Credit Account 1385 - Receivables for Equitization (Details of equitization expenses);

- When selling shares belonging to state capital to shareholders, record:

Debit Accounts 111, 112 (Immediate receipts);

Debit Account 1385 - Receivables for Equitization (Details of receivables for shares sold on credit according to each entity);

Credit Account 3385 - Payables for Equitization (Details of payables for shares already sold);

- When receiving money from shareholders returning the amount paid for shares purchased on credit, record:

Debit Accounts 111, 112

Credit Account 1385 - Receivables for Equitization (Details of receivables for shares sold on credit according to each entity);

3.4. Accounting for proceeds from selling stocks issued by the enterprise to raise additional capital;

To reflect proceeds from selling stocks issued by the enterprise to raise additional capital, accountants use Account 411 - "Business Operating Capital";

Account 411 is used to reflect current business operating capital and changes in business operating capital of the enterprise. Account 411 must be detailed according to par value and the difference between par value and issue price;

- When selling shares to shareholders, record:

Debit Accounts 111, 112

Credit account 411 - Business capital.

4. Transfer of assets and capital to Joint Stock Company;

4.1. To transfer assets and capital to Joint Stock Company, the unit must close the accounting books, prepare financial statements, and establish a transfer document for assets and capital at the time of transfer;

4.2. The transfer document for assets and capital includes:

a) Financial statements at the time the enterprise officially becomes a Joint Stock Company and tax settlement reports;

b) Decision on the value of the enterprise at the time it becomes a Joint Stock Company by the competent authority;

c) Minutes of the asset and capital transfer document established at the time of transfer;

The minutes of the transfer must have signatures of representatives of the equitization decision-making authority, state-owned enterprises, and the Joint Stock Company as prescribed. The minutes of the transfer between both parties must clearly show:

- Total asset value, total capital, and liabilities present at the time of transfer;

- Rights and obligations of the Joint Stock Company that continue to be inherited;

- Outstanding issues that the Joint Stock Company is responsible for resolving (Including continuing to monitor, recover receivables, excluded assets, recover proceeds from shares sold on credit...);

d) Detailed appendices about assets and capital included in the enterprise's value transferred to the Joint Stock Company, including:

- Appendix 01: Details of fixed assets included in the enterprise's value transferred to the Joint Stock Company;

- Appendix 02: Details of short-term and long-term investments included in the enterprise's value transferred to the Joint Stock Company;

- Appendix 03: Details of inventory included in the enterprise's value transferred to the Joint Stock Company;

- Appendix 04: Details of receivables included in the enterprise's value transferred to the Joint Stock Company;

- Appendix 05: Details of receivables from shares sold on credit;

- Appendix 06: Details of payables included in the enterprise's value transferred to the Joint Stock Company;

- Appendix 07: Details of equity contributions transferred to the Joint Stock Company;

e) Detailed appendices about receivables and state-held assets not included in the enterprise's value transferred to the Joint Stock Company, or companies buying and selling debts and remaining assets of the enterprise, including:

- Appendix 08: Details of receivables not included in the enterprise's value transferred to the Joint Stock Company, or companies buying and selling debts and remaining assets of the enterprise;

- Appendix 09: Details of inventory not included in the enterprise's value transferred to the Joint Stock Company, or companies buying and selling debts and remaining assets of the enterprise;

- Appendix 10: Details of short-term and long-term investments not included in the enterprise's value transferred to the Joint Stock Company, or companies buying and selling debts and remaining assets of the enterprise;

- Appendix 11: Details of fixed assets not included in the enterprise's value transferred to the Joint Stock Company, or companies buying and selling debts and remaining assets of the enterprise;

f) Accounting documents transferred to the Joint Stock Company:

- In cases where the entire enterprise is equitized, all accounting documents (accounting vouchers, detailed accounting books, consolidated accounting books, financial statements, management reports, and other related accounting documents) are transferred to the Joint Stock Company, including stored accounting documents and those in use but not yet stored;

- In cases where only a part of the enterprise is equitized, only relevant accounting documents related to the assets and capital being transferred to the Joint Stock Company are transferred (if separable accounting documents can be identified). Remaining accounting documents must be preserved and stored at the equitized enterprise;

4.3. Accounting for transferring assets and capital to the Joint Stock Company;

a) In cases where the entire enterprise is equitized;

- When transferring assets to the Joint Stock Company, based on the asset transfer minutes, detailed appendices about assets transferred to the Joint Stock Company, and related accounting documents and books, accountants reflect the reduction in the value of transferred assets, recorded as follows:

Debit Account 3388 - Other Payables and Payments Due (Details of transferred assets);

Debit Account 214 - Depreciation of Fixed Assets (Already depreciated portion);

Credit Related Accounts: 111, 112, 121, 131, 133, 138, 152, 153, 154, 155, 156, 211, 213, 221, 222, 228, 241...

When transferring capital to a Joint Stock Company, based on the asset transfer record, Appendix No. 06 (Details of liabilities included in the enterprise's value transferred to the Joint Stock Company), Appendix No. 07 (Details of share capital contributions transferred to the Joint Stock Company), and related accounting documents and books, the accountant shall reflect the reduction in capital, recording as follows:

Debit account 411 - Business capital

Debit Accounts 311, 331, 333, 334, 335, 338, 341, 342... (Portion of liabilities transferred, the Joint Stock Company has the obligation to continue to pay)

Credit Account 3388 - Other Payables (Details of capital transferred)

(Note: The debit amount generated in Account 3388 "Details of assets transferred" must equal the credit amount generated in Account 3388 "Details of capital transferred")

b) In the case of converting a portion of the enterprise into a joint stock company

When transferring assets to the Joint Stock Company, based on the asset transfer record, detailed appendices regarding the assets transferred to the Joint Stock Company, and related accounting documents and books, the accountant shall reflect the reduction in the value of assets transferred to the Joint Stock Company, recording as follows:

Debit account 411 - Business capital

Debit Account 214 - Depreciation of Fixed Assets (Already depreciated portion);

Credit Accounts 111, 112, 121, 131, 152, 153, 154, 155, 156, 211, 213, 221, 222, 241...

4.4. Accounting for receivables and state-held assets not included in the enterprise's value, transferred to the Joint Stock Company, or to the company purchasing and selling debts and remaining assets of the enterprise

When transferring state-held assets not included in the enterprise's value to be held by the Joint Stock Company or to the company purchasing and selling debts and remaining assets of the enterprise, the accountant must prepare the Transfer Record and relevant forms according to Appendices No. 08, 09, 10, and 11 as stipulated in this Circular; simultaneously, the accountant shall reflect it on the Credit side of Account 002 "Materials and goods received for storage, processing"

B. ACCOUNTING AT JOINT STOCK COMPANIES TRANSFORMED FROM STATE OWNED ENTERPRISES

Joint Stock Companies formed through conversion from State Owned Enterprises shall implement the Accounting System for Small and Medium-Sized Enterprises (Issued pursuant to Decision No. 1177 TC/QĐ-CĐKT dated December 23, 1996 and amended and supplemented by Decision No. 144/2001/QĐ-BTC dated December 21, 2001 of the Minister of Finance).

For Joint Stock Companies listed on the securities market, they must comply with the Accounting System for Enterprises issued pursuant to Decision No. 1141 TC/QĐ/CĐKT dated November 1, 1995 on the issuance of the Accounting System for Enterprises, Decision No. 167/2000/QĐ-BTC dated October 25, 2000 on the issuance of the Financial Reporting System, and Circulars guiding amendments and supplements to the Accounting System for Enterprises of the Ministry of Finance.

1. Opening new accounting books

Upon receiving the transfer documents for assets and capital and accepting the transferred assets and capital, the Joint Stock Company must open new accounting books (including general and detailed accounting books) to reflect the value of the transferred assets and capital.

2. Accounting for the receipt of transferred assets and capital at the Joint Stock Company

When receiving transferred assets, the accountant bases on the transfer documents, asset transfer records, and Appendices 01, 02, 03, 04, and 05 regarding the transfer of assets to the Joint Stock Company, the accountant shall reflect the value of the received transferred assets, recording as follows:

Debit Relevant Accounts: 111, 112, 121, 131, 133, 138, 141, 152, 153, 154, 155, 156, 157, 211, 221, 241...

Credit Account 3388 - Other Payables

(Details of received transferred assets)

When receiving transferred capital, the accountant bases on the transfer documents, asset transfer records (Details of transferred capital), Appendix No. 06 (Details of liabilities included in the enterprise's value transferred to the Joint Stock Company), Appendix No. 07 (Details of share capital contributions transferred to the Joint Stock Company) transferred to the Joint Stock Company, the accountant shall reflect the received transferred capital, recording as follows:

Debit Account 3388 - Other Payables (Details of received transferred capital)

Credit Account 411 - Business Capital (Portion of state and shareholder share capital contributions)

Credit Accounts 311, 315, 331, 333, 334, 335, 338, 341, 342...

(Portion of received transferred liabilities, the Joint Stock Company has the obligation to continue to pay)

(Note: The credit amount generated in Account 3388 (Details of received transferred assets) must equal the debit amount generated in Account 3388 (Details of received transferred capital))

3. Accounting for the recovery and payment of deferred share proceeds

When the Joint Stock Company recovers deferred share proceeds from shareholders, record as follows:

Debit Accounts 111, 112

Credit Account 1385 - Proceeds from Shareholding Transformation (Details of deferred share proceeds recovered)

When paying the recovered deferred share proceeds into the Fund for Enterprise Restructuring and Shareholding Transformation according to the prescribed regulations, the Joint Stock Company accountant shall record as follows:

Debit Account 3385 - To be returned for shareholding reform

Credit Accounts 111, 112.

4. Accounting at the Joint Stock Company for collected receivables and proceeds from the sale of state-held assets not included in the enterprise's value

Upon receiving transferred receivables and state-held assets not included in the enterprise's value, the accountant bases on the transfer documents, asset transfer records (Details of transferred receivables and state-held assets not included in the enterprise's value transferred to the Joint Stock Company for holding) and Appendices No. 08, 09, 10, and 11 detailing transferred receivables and state-held assets not included in the enterprise's value, the accountant shall reflect it on the Debit side of Account 002 "Materials and goods received for storage, processing" - an account outside the Balance Sheet.

When the Joint Stock Company collects receivables and proceeds from the sale of state-held assets not included in the enterprise's value, record as follows:

Debit Accounts 111, 112

Credit Account 3385 - Proceeds from Shareholding Transformation (Details of collected receivables and proceeds from the sale of state-held assets)

Simultaneously, the accountant shall reflect it on the Credit side of Account 002 "Materials and goods received for storage, processing" - an account outside the Balance Sheet for state-held assets sold.

When the Joint Stock Company pays 90% of the total proceeds from collected receivables and proceeds from the sale of state-held assets into the Fund for Enterprise Restructuring and Shareholding Transformation, record as follows:

Debit Account 3385 - To be returned for shareholding reform

Credit Accounts 111, 112.

When allocating 10% of the total proceeds from collected receivables and proceeds from the sale of state-held assets, the Joint Stock Company accountant shall record as follows:

Debit Account 3385 - To be returned for shareholding reform

Credit account 711 - Other income.

When incurring direct costs related to collecting receivables and selling state-held assets, the Joint Stock Company accountant shall record as follows:

Debit account 811 - Other expenses

Credit Accounts 111, 112, 331...

5. Reporting on receivables and state-held assets not included in the enterprise's value, transferred to the company purchasing and selling debts and remaining assets of the enterprise

When transferring debts receivable and state-held assets to the Company for buying and selling debts and surplus assets of enterprises, a handover record must be established according to the prescribed regulations, and at the same time, Schedules No. 08, 09, 10, and No. 11 must be prepared according to the model specified in this Circular.

When transferring debts receivable and state-held assets to the Company for buying and selling debts and surplus assets of enterprises, the accountant of the joint-stock company must record on the Credit side of Account 002 "Assets and goods received for custody and processing."

6. Report on final settlement of debts collected on behalf of the state and state-held assets.

The joint-stock company must prepare the Report on final settlement of debts collected on behalf of the state and state-held assets (Schedule 12) by December 31 each year and submit the report to the following units no later than 45 days from the end of the annual accounting period:

7. Accounting for the sale of shares issued by the joint-stock company to raise additional capital

When the joint-stock company issues shares to raise additional capital, it must comply with current financial policies, and the accountant must monitor and reflect in detail the quantity of each type of shares issued and the difference between par value and issue price.

To account for the sale of shares issued by the joint-stock company to raise additional capital, the accountant uses Account 411 "Business Operating Capital."

Structure and content reflected in Account 411 - Business Operating Capital

Debit Side: Reflects a decrease in business operating capital due to:

- Repaying capital contributions to shareholders (Owners of capital);

- Purchasing back shares for cancellation;

- Covering business losses according to the decision of the shareholders' meeting.

Credit Side: Reflects an increase in business operating capital due to:

- Receiving capital contributions from shareholders, owners;

- The difference between the issue price and the par value of shares;

- Supplementing capital from accumulated profits;

- Other increases in business operating capital.

Credit Balance: Reflects the current business operating capital at the enterprise.

Account 411 - "Business Operating Capital" has three sub-accounts.

+ Account 4111 - Contributed Capital: This account is used to reflect the contributed capital according to the company's charter of capital owners. For joint-stock companies, the portion of contributed capital from shareholders from issuing shares is reflected in this account at par value.

+ Account 4112 - Capital Surplus: This account is used to reflect the difference between the issue price and the par value of shares.

+ Account 4118 - Other Capital: This account is used to reflect the business operating capital formed from donations, gifts, sponsorships, non-repayable aid... (After deducting taxes payable).

Accounting methods for some main economic activities of Account 411

- When selling shares to shareholders at the par value of shares, record:

Debit Accounts 111, 112

Credit Account 411 - Business Operating Capital (4111 - Contributed Capital) (Par Value).

- When selling shares to shareholders at an issue price higher than the par value of shares, record:

Debit Accounts 111, 112 (Issue Price)

Credit Account 4111 - Contributed Capital (Recorded at Par Value)

Credit Account 4112 - Capital Surplus (Difference between Issue Price and Par Value of Shares).

- When receiving money from reissuing repurchased shares, record;

Debit Accounts 111, 112 (Reissue Price)

Debit Account 4112 - Capital Surplus (Difference between Reissue Price lower than actual purchase price)

Credit Account 419 - Repurchased Shares (Actual Purchase Price)

Credit Account 4112 - Capital Surplus (Difference between Reissue Price higher than actual purchase price).

- When increasing contributed capital due to paying dividends in shares to shareholders, record:

Debit Account 421 - Undistributed Profits (Issue Price)

Credit Account 4111 - Contributed Capital (Recorded at Par Value)

Credit Account 4112 - Capital Surplus (Difference between Issue Price and Par Value of Shares).

- When repurchasing shares for immediate cancellation on the day of repurchase, record:

Debit Account 4111 - Contributed Capital (Recorded at Par Value)

Debit Account 4112 - Capital Surplus (Difference between Actual Purchase Price higher than Par Value of Shares)

Credit Accounts 111, 112 (Amount spent on purchasing shares).

- When cancelling repurchased shares, record:

Debit Account 4111 - Contributed Capital (Recorded at Par Value)

Debit Account 4112 - Capital Surplus (Difference between Actual Purchase Price higher than Par Value of Shares)

Credit Account 419 - Repurchased Shares (Actual Purchase Price).

8. Accounting for repurchased shares

Accounting for repurchasing shares issued by the company itself uses Account 419 "Repurchased Shares." The principles, contents, and accounting methods for Account 419 "Repurchased Shares" are implemented according to Decision No. 144/2001/QĐ-BTC dated December 21, 2001 of the Ministry of Finance regarding the supplementation and amendment of the Accounting System for Small and Medium Enterprises issued pursuant to Decision No. 1177 TC/QĐ-CĐKT dated December 23, 1996 of the Ministry of Finance.

9. Accounting for dividend distribution to shareholders

After paying corporate income tax and setting aside reserves as prescribed, the remaining profit is distributed to shareholders based on the number of shares held by each shareholder.

- When determining the amount of profit to be distributed to shareholders, record:

Debit account 421 - Undistributed profits

Credit Account 338 - Other Payables (3388).

- When paying dividends to shareholders, record:

Debit Account 338 - Other Payables (3388)

Credit Accounts 111, 112...

- When increasing contributed capital due to paying dividends in shares to shareholders, record:

Debit Account 421 - Undistributed Profits (Issue Price)

Credit Account 4111 - Contributed Capital (Recorded at Par Value)

Credit Account 4112 - Capital Surplus (Difference between Issue Price and Par Value of Shares).

C. ACCOUNTING AT HOLDING COMPANIES, COMPANIES WITH SUBSIDIARIES AND AFFILIATED UNITS THAT HAVE BEEN SHAREHOLDING REFORMED

1. When receiving assets excluded from the enterprise value of subsidiaries and affiliated units undergoing shareholding reform of the Holding Company, the Holding Company's accountant records:

Debit various Accounts 152, 153, 155, 156, 211,...

Credit Account 1361 - Operating Capital of Affiliated Units.

2. Based on vouchers and reports from subsidiaries and affiliated units undergoing shareholding reform under the Holding Company regarding assets excluded from the enterprise value transferred to other units outside the Holding Company, the Holding Company's accountant records:

Debit account 411 - Business capital

Credit Account 1361 - Operating Capital of Affiliated Units.

3. Based on vouchers reflecting the value of assets excluded from the enterprise value after subtracting the value of assets excluded from the enterprise value transferred to the Holding Company and other units outside the Holding Company as reflected in Items 1 and 2 above, the result is recorded by the Holding Company's accountant:

Debit account 411 - Business capital

Credit Account 1361 - Operating Capital of Affiliated Units.

4. Based on the shareholding reform decision of the competent state authority and related accounting vouchers and documents, the accountant determines the state capital sold to shareholders to reduce operating capital, records:

Debit account 411 - Business capital

Credit Account 1361 - Operating Capital of Affiliated Units.

5. Based on handover documents and schedules for assets and capital handed over to the joint-stock company, the accountant determines the state capital contribution to the joint-stock company, records:

Account 221 - Long-term stock investment (2212 - Shares)

Credit Account 1361 - Operating Capital of Affiliated Units.

6. Accounting for the "Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund"

The proceeds from selling state capital in enterprises undergoing shareholding reform, after deducting (-) the costs of shareholding reform, shall be transferred to the "Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund" of the Corporation (In the case of shareholding reform of affiliated units or independent accounting units of the Corporation).

a) Account 417 "Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund"

To record the establishment and use of the "Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund," the accountant opens Account 417 "Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund."

Account 417 "Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund" shall only apply to Corporations that establish the "Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund."

b) Structure and Content Reflected in Account 417

Debit Side:

- Expenditure to support enterprises in paying severance pay to employees who lose their jobs;

- Expenditure to support enterprises in retraining redundant labor at the time of shareholding reform to arrange new employment in joint-stock companies;

- Investment in enterprises that have undergone shareholding reform to ensure the controlling stake of the State in types of enterprises that the State must hold controlling shares;

- Providing capital support to SOEs before shareholding reform that face difficulties in payment capacity to handle overdue debts, social insurance debts;

- Providing capital support to SOEs for technological innovation investment, enhancing competitiveness, and developing enterprises;

Credit Side:

- Receiving funds deposited into the "Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund" from affiliated units and independent accounting units of the Corporation regarding the difference between proceeds from selling state capital exceeding the cost of shareholding reform;

- Receiving funds from the "Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund" for recovered receivables and proceeds from the sale of assets excluded from enterprise value of affiliated units and shareholding reform units of the Corporation and proceeds from the sale of assets held on behalf of the State by converted joint-stock companies submitted by SOEs;

- Other increases.

Debit balance:

Reflecting the balance of the "Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund" at the end of the period.

c) Accounting Method for Account 417

- When receiving funds from the "Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund" from subordinate units and independent accounting units of the Corporation regarding the difference between proceeds from selling state capital exceeding the cost of shareholding reform, record:

Debit Accounts 111, 112

Credit Account 417 - Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund.

- When receiving funds from the recovery of receivables and proceeds from the sale of assets excluded from enterprise value of subordinate units and shareholding reform units of the Corporation and proceeds from the sale of assets held on behalf of the State by converted joint-stock companies submitted to the Corporation into the "Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund," the Corporation's accountant records:

Debit Accounts 111, 112

Credit Account 417 - Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund.

- When disbursing funds from the "Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund" to support enterprises in paying off debts, providing severance pay to employees who lose their jobs, retraining redundant labor at the time of shareholding reform to arrange new employment in joint-stock companies; or investing in enterprises (under the Corporation) that have undergone shareholding reform to ensure the controlling stake of the State that the State must hold controlling shares, when disbursing funds, the accountant records:

Debit Account 417 - Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund

Credit Accounts 111, 112.

- When disbursing funds from the "Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund" to provide capital support to SOEs under the Corporation before shareholding reform facing difficulties in payment capacity to handle overdue debts, social insurance debts; providing capital support to SOEs under the Corporation for technological innovation investment, enhancing competitiveness, and developing enterprises, when disbursing funds, the accountant records:

Debit Account 417 - Enterprise Restructuring and State-owned Enterprise Shareholding Support Fund

Credit Accounts 111, 112.

III. ACCOUNTING FOR THE ISSUE OF BONDS TO RAISE CAPITAL

When enterprises issue bonds to raise additional capital, they must comply with current financial policies, and accountants must monitor and reflect in detail the quantity of each type of bond issued, the difference between par value and issue price, and record according to the provisions of Circular No. 105/2003/TT-BTC dated November 4, 2003, guiding the implementation of six (06) accounting standards issued pursuant to Decision No. 165/2002/QĐ-BTC dated December 31, 2002 of the Ministry of Finance.

IV. IMPLEMENTATION ORGANIZATION:

1. This Circular takes effect fifteen days after its publication in the Official Gazette. Previous regulations on accounting when converting SOEs into joint-stock companies contrary to the provisions of this Circular are abolished.

2. The Head of the Accounting System and Audit Department, the Director of the Corporate Financial Department, the Director of the Provincial Finance Departments, and the Heads of the Tax Departments of centrally governed cities and provinces are responsible for guiding and inspecting joint-stock reform enterprises in accordance with State regulations.

During implementation, if there are any issues, please report them to the Ministry of Finance for research and resolution./.