Circular Joint No. 43-LD/TT guiding the implementation of Decision No. 150/HDBT dated November 27, 1986 of the Council of Ministers on handling the results of the comprehensive inventory and revaluation of fixed assets (Tangible Fixed Assets - TFA) as of October 1, 1995 to strengthen management of TFA in production and business units.

JOINT CIRCULAR

Guidelines for implementing Decision No. 150/HĐBT dated November 27, 1986 of the Council of Ministers on handling the results of the comprehensive inventory and revaluation of fixed assets at zero hour on October 1, 1995, and strengthening management of fixed assets in production and business units.

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Implementing Decision No. 157/HĐBT dated December 16, 1983, and Decision No. 125/HĐBT dated April 13, 1985 of the Council of Ministers on the comprehensive inventory and revaluation of fixed assets at zero hour on October 1, 1985; the Ministry of Finance issued Circular No. 27-TC/CĐKT dated May 29, 1985 and Circular No. 204-TC/CĐKT dated March 26, 1986 guiding accounting for the results of the comprehensive inventory and revaluation of fixed assets.

Implementing Decision No. 150/HĐBT dated November 27, 1986 of the Council of Ministers on handling the results of the comprehensive inventory and revaluation of fixed assets at zero hour on October 1, 1985, and strengthening management of fixed assets in production and business units; the Ministry of Finance and the General Statistics Office guide certain points regarding handling the results of the inventory and revaluation of fixed assets as follows:

I. COMBINATION OF RESULTS OF COMPREHENSIVE INVENTORY AND REVALUATION OF FIXED ASSETS AT NEW VALUES:

To serve the accounting work of basic units and the consolidation work of state agencies managing fixed assets in accordance with the new value of fixed assets stipulated in Decision No. 150/HĐBT dated November 27, 1986 of the Council of Ministers and Circular No. 28-VGNN/TKK dated November 29, 1986 of the State Price Commission; production and business units under the state economic sector shall base on the results of the comprehensive inventory and revaluation of fixed assets at zero hour on October 1, 1985 to recalculate the value of fixed assets at new values. The recalculation of the value of fixed assets must comply with the following principles:

- Recalculating the value for each individual object of fixed assets;

- Recalculating the new value must be based on the price level of the 1985 inventory for those fixed assets that have been revalued;

- Recalculating the value from the current price used in the accounting books for those fixed assets existing before October 1, 1985 but not yet revalued. To accurately determine the original cost of fixed assets at new values (revalued price - restored price), the basic units must perform the following tasks:

1. Review the entire "Inventory and Revaluation of Fixed Assets Form."

- Must review whether the application of the 1985 inventory price was correct, if there is no price, whether the application of the calculation methods was appropriate? In cases where adjustments need to be made to any item in the inventory form, a specific record must be made for each form and confirmed by the signature of the inventory committee.

- If the inventory form records multiple fixed assets together, now it appears unreasonable, they can be separated into separate forms.

2. Calculate and record the new value of fixed assets in the "Inventory and Revaluation of Fixed Assets Form" in the blank sections not filled during the inventory at zero hour on October 1, 1985: Now fill as follows:

- Item 18: Record the restoration price conversion factor of fixed assets according to the guidance circular of the State Price Commission.

- Item 19: Record the original cost at the restored 1985 price of fixed assets after recalculating, obtained by multiplying the original cost at the 1985 inventory price by the restoration price conversion factor.

Item 19 = Item 16 x Item 18

- Item 20: Record the remaining value at the restored 1985 price of fixed assets after recalculating, obtained by multiplying the remaining value at the 1985 inventory price by the restoration price conversion factor.

Section 20 = Section 17 multiplied by Section 18

The original value and remaining value of fixed assets according to the 1985 restoration price, recalculated in Sections 19 and 20 of the "Fixed Asset Inventory and Revaluation Form," shall be officially used as the basis for accounting and recorded in the fixed asset ledger from January 1, 1987.

3. Prepare a report on the handling of the results of the comprehensive inventory and revaluation of fixed assets at 00:00 on October 1, 1985, based on the new value (restoration price).

Based on the results of the comprehensive inventory and the recalculation of the new value of fixed assets in the "Fixed Asset Inventory and Revaluation Form," production units must prepare a report on the handling of the results of the comprehensive inventory and revaluation of fixed assets at 00:00 on October 1, 1985  according to the new value up to January 1, 1987 (following the model provided at the end of this circular). The steering committees for the comprehensive inventory and revaluation of fixed assets under ministries, general departments; provinces, cities, and centrally-administered municipalities have the responsibility to urge, collect (but not compile reports) and submit the reports on the handling of the comprehensive inventory and revaluation of fixed assets of grassroots units to the central steering committee for the comprehensive inventory and revaluation of fixed assets no later than January 30, 1987. The report on the handling of the comprehensive inventory and revaluation of fixed assets at 00:00 on January 1, 1985, based on the new value, must be reviewed by the financial authority or the supervising agency before being submitted to the central steering committee for the comprehensive inventory.

- For grassroots units managed by local authorities, the review is conducted by the local Department of Finance.

- For grassroots units managed by central authorities, the review is conducted by the central ministry's finance department (Finance Division).

II. HANDLING THE RESULTS OF THE COMPREHENSIVE INVENTORY AND REVALUATION OF FIXED ASSETS:

A. Circular 27 TC/CĐKT provides detailed guidance on the handling and accounting of fixed assets discovered as surplus or missing during the comprehensive inventory at 00:00 on October 1, 1985. Below are some key points emphasized:

1. If fixed assets are found to be surplus, based on the "Fixed Asset Inventory and Revaluation Form," a new fixed asset file should be established, increasing fixed assets and fixed capital according to the original price recorded in the file (Debit Account 01, Credit Account 85 (85.1)), reducing basic capital and increasing depreciation of fixed assets according to the depreciation rate determined in the comprehensive inventory (Debit Account 85 - 85.1, Credit Account 02).

2. If fixed assets are found to be missing, the cause should be investigated, responsibility determined, and handled according to general principles. Pending higher-level resolution, reduce fixed capital and fixed assets according to the original price recorded (Debit Account 85-85.1, Credit Account 01), increase fixed capital and reduce depreciation of fixed assets according to the accumulated depreciation already deducted (Debit Account 02, Credit Account 85-85.1), and transfer the remaining value of fixed assets to a pending shortage account (Debit Account 84-84.1, Credit Account 85-85.2). Upon receiving the higher-level decision, record: Debit Account 75 (if the responsible party must compensate), Debit Account 85-85.2 (if capital reduction is recorded), Debit Account 99 (if it is included in losses), Credit Account 84-84.1.

To provide a basis for examination, handling, and accounting records, units must prepare a list of surplus and missing fixed assets during the comprehensive inventory, clearly stating the original price, accumulated depreciation, and remaining value of each asset, as well as the total number of surplus and missing fixed assets.

Example 1: (Unit of measurement: 1,000 VND)

Original Price Accumulated Depreciation Remaining Value

I. Balance on Accounting Date 1,000 200 800

As of September 30, 1985

II. Surplus Fixed Assets in Inventory 250 110 140

III. Missing Fixed Assets in Inventory 200 50 150

IV. Actual Inventory

At 00:00 on October 1, 1985

(I + II + III) 1,050 260 790

Accounting entries:

1. Debit Account 01, Credit Account 85 (85.1): 250

2. Debit Account 85 (85.1), Credit Account 02: 110

3. Debit Account 85 (85.1), Credit Account 01: 200

4. Debit Account 02, Credit Account 85 (85.1): 50

5. Debit Account 84 (84.1), Credit Account 85 (85.2): 150

Recording entries for increases and decreases in fixed assets discovered as surplus or missing during the comprehensive inventory must be completed before determining the new valuation of fixed assets, ensuring that the original price of fixed assets on the accounting records matches the actual inventory at 00:00 on October 1, 1985.

B. According to Decision 150/HĐBT of the Council of Ministers, the new valuation (restoration price) of fixed assets will be officially recorded in accounting ledgers from January 1, 1987, while the results of the comprehensive inventory and revaluation of fixed assets were determined at 00:00 on October 1, 1985. Therefore, handling the results of the revaluation of fixed assets must be based on the results of the comprehensive inventory of changes and depreciation of fixed assets from October 1, 1985, to December 31, 1986, and proceed with the following steps:

1. Adjust the difference in the increase in the original value of fixed assets due to revaluation by basing it on the new valuation and the original value recorded in the accounting ledger of all actual inventory fixed assets to determine the difference in the increase in the original value of fixed assets, increasing the value of fixed assets and fixed capital:

Debit Account 01 - "Fixed Assets"

Credit Account 85 (85.1) - "Basic Capital"

simultaneously recording the new valuation of each fixed asset in the card or number of fixed assets (see Example 2).

2. Adjust the difference between the actual depreciation and the book depreciation of all actual inventory fixed assets at 00:00 on October 1, 1985, by basing it on the "Fixed Asset Inventory and Revaluation Form," multiplying the actual depreciation rate of each fixed asset determined in the comprehensive inventory (x) with the value of the fixed asset according to the 1985 inventory price (Section 17 in the "Fixed Asset Inventory and Revaluation Form"), then multiplying (x) with the adjustment factor for the restoration price to calculate the actual depreciation of each fixed asset and the total fixed assets, comparing the result with the book depreciation (accumulated depreciation calculated up to October 1, 1985) to determine the difference in increased depreciation of each fixed asset and the total fixed assets. The total difference in increased depreciation of all fixed assets is recorded:

Debit Account 85 (85.1) - "Basic Capital"

Credit Account 02 - "Depreciation of Fixed Assets"

The difference in increased depreciation of each fixed asset is recorded in the corresponding "Fixed Asset Card."

Example 2: (Unit of measurement: 1,000 VND)

- Total original value of actual inventory fixed assets according to the current book value is 1,050, book depreciation: 260 (see Example 1).

- Total new value of fixed assets (revalued price) is 22,050, actual depreciation rate determined in the comprehensive inventory is 30% (average).

1. Debit Account 01, Credit Account 85 (85.1): 21,000

1. Debit Account 01, Credit Account 85 (85.1): 250

2. Debit Account 85 (85.1), Credit Account 02: 6,355

(21.000 = 22.050 - 1.050)

[6,355 = (22,050 x 30% - 260)]

3. Adjust fixed assets decreased from October 1, 1985, to before January 1, 1987:

Based on the decrease in fixed assets (due to liquidation, sale, transfer...), from October 1, 1985, to before January 1, 1987, adjust the decrease in fixed assets and fixed capital:

On the basis of the situation of reducing fixed assets (due to liquidation, sale, transfer...), from October 1, 19985 to before January 1, 10987, to adjust for the reduction of fixed assets and fixed capital:

- If during the aforementioned period, the reduction of fixed assets has not been recorded at the old book value, it shall now be recorded at the new appraised value (Debit Account 85-85.1, Credit Account 01). If the reduction has already been recorded at the old book value, only the increase in original cost due to reappraisal shall now be recorded (Debit Account 85-85.1, Credit Account 01).

- The difference between the actual depreciation calculated based on the new appraised value and the depreciation recorded in the books for the reduced fixed assets during the aforementioned period shall be adjusted according to the reverse entry as stated in Section 2 (Debit Account 02, Credit Account 85-85.1).

4/ Fixed assets increased due to construction investment or new purchases from October 1, 1985 to before January 1, 1987 shall be recorded at their actual investment or purchase value according to general regulations.

Fixed assets increased due to transfer or sale during the aforementioned period, if recorded at the old price, must record an additional adjustment for the increase in original cost due to reappraisal (Debit Account 01, Credit Account 85-85.1); simultaneously, record an increase in the difference between actual depreciation and book depreciation (Debit Account 85-85.1, Credit Account 02).

Example 3: (unit of measurement 1,000 VND)

- In May 1986, reduce one fixed asset, valued at 40 VND on the current books, with accumulated depreciation up to October 1, 1985 being 16 VND; revalued at 800 VND, with a determined depreciation rate of 40% in the comprehensive inventory; accumulated depreciation from October 1, 1985 to May 1986 is 15 VND. Accounting entries have been made to reduce the fixed asset and capital on the accounting books in May 1986 at the old price.

- In March 1986, received a transferred fixed asset valued at 30 VND on the current books, with accumulated depreciation up to October 1, 1985 being 56 VND; revalued at 610 VND, with a determined depreciation rate of 20% in the comprehensive inventory; accumulated depreciation from October 1, 1985 to March 1986 is 2 VND. Accounting entries have been made to increase the fixed asset and capital on the economic books in March 1986 at the old price.

Accounting entries are as follows: reduction of fixed assets:

1. Debit Account 85 (85.1), Credit Account 01: 760 (800 - 40)

2. Debit Account 02, Credit Account (85.1): 289

[289 = (800 x 40%) - (16 + 15)]

Increase in fixed assets:

3. Debit Account 01, Credit Account 85 (85.1): 580 (610 - 30)

4. Debit Account 85 (85.1), Credit Account 02: 115

[115 = (610 x 20%) - (5 + 2)]

5. Additionally, determine the difference in actual accumulated depreciation extracted based on the old book value from January 1, 1987 (recorded as Credit Account 86-86.1, Debit Accounts for production and business expenses) compared to the accumulated depreciation recorded as a reduction in capital (recorded as Debit Account 85-85.1, Credit Account 02) to adjust the reduction in fixed capital:

Debit Account 85 (85.1) "Fixed Capital"

Credit Account 02 "Depreciation of Fixed Assets".

Example 4: (unit of measurement 1,000 VND)

The total accumulated depreciation of fixed assets extracted from October 1, 1985 to before January 1, 1987 is 650 VND (total credit balance in Account 86.1 during this period), including 150 VND recorded as a reduction in capital and an increase in depreciation of fixed assets (total credit balance in Account 02 - corresponding debit in Account 85 (85.1) during this period).

Accounting records:

Debit Account 85 (85.1), Credit Account 02: 500 (650 - 150)

6/ Handle the remaining loan balance for construction investment.

For the increase in original cost of fixed assets invested with bank loans, in addition to adjusting the increase in fixed assets and capital (as recorded in point 1), also base on the remaining loan balance and the ratio of the increase in original cost between the new appraised value and the old book value recorded in the books of those fixed assets to calculate the new balance and the increase in the loan balance and record:

Debit Account 72: "Payment for Bank Loans for Construction Investment using Profits and Other Sources"

Credit Account 94: "Long-term Bank Loan".

Example 5: (unit of measurement 1,000 VND)

Fixed assets invested with bank loans recorded at the old price on the books (also the total amount of bank loans) is 30 VND; revalued at 600 VND. The remaining loan balance as of before January 1, 1987 is 10 VND.

Accounting entries: Debit Account 72, Credit Account 94 = 190

[190 = (10 x 600/30) - 10]

III. ADJUSTMENTS TO THE MANAGEMENT AND ACCOUNTING OF FIXED ASSETS AFTER THE COMPREHENSIVE INVENTORY AND REASSESSMENT AT 00:00 ON OCTOBER 1, 1985

1/ Review fixed assets, transfer assets that do not meet the criteria to tools and equipment under fixed assets.:

According to Decision No. 507/DTXD dated July 22, 1986 of the Ministry of Finance regarding "Regulations on Management and Depreciation of Fixed Assets...", the criteria for fixed assets are: having a unit value of 10,000 VND or more and a usage period of one year or longer.

Based on these criteria, after determining the new value of fixed assets (reappraised value), a thorough review of all fixed assets must be conducted and those not meeting either of the two conditions above (except for specific types defined by industry characteristics) should be transferred to tools and equipment under fixed assets. The accounting department must base on the "Inventory and Reappraisal Form of Fixed Assets," cards, or fixed asset ledgers to compile a list of fixed assets to be converted into tools and equipment under fixed assets. Entries should be made based on the consolidated ledger of the compiled list.

a) Debit Account "Tools and Equipment under Fixed Assets"

Credit Account 01 "Fixed Assets" (recorded at the new value of the fixed assets converted into tools and equipment); simultaneously, transfer the fixed asset cards of these assets into the archival files and record them in the tracking ledger of tools and equipment under fixed assets in storage or in use.

b) Debit Account 85-85.1 "Fixed Capital"

Credit Account 85-85.2 "Current Capital" (based on the actual remaining value determined in the comprehensive inventory on October 1, 1985 at the new reappraised value minus (-) the accumulated depreciation extracted from October 1, 1985 to January 1, 1987 of the fixed assets converted into tools and equipment under fixed assets).

c) Debit Account 02 "Depreciation of Fixed Assets"

Credit Account 13 "Allocation of Tools and Equipment under Fixed Assets" (based on the actual depreciation determined in the inventory on October 1, 1985 at the new reappraised value and the accumulated depreciation calculated from October 1, 1985 to January 1, 1987 of the fixed assets converted into tools and equipment under fixed assets).

+ For fixed assets converted into tools and equipment allocated at 50%:

- If the accumulated depreciation calculated above is insufficient to reach 50% of the value of the tools and equipment put into use, allocate further until reaching the required amount, record:

Debit Accounts for production and business expenses (or Account 33)

Credit Account 13 "Allocation of Tools and Equipment under Fixed Assets"

- If the accumulated depreciation calculated above exceeds 50% of the value of the tools and equipment put into use, a separate record must be maintained to allocate the remaining value when the item is scrapped.

+ For fixed assets converted into tools and equipment allocated gradually, in addition to the entries a and c mentioned above, also record:

- Debit Account 33 "Pending Allocation Expenses"

There is Account 12 "Labor tools belonging to fixed assets" (based on the new value of fixed assets converted to labor tools belonging to fixed assets for gradual allocation).

- Debit Account 13 "Gradual allocation of labor tools belonging to fixed assets"

Credit Account 33 "Costs awaiting allocation" (based on the actual depreciation determined in the general inventory on October 1, 1985, calculated according to the re-evaluated new value of fixed assets converted to labor tools belonging to fixed assets for gradual allocation).

2/ Adjust the files, vouchers, and books related to the management and accounting of fixed assets:

+ Complete technical files including design drawings, functional performance guides, usage instructions, operation methods...

+ Complete accounting files:

- Re-establish the "Fixed Asset Card" (replacing all existing fixed asset cards) based on the re-evaluated new value and the actual depreciation determined in the general inventory.

- Collect all invoices, budget estimates, fixed asset receipt forms, major repair documents, installation and trial run certificates...

Each fixed asset's file must be arranged separately and stored in order by type in the drawer.

The Fixed Asset Card must be opened for each fixed asset, recording all necessary elements and arranged in the card box according to each managing unit, each type of fixed asset, and their usage status (in production use, outside production use, not needed yet...).

Additionally, each managing unit must have a fixed asset book to monitor the increase, decrease, repairs, and usage of fixed assets within the unit.

3/ Adjust the calculation and allocation of depreciation for fixed assets:

According to Decision No. 507 TC/DTXD of the Ministry of Finance mentioned above, from January 1, 1987, the basic depreciation and major repair depreciation of fixed assets will be calculated based on the new ratio (according to Decision No. 507 TC/DTXD) and the re-evaluated new value of fixed assets prior to October 1, 1985, according to Decision No. 150/HĐBT or the actual construction or purchase price of fixed assets after October 1, 1985.

The monthly depreciation of fixed assets must necessarily be calculated for each fixed asset (and not allocated collectively for all fixed assets as some units are currently doing). At the end of each year, the total depreciation extracted during the year for each fixed asset must be recorded on the "Fixed Asset Card" to serve as the basis for determining the wear and tear level and utilization efficiency of each fixed asset.

4/ Adjust the preparation of reports on the quantity, value, and usage situation of fixed assets:

Units must strictly comply with the accounting-statistical reporting system for fixed assets, machinery, equipment... issued by the General Statistics Office and the Ministry of Finance for each industry to ensure that the heads of Ministries, General Departments, and the Ministry of Finance, General Statistics Office can accurately grasp the situation of fixed assets according to Decision No. 150/HĐBT of the Council of Ministers.

5/ All matters concerning the resolution and adjustment of accounting data regarding fixed assets mentioned in Sections B1, 2, 3, 4, 5, 6 of Part II and Section 1 of Part III above shall be implemented in the accounting books in December 1986 before preparing the final settlement report for 1986. However, when analyzing and evaluating the completion of the 1986 plan, these figures shall not be used.

This Circular takes effect from the date of signature.

During the implementation process, if any issues arise, please reflect them to the Ministry of Finance and the General Statistics Office for resolution.