Account 412 - Difference due to asset revaluation

1.Accounting principles

a) This account used for recording of differences due to revaluation of existing assets and situation of settlement of such differences at enterprises. Revaluated assets are revaluated primarily fixed assets, property investment. In some cases it is possible and necessary to revaluate materials, equipments, tools, finished goods Inventory, goods, unfinished goods Inventory, etc.

b) Differences due to asset revaluation shall be recorded in this account in following cases:

- When having the decision of State on asset revaluation;

- When carrying out the equitization of State enterprises;

- Other cases under provisions of the law.

c) This account shall not revaluated differences when taking assets for capital contribution in other units, changing ownership form, differences of revaluation in such cases shall be recorded in Account 711 - Other income (if being interests) or Account 811 - Other expenses (if being losses)

d) Asset value shall be re-determined on the basis of price list stipulated by the State or determined by asset pricing committee or professional price verificating agency.

dd) Differences due to asset evaluation shall be treated and settled according to the current financial policy.

2.Structure and contents of account 412 - Difference due to asset revaluation

Debit side:

- The negative difference due to asset revaluation;

- Settlement of the positive difference due to asset revaluation

Credit side:

- The positive difference due to asset revaluation;

- Settlement of the negative difference due to asset revaluation.

Account 412 - Differences due to asset revaluation may have balance in Debit or in Credit.

Debit balance: The negative difference due to revaluating assets which has not yet settled.

Credit balance: The positive difference due upon revaluating assets which has not yet settled.

3.Method of accounting for several major transactions

When having the State‘s decisions on revaluation of fixed-asset, real estate Investment, materials, goods, etc or valuation when conducting equitization of State enterprises, enterprises shall carry out inventory, revaluate assets and record differences due to asset evaluation in the accounting book.

- Revaluation of materials, goods:

If revaluation price are higher than price recorded in the accounting book, the positive price difference will be recorded:

Dr 152, 153, 155, 156

Cr 412 - Difference due to asset revaluation.

If revaluation price are lower than price recorded in the accounting book, the negative price difference will be recorded:

Dr 412 - Difference due to asset revaluation.

Cr 152, 153, 155, 156.

- Revaluation of fixed assets and real estate investment: Based on the written summary of inventory and revaluation results of fixed assets, real estate investment:

Historical cost, book value, depreciation value is adjusted as an increase, record:

Dr 211, 213, 217 (adjusted increase in cost)

Cr 214 - Depreciation of fixed asset (adjusted increase in depreciation value)

Cr 412 - Difference due to asset revaluation. (adjusted increase in book value)

Historical costs, book value, depreciation value is adjusted as a decrease, record:

Cr 412 - Difference due to asset revaluation. (adjusted decrease in book value)

Dr 214 - Depreciation of fixed asset (adjusted decrease in depreciation value)

Cr 211, 213, 217 (adjusted decrease in cost)

b) At fiscal year-end, settlement of differences due to asset revaluation shall comply with the decision of or authorized agencies:

- If Account 412 has the balance in Credit, and business has the decision on owner‘s capital, record:

Dr 412 - Difference due to asset revaluation.

Cr 411 - owner‘s capital.

- If Account 412 has the balance in Debit, and business has the decision on decreasing owner‘s capital, record:

Dr 411 - owner‘s capital

Cr 412 - Difference due to asset revaluation

Source: Circular 200