Account 414 - Development investment funds
1. Accounting principles
This account is used to record existing amount, and the situation of increase and decrease of development investment fund of enterprises.
b) Development investment fund is set up from post- income tax profits of enterprises and used for expansion investment of business and production scale, or for intensive investment of enterprises.
c) Setting up and use of development investment fund must comply with the current financial policy for every type of enterprise or decision of owners.
d) If enterprises do not continue to set up financial reserve funds. Owners of enterprises shall make decision to transfer the balance of financial reserve fund to development investment funds.
2. Structure and content of account 414 - Development investment funds
Debit side: Situation of expenditure and using the development investment fund of enterprises
Credit side: Development investment fund increases due to appropriation from income after tax
Credit balance: Existing development investment fund
3. Method of accounting for several major transactions
In period, when temporarily appropriate the development investment fund from income after tax, recorded:
Dr 421 - undistributed post-tax profits
Cr 414 - development investment funds
b) At year-end, determining development investment fund appropriated, accountants will calculate amount appropriated additionally, recorded:
Dr 421 - undistributed post-tax profits
Cr 414 - development investment funds
c) In case a joint stock company issue additional shares from the development investment funds, record:
Dr 414 - development investment funds
Cr 4111 - Contributions from owners (face value)
Cr 4112 - Share premium (the difference between the issue price higher than face value, if any)
d) Transfer of the balance of fund financial reserve fund: The balance of existing financial reserve funds in enterprises is transferred to development investment funds, record:
Dr 415 - financial reserve funds
Cr 414 - development investment funds
dd) When enterprises supplement charter capital from development investment funds, enterprises must transfer to owner‘s capital, record:
Dr 414 - development investment funds
Cr 4111- Contributions from owners
Source: Circular 200
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