Methods of preparing and presenting Notes to financial statements (Form B09 - DN)

1. Purposes of notes to financial statements:
a) The note to the financial statement is an inseparable part of the financial statement used to describe the narrative or analyze in detail of the information and figures presented in the balance Sheet, income statement, cash flows statement as well as other necessary information as required by the specific accounting standards by enterprises.
b) The note to the financial statement may also present other information if the enterprise deems it necessary to present honestly and reasonablely the financial statement.

2. Principles of preparation and presentation of the notes to financial statements
a) When preparing the annual financial statements, enterprises must make the notes to the financial statements in accordance with the provisions of Accounting Standards, "Presentation of financial statements" and guidance in this policy of financial statements.
b) When preparing the interim financial statements (including full form and short form), enterprises must make the notes to the selective financial statements in accordance with the provisions of the accounting standard, "Interim financial statement ―and the Circular guiding the standards.
c) Notes to the financial statements of an enterprise must be presented the following contents:
- Information on the basis of preparation and presentation of financial statements and the specific accounting policies selected and applied to transactions and important events;
- Information under the provisions of the accounting standards that has not been presented in other financial statements (key information);
- Additional information that has not been presented in the financial statements, but is necessary for a true and fair presentation of the financial situation of the enterprises.
d) Notes to the financial statements must be presented in a systematic way. Enterprises shall actively sort in the order in the notes to financial statements in a manner that best suits their
particular on the principle that each item in the balance sheet, income Statement and cash flow Statement should be marked to lead to relevant information in the notes to financial statements

3. Basis of preparation of Notes to financial Statements
- Based on the balance Sheet, income statements, cash flow statements of the reporting year;
- Based on the general accounting books; Books, detailed accounting cards or summary of the relevant details;
- Based on the Notes to the financial statements of previous year;
- Based on the actual situation of enterprises and the related documents.

4. Contents and methods of setting up items
Characteristics of operation of enterprises
In this part, enterprises clearly state:
a) Form of capital ownership: A state-owned companies, joint-stock company, limited liability companies, partnership or private enterprises. For foreign-invested enterprises: Names of nations and territories of each investor in enterprises (including investors with Vietnamese and foreign nationalities) and changes in structure of owner‘s equity among investors (percentage of contribution) at the end of the fiscal year.
b)Trading: industrial manufacturing, trading, service, construction or summary of many trading fields.
c) Business lines: the main business activity (Contents describing the main business activities referenced under the provisions of system of economics of Vietnam) and the characteristics of products or services of enterprises.
d) Normal business and production cycle: If the cycle is longer than 12 months, notes to the average business and production cycle of branches, sectors are added.
e) Characteristics of operation of enterprises in the fiscal year that affect the financial statements: the events of legal environment, market happenings, characteristics of business, management, finance, the event of acquisition, division, change the size ... that affect the financial statements of enterprises.
e) Structure of enterprises
- List of subsidiaries: name, address, rate of voting rights, contribution ratio, the ratio of the parent company's interests in each of its subsidiary must be presented in detail;
- List of associated companies and joint ventures: name, address, rate of voting rights, contribution ratio, the interest ratio of enterprises in each associated company and joint venture must be presented in detail;
- List of subordinate units of dependent cost-accounting: name and address of each unit must be presented
Accounting period, currency used in accounting
a) Annual accounting period: the annual accounting period must be specified in the calendar year starting on January 01 / ...to December 31/ ... If enterprises have the financial year other than the calendar year, then starting date and ending date of the annual accounting period must be clearly stated.
b) Currency used in accounting: Vietnam Dong, or other currencies selected according to the provisions of the Law on Accounting must be specified.
Standards and applicable accounting policy
a) Applicable accounting policy: the accounting policy that enterprises are applying such as : enterprise accounting policy, peculiar enterprise accounting policy approved in writing by the Finance Ministry, construction enterprise accounting policy or accounting policy for small and medium enterprises must be specified.
b) Declaration of compliance with accounting standards and accounting policy: those financial statements have been prepared and presented in accordance with Accounting Standards and Accounting policy of Vietnam or not must be specified. The financial statements are considered to be prepared and presented in accordance with Accounting Standards and Accounting policy of Vietnam if the financial statements comply with all provisions of each standard, circular guiding the implementation of current accounting standards and policy that enterprises are applying. If the accounting standards are not applied, it must be clearly stated.
The accounting policies applied when enterprises meet the assumption of continuous operation
(1) The principle of converting financial statements prepared in foreign currencies into Vietnam Dong: The application of exchange rates in converting the financial statements complies with the guidelines of enterprise accounting policy or not (assets and liabilities at the exchange rate at the end of period, owner‘s investments at the exchange rate at the date of contribution, income statements and cash flows statements in accordance with the actual exchange rate or the average exchange rate ).
(2).Types of foreign exchange rate applied in accounting
- The exchange rate selected by the bank to apply in accounting;
- The exchange rate applied to record and evaluate assets;
- The exchange rate applied to record and evaluate liabilities;
- The types of exchange rate applied in other transactions.
(3) The principles for determining the actual interest rate (also called the effective interest rate) used to discount cash flows for items are recorded at present value, allocated cost, recovery value ... (This note is just made when enterprises have applied interest rates to discount cash flows):
- Base of determination of the actual interest rate (the market interest rates or commercial bank interest rates or interest rates applied to loans of enterprises or other bases);
- Reasons for the selection of actual interest.
(4) Principles for recording cash and cash equivalents:
- Specification of bank deposits that are demand or term;
- Specification of monetary gold that includes types, are used as inventory or not;
- Specification of the base of determination of the cash equivalents? Consistence with the provisions of Accounting Standard "Cash flow statement" or not?
(5) Accounting Principles for financial investments
a) For trading securities:
- The time recorded (for listed securities, T + 0 or another time is clearly explained)
- The book value determined as the fair value or historical cost;
- Base of setting up provisions for devaluation.
b) For investments held to maturity:
- The book value determined as the fair value or historical cost;
- Base of determination unrecoverable losses;
- Revaluation amounts meeting the definition of accounts derived from foreign currencies or not?
c) For loans:
- The book value determined as the historical cost or allocated value;
- Revaluation amounts meeting the definition of accounts derived from foreign currencies or not?
- Base of making provisions for doubtful loans.
d) For investments in subsidiaries, associated companies and joint ventures:
- For the subsidiaries, joint ventures and associated companies purchased during the period, the time of initial recording, compliance with consolidated business accounting Standard for subsidiaries bought in the period or not? Compliance with accounting Standard in investments in associated companies and joint ventures or not?
- Principles for determining subsidiaries, associated companies and joint ventures (based on the proportion of the voting rights, the proportion of contributed capital or benefits);
- The book value of investments in subsidiaries determined at historical cost, fair value and other values? The book value of investments in joint ventures and associated companies determined at historical cost, owner‘s equity method or other methods?
- Base of making the provision for investment losses in subsidiaries, associated companies and joint ventures; The financial statements to determine losses (consolidated financial statements and separate financial statements of subsidiaries, associated companies and joint ventures);
dd) For investments in capital instruments of other units:
- The book value of investments in other units determined at historical cost or other methods?
- Base of making the provision for investment losses in other units; The financial statements to determine losses (consolidated financial statements and separate financial statements of the invested units);
e) Accounting methods for other transactions relating to financial investments:
- Shares swaps ;
- Investment under the form of capital contribution;
- Transactions under the form of repurchase of contributed capital;
- Accounting method for dividends divided by shares;
(6) Accounting principles for debts receivable
- Criteria for the classification of debts receivable (receivables from customers, other receivables, internal receivables)
- Being monitored in detail under the original terms, the remaining term at the time of reporting, original currencies and each object or not?
- Revaluation of amounts meeting the definition of accounts derived from foreign currencies or not ? The exchange rates used to revalue?
- Recording debts receivable which do not exceed the recoverable value or not?
- Method of making the provision for bad debts.
(7) Principle for recording inventory
- (7) Principle for recording inventory: Specify inventory that is recorded at the historical cost or net realizable value.
- The method of calculating the value of inventory: Specify the method that enterprises apply (Weighted average; first in, first out, specification price or retail price).
- Method of inventory accounting: Specify that enterprises are applying perpetual inventory method and periodic inventory method.
- Methods for making provision against devaluation of goods in stock: Specify that enterprises make provision against devaluation of goods in stock on the basis of the positive difference of historical cost and net realizable value of inventories. The net realizable value of inventories is determined in accordance with the provisions of Accounting Standard "Inventories" or not? Method for making provision against devaluation of goods in stock is according to the difference between the provision that must be made in current year and the provision that have been made in previous year unused made additionally or refunded in current year.
(8)Principles of accounting and depreciation fixed assets, financial lease fixed assets, investment real property
a) Accounting principles of tangible fixed assets, intangible fixed assets:
- Specification of the book value of fixed assets which are at historical cost or revalued cost.
- Accounting principles of expenses incurred after the initial recording (cost of upgrading, improvement, maintenance, repair) recorded in the book value or the cost of production and business;
- Specification of methods of depreciation of fixed assets; Depreciation at historical cost or historical cost minuses recoverable value estimated from the liquidation or sale of fixed assets;
- Other provisions on the management, use, depreciation of fixed assets complied with or not?
b) Accounting principles of finance lease fixed assets:
- Specification of methods of determination the book value;
- Specification of method of depreciation of finance lease fixed assets.
c) Accounting principles for investment real property.
- The method of recording book value of investment real property
- Specification of methods of depreciation of investment real property.
(9) Accounting principles for Business Cooperation Contract (BCC)
a) For the capital contributors
- The recording capital (cash or non-cash assets) contributed to the BCC;
- The recording revenues and expenditures related to the contract
b) For capital recipients (executive party, incurring general expenses)
- Principles of recording capital contributed by other parties
- Principles of division of revenue, expenses and products of the contract.
(10) Accounting principles of deferred enterprise income tax
a) Accounting principles of deferred income tax assets
- Basis of recording the deferred income tax assets (deductible temporary differences, tax loss or unused tax incentives);
- Tax rate (%) used to determine the value of deferred income tax assets;
- Offsetting with deferred income tax or not?
- Determination of ability of taxable income in future when the deferred income tax assets are recorded, revaluation of deferred income tax assets unrecorded
b) Accounting principles of deferred enterprise income tax payable
- Basis of recording deferred income taxes payable (taxable temporary differences);
- Tax rate (%) used to determine the value of deferred income tax payable;
- Offsetting with deferred income tax assets or not?
(11) Accounting Principles for prepaid expenses
- Specification of prepaid costs allocated gradually into cost of production and business.
- Method and time of allocation of prepaid costs;
- Methods and time of allocation of goodwill arising in equitization;
- Monitoring in detail prepaid expenses by maturity or not?
(12) Accounting principles for liabilities
- Classification of liabilities
- Monitoring in detail under each object, original terms, the remaining term at the time of reporting, original currencies
- Revaluation of amounts meeting the definition of accounts derived from foreign currencies
- Recording liabilities which are not less than payment obligations
- Making provision for liabilities
(13) Principle for recording loans and finance lease liabilities
- Recording the value of loans and finance lease liabilities
- Monitoring each object, term, original currency
- Revaluation of loans and finance lease liabilities in foreign currencies? (14) Principle for recording and capitalizing borrowing costs:
- Principle for recording borrowing costs: Specification borrowing costs recorded in cost of production, sales in the period incurred, unless they are capitalized in accordance with the provisions of Accounting Standards "borrowing costs ".
- The capitalization rate used to determine the borrowing costs capitalized during the period: Specification of the capitalization rate (Capitalization rate is determined by the formula set out in the Circular providing guidance on Accounting Standard No. "Borrowing Costs".
(15) Principles of recording expenses payable: Specification of the expenses unpaid, but estimated to be recorded in the cost of production, sales in the period and the basis for determining the value of such expenses.
(16) Principles and methods of recording provisions payable :
- Principles for recording provisions payable: Specification of provisions payable recorded satisfying or not the conditions prescribed in Accounting Standard "Provisions, assets and potential liabilities "
- Method of recording provisions payable: Specification of the provisions payable made more (or refunded) under the positive difference (or negative) between the provision payable that must be made in this year and the provision payable made in previous year unused in the accounting books.
(17) Principles for recording unearned revenues
- The basis of recording unearned revenue
- Allocation method of unearned revenue.
(18) Principle of recording convertible bonds
- Ability of recording separately debt component and capital component
- Trust of interest rate used to discount cash flows
(19) Principle for recording owner‘s equity:
- Contributions from owners are recorded at capital actually contributed not; Method of recording the share premium, method of determining options of convertible bonds
- The reason for recording the differences upon asset revaluation and the exchange differences
- Method of determining undistributed profits, the principle of distribution of profits, dividends.
(20) The principle and method of recording revenues and other income:
- Revenues from goods and service provision: Compliance fully with the conditions of recording revenues specified in Accounting Standard "Revenue and other income", The methods used to record revenues.
- Revenues from construction contracts: Compliance with the Accounting Standard "construction contract", The methods used to record revenue of construction contracts).
- Methods of recording revenues from financial activities.
- Principles of recording other income
(21) Accounting principles of revenue deductions
- Inclusion of the revenue deductions
- Compliance with the accounting Standard "The events arising after the end of the annual accounting period" to adjust the revenue
(22) Accounting Principles for the cost price of goods sold
- Guarantee of conformity principle with revenues
- Guarantee of precautionary principle, recording immediately the costs that exceed the normal level of inventories
- Items recorded a decrease in cost price of goods sold
(23) Principle and method of recording financial costs: full recording or not the interest expense (including advanced amounts), loss on forex of the reporting period
(24) selling expense and enterprise administrative expense
- Full recording or not the selling expense and enterprise administrative expense incurred in period
- Adjustments in selling expense and enterprise administrative expense
(25) The principle and method of recording current enterprise income tax, deferred enterprise income tax expense: Current enterprise income tax expense is determined on the basis of taxable income and tax rate of enterprise income tax in the current year. Deferred enterprise income tax is determined on the basis of deductible temporary differences, taxable temporary differences and tax rate of enterprise income tax. Current enterprise income tax expense is not offset with deferred enterprise income tax expense.
(26) The principles and other accounting methods: Specification the principles and other accounting methods for the purpose of helping users understand the financial statements of the enterprise presented on the basis of compliance with the system of Vietnamese accounting standards issued by the Ministry of Finance.
The accounting policies applied in case enterprises do not meet the assumption of continuous operation
a) Policy on reclassification of long-term assets and liabilities into short-term ones
b) Principles of valuation
- Financial investments;
- Receivables;
- Payables;
- Inventories;
- Fixed assets, investment real property;
- Other assets and liabilities.
Additional information for the items shown in the Balance Sheet
- In this section, enterprises must present and analyze in detail the figures presented in the Balance Sheet to help users of financial statements understand better the contents of the assets, liabilities and owner‘s equity.
- The unit of values presented in the section "Additional information for the items shown in the Balance Sheet" is the unit used in the Balance Sheet. Figures recorded in the column "Beginning" are taken from the column "ending" in the notes to financial statements of previous year. Figures recorded in the column "ending" are set up on the basis of figures taken from:
The Balance sheet of current year;
The general accounting books;
Detailed accounting books and cards or summary of the relevant details.
- Enterprises actively number information presented in this section under the principle of conformity with leading numbers from the Balance Sheet and guarantee of easy reference and comparison among periods.
- If the enterprise has applied retroactively changes in accounting policies or retroactive adjustment of important errors of the previous year, they must adjust comparative figures (figures in column "beginning") to ensure principles of comparing and explain this clearly. In case of any reasons which lead the figures in column "beginning" to inability to compare with figures in column "Ending", this must be indicated in the notes to financial statements.
- For the items required the notes under the fair value, if the fair value is not identifiable, the reasons must be specified.
Additional information for items presented in income statements.
- In this section, enterprises must present and analyze in detail the figures shown in income statements to help users of financial statements to better understand the content of the items of revenues and expenditures.
- The unit of values presented in the section "Additional information for the items shown in the income statement " is the unit used in the income statement. Figures recorded in the column
"Previous year" are taken from the notes to financial statements of previous year. Figures recorded in the column "Current year" are set up on the basis of figures taken from:
Income statement of current year;
The general accounting books;
Detailed accounting books and cards or summary of the relevant details.
- Enterprises actively number detailed information presented in this section under the principle of conformity with leading numbers from the income statement and guarantee of easy reference and comparison among periods.
- In case of any reason which leads to inability to compare the figures in column "Beginning" with the figures in column "Ending", this must be indicated in the notes to financial statements.
Additional information for the Cash flow statement
- In this section, enterprises must present and analyze the figures presented in the Cash flow statement in order to help users better understand the factors affecting cash flows during the period of the enterprises .
- In case in the period, enterprises purchase or liquidate investments in subsidiaries or other business units, the cash flows must be presented as separate items in the Cash flow statement. This section must provide detailed information relating to the purchase or liquidation of investments in subsidiaries or other business units.
- The unit of values presented in the section "Additional information for the items shown in the cash flow statement " is the unit used in the cash flow statement. Figures recorded in the column "Previous year" are taken from the notes to financial statements of previous year. Figures recorded in the column "Current year" are set up on the basis of figures taken from:
Cash flow statement of current year
The general accounting books;
Detailed accounting books and cards or summary of the relevant details.
Other information
- In this section, enterprises must present other important information (if any) in addition to the information presented in the section above to provide information to describe in words or in figures under the provisions of the specific accounting Standards to help users understand the financial statements of the enterprises presented honestly and reasonably.
- When presenting information in this section, depending on the requirements and characteristics of information as prescribed from point 1 to point 7 of this section, enterprises can give detailed and suitable forms, and the necessary comparable information.
- In addition to the information presented under the provisions of section 4.1 to section 4.8, enterprises shall present additional information if they deems necessary for the users of financial statements of the enterprises.

Source: Circular 200, Article 115