Rules for accounting for investments in associates  

1. Investments in associates include investments in subsidiaries, joint ventures and other investments for long-term held. The investment may be conducted in the following forms:
2. a) Investments in the form of capital contribution in associates (capital mobilized by the investee): in this form, the assets contributed by the contributor shall be recorded to balance sheet of the investee;
3. b) Investments in the form of purchase of capital contribution of other associates (purchase of owner‘s equity): in this form, the assets of the buyer (the investor or transferee) shall be transferred to the seller (the transferor); they shall not be recorded to balance sheet of the unit issuing equity instruments (investee)
4. When investing by non-monetary assets, the investor must apply appropriate accounting method according to type of investment, in particular:
5. a) If a non-monetary asset is used for capital contribution, the investor must re-evaluate such asset under agreement. The difference between book value or residual value and re-evaluate price of the asset for capital contribution shall be recorded to other income or other expenses;
6. b) Sale of capital holding of other associates and payment of non-monetary asset to the transferor:

- If the non-monetary asset for payment is an inventory, the ethnic minorities shall account for them similarly to sale of inventories in the form of barter agreement (the revenue and cost of the inventory used for exchange with purchased capital holding shall be recorded); - If the non-monetary asset for payment is a fixed asset or an investment property, the investor shall account for them similarly to sale of fixed assets or investment properties (revenue, other income or other expenses shall be recorded, etc); - If the non-monetary asset for payment is an equity instrument (shares) or a debt instrument (bonds, receivables, etc), the investor shall account for them similarly to sale of investments (gains or losses shall be recorded to financial income or financial expenses).

3. The cost of an investment shall be recorded according to their original cost, including purchase price plus (+) directly-attributable expenses (if any), such as: transactions, brokerage, consultancy, auditing, fees, taxes and bank‘s fees, etc. In case a non-monetary asset is invested, the cost of the investment shall be recorded according to the fair value of the non-monetary asset at the incurring time.
4. Every investment spread over each subsidiary, joint-venture company or other associate shall be kept records in details. A long-term financial investment shall be recorded when the ownership is acquired, in particular:

- Listed securities are recorded at the time of matching (T+0); - Unlisted securities, other investments shall be recorded at the time in which the ownership is required as prescribed.

5. All dividends and profits allocated to the financial statement of the parent company must be kept records sufficiently and promptly. The dividends and profits shall be recorded as follows:
6. a) Dividends and profits allocated in money or non-monetary asset after investment date shall be recorded to financial income according to the fair value on the date in which the dividends and profits are received;
7. b) Dividends and profits allocated in money or non-monetary asset before investment date shall not be recorded to financial income according to the fair value but they shall be recorded as a decrease in value of investment.
8. c) When determining value of the enterprise for equitization, if investments in other units are recorded as an increase equivalent to the portion of ownership of the equitized enterprise in the undistributed post-tax profits of the subsidiary, joint venture or associate, the equitized enterprise must record the increase in state capital as prescribed. When the equitized enterprise receives the dividends or profits which are used for evaluation of state capital, it shall not record financial income but record a decrease in value of investment.
9. d) If the dividends are received in the form of shares, it is required to follow rules below:

- Non-wholly-state-owned companies shall only keep track of number of shares stated in the financial statement, but not record an increase in value of investment and financial income. - Wholly-state-owned companies shall comply with regulations of law on wholly-state-owned companies.

6. When liquidating or selling financial investments, their costs shall be determined according to mobile weighted average.
7. The enterprise is not required to classify investments in subsidiary, joint venture or associate into trade securities, unless it liquidated or sold those investments, leading losing control of subsidiary, losing jointly control over joint venture and no longer having significant influence on the associate.
8. The control, jointly control, significant influence shall be temporarily determined when the investments are initially recorded. In this case, those investments shall be recorded to investments in other units or trade securities, but not recorded to investments in subsidiary or joint venture or associate.
9. When preparing the financial statement, the enterprise must determine value of investment loss to create allocation for investment loss.

1. Investments in associates include investments in subsidiaries, joint ventures and other investments for long-term held. The investment may be conducted in the following forms:
2. a) Investments in the form of capital contribution in associates (capital mobilized by the investee): in this form, the assets contributed by the contributor shall be recorded to balance sheet of the investee;
3. b) Investments in the form of purchase of capital contribution of other associates (purchase of owner‘s equity): in this form, the assets of the buyer (the investor or transferee) shall be transferred to the seller (the transferor); they shall not be recorded to balance sheet of the unit issuing equity instruments (investee)
4. When investing by non-monetary assets, the investor must apply appropriate accounting method according to type of investment, in particular:
5. a) If a non-monetary asset is used for capital contribution, the investor must re-evaluate such asset under agreement. The difference between book value or residual value and re-evaluate price of the asset for capital contribution shall be recorded to other income or other expenses;
6. b) Sale of capital holding of other associates and payment of non-monetary asset to the transferor:

- If the non-monetary asset for payment is an inventory, the ethnic minorities shall account for them similarly to sale of inventories in the form of barter agreement (the revenue and cost of the inventory used for exchange with purchased capital holding shall be recorded); - If the non-monetary asset for payment is a fixed asset or an investment property, the investor shall account for them similarly to sale of fixed assets or investment properties (revenue, other income or other expenses shall be recorded, etc); - If the non-monetary asset for payment is an equity instrument (shares) or a debt instrument (bonds, receivables, etc), the investor shall account for them similarly to sale of investments (gains or losses shall be recorded to financial income or financial expenses).

3. The cost of an investment shall be recorded according to their original cost, including purchase price plus (+) directly-attributable expenses (if any), such as: transactions, brokerage, consultancy, auditing, fees, taxes and bank‘s fees, etc. In case a non-monetary asset is invested, the cost of the investment shall be recorded according to the fair value of the non-monetary asset at the incurring time.
4. Every investment spread over each subsidiary, joint-venture company or other associate shall be kept records in details. A long-term financial investment shall be recorded when the ownership is acquired, in particular:

- Listed securities are recorded at the time of matching (T+0); - Unlisted securities, other investments shall be recorded at the time in which the ownership is required as prescribed.

5. All dividends and profits allocated to the financial statement of the parent company must be kept records sufficiently and promptly. The dividends and profits shall be recorded as follows:
6. a) Dividends and profits allocated in money or non-monetary asset after investment date shall be recorded to financial income according to the fair value on the date in which the dividends and profits are received;
7. b) Dividends and profits allocated in money or non-monetary asset before investment date shall not be recorded to financial income according to the fair value but they shall be recorded as a decrease in value of investment.
8. c) When determining value of the enterprise for equitization, if investments in other units are recorded as an increase equivalent to the portion of ownership of the equitized enterprise in the undistributed post-tax profits of the subsidiary, joint venture or associate, the equitized enterprise must record the increase in state capital as prescribed. When the equitized enterprise receives the dividends or profits which are used for evaluation of state capital, it shall not record financial income but record a decrease in value of investment.
9. d) If the dividends are received in the form of shares, it is required to follow rules below:

- Non-wholly-state-owned companies shall only keep track of number of shares stated in the financial statement, but not record an increase in value of investment and financial income. - Wholly-state-owned companies shall comply with regulations of law on wholly-state-owned companies.

6. When liquidating or selling financial investments, their costs shall be determined according to mobile weighted average.
7. The enterprise is not required to classify investments in subsidiary, joint venture or associate into trade securities, unless it liquidated or sold those investments, leading losing control of subsidiary, losing jointly control over joint venture and no longer having significant influence on the associate.
8. The control, jointly control, significant influence shall be temporarily determined when the investments are initially recorded. In this case, those investments shall be recorded to investments in other units or trade securities, but not recorded to investments in subsidiary or joint venture or associate.
9. When preparing the financial statement, the enterprise must determine value of investment loss to create allocation for investment loss.