Account 515 - Revenues from financial activities

1.Accounting Principles

This account is used to record revenues from interests, copyrights, dividends, distributed income, and other income from financial activities of enterprises, including :

- Interests: interests on loans, interests on cash in banks, on credit sales, installment sales, earnings from investment bond, notes, discounts earned from purchasing goods, services

- Distributed dividends and earnings in stage after the date of investment;

- Revenues from buying or selling activities of short or long-term securities; Interest of transfer of capital when liquidating contributed capital in joint venture, capital invested in associate companies, in subsidiary companies and other capital investments;

- Revenues from other investment activities;

- Gains on exchange rates, including gains from selling foreign currencies;

- Revenues from other financial activities.

b) For sale of investments in subsidiary companies, joint ventures, associated companies, buying and selling trading securities, revenue is recorded a the difference between the sale price higher than cost price, in which the cost price is the book value determined by the method of weighted average, selling price is calculated according to the fair value of amounts received. In case of buying or selling securities under the form of share swap (investors swap share A for share B), accountants determine the value of shares received under the fair value at the date of exchange as follows:

- For shares received being the listed shares, the fair value of the shares is the closing price listed on securities market at the date of exchange. If at the date of exchange, securities market does not work, the fair value of the shares is the closing price of the previous session preceding the date of exchange.

- For shares received being the unlisted shares traded on UPCOM, the fair value of the shares is the closing price announced on UPCOM at the date of exchange. If at the date of exchange, UPCOM does not work, the fair value of the shares is the closing price of the previous session preceding the date of exchange.

For shares received being other unlisted shares, the fair value of the shares is the agreed price by the parties or the book value at the time of exchange or book value at the end of the previous quarter preceding the exchange date. The determination of the book value of the shares is carried out according to the formula:

- The book value of share

Total owner‘s equity

= ---------------

Number of available shares at the time of exchange

c) For revenues from buying and selling foreign currency, revenue is recorded as the interest difference between the price of exchange rate sold and the price of foreign bought.

d) For deposit interest: Revenue does not include interest of deposit arising from the temporary investment of loans used for unfinished asset construction purposes as prescribed by accounting Standard on borrowing costs .

dd) For interest received from loans, credit or installment sale: Revenue is only recorded when it is definitely earned and original loans, principals receivables are not classified as overdue that need provision.

e) For gains on investments received from investments in stocks, bonds, then only part of interest in the periods which business use to redeem these investments shall be recorded a revenue incurred in the period, and gains on investments from accrued investment before enterprises buy such investment are recorded a cost price of such bonds and stocks investments.

g) For distributed dividends, profit used to revaluate investments when determining the value of the enterprise for equitization: When determining the value of the enterprise for equitization, if the financial investments are evaluated as increase in proportion to ownership of equitized enterprises in undistributed post-tax profits of invested party, equitized enterprises must record an increase in state capital as prescribed by the law. Then, upon receipt of dividends, profits used to evaluate the increase of state capital, equitized enterprises do not record revenue from financial activities but record a decrease in the value of financial investments.

h) When investors receive dividends in shares, investors only monitor the number of shares increased in the note of financial statements, do not record the value of shares received, do not record revenue from financial activities, do not record an increase in the value of the investment into company.

For enterprises of which 100% charter capital is held by the State, accounting for dividends received by shares shall be complied with the provisions of law on the types of enterprises owned by the State (if any).

2.Structure and contents of account 515 - Revenues from financial activities

Debit side :

- VAT payable under direct method (if any)

- Transferring net revenues from financial activities into account 911 ―Income Summary‖.

Credit side : Revenues from financial activities incurred in the period .

Account 515 does not have ending balances.

3.Method of accounting for several major transactions

Recording revenues from distributed dividends and earnings by money incurring in the period from contributed capital investment activity, record:

- Upon receiving notice of the right to receive dividends, profits from investment activities, record :

Dr 138 - Other receivables

Cr 515 - Revenues from financial activities

- In case distributed dividends, profits include accrued investment gains before enterprises repurchase such investment, then enterprises must allocate this gains, only part of gains in period that enterprises purchase such investment shall be recorded a revenue from financial activities, and accumulated earnings before enterprises repurchase the investment shall be recorded a decrease in value of the bonds and stocks investment, record:

Dr 138 - Other receivables (total received dividends, profits)

Cr 121, 221, 222, 228 (dividends, profits accrued before enterprises repurchase the investments)

Cr 515 - Revenues from financial activities (dividends, profits of periods after enterprises repurchase the investment).

- For distributed dividends, profit used to revaluate investments when determining the value of the enterprise for equitization: When determining the value of the enterprise for equitization, if the financial investments are evaluated as increase in proportion to ownership of equitized enterprises in undistributed post-tax profits of invested party, equitized enterprises must record an increase in state capital as prescribed by the law. Then, upon receipt of dividends, profits used to evaluate the increase of state capital, equitized enterprises do not record revenue from financial activities but record a decrease in the value of financial investments:

Dr 138 - Other receivables (total received dividends, profits)

Cr 121, 221, 222, 228 (accrued investment profits before enterprises repurchase the investments)

b) Periodically, when there is strong evidence of receipt of loan interests (including bond interest), interest on deposits, interest on credit, installment, record :

Dr 138 - Other receivables

Dr 121, 128 (if periodical loan interest is added to the principal)

Cr 515 - Revenues from financial activities

Solid evidences for receipt of receivables include:

- Principal receivables not considered bad debts being subject to the provision or irrecoverable debts, not being subject to debt freezing or rescheduling;

- Debt certification and debt payment commitment of debt party;

- Additional evidence (if any).

c) When selling or withdrawal of financial investments, record :

Dr 111, 112, 131...

Dr 635 - Financial expenses (if selling is a loss)

Cr 121, 221, 222, 228

Cr 515 - Revenues from financial activities ( if selling gets profit)

d) In case the shares are swapped, accountants base on the fair value of the shares received and the book value of the shares exchanged, record

Dr 121, 228 (details of shares received under fair value)

Cr 635 - Financial expenses (the difference between the fair value of the shares received less than the book value of the shares exchanged)

Cr 121, 228 (shares exchanged under book value)

Cr 515 - Financial revenues (the difference between the fair value of the shares received higher than the book value of the shares exchanged)

dd) Accounting for selling foreign currency, record :

Cr 111 (1111), 112 (1121) (actual selling exchange rates )

Dr 635 - Financial expenses (the difference between the real selling exchange rate lower than the exchange rates in accounting books).

Cr 111 (1112), 112 (1122) (at the exchange rate on the accounting books)

Cr 515 - Revenues from financial activities (the difference between the real selling exchange rate higher than the exchange rates in accounting books).

e) When purchasing materials, goods, fixed assets, services paid in foreign currency, if the actual exchange rate at the time of incurring is higher than the exchange rate in the accounting books of Accounts 111, 112, record :

Dr related accounts (according to the actual exchange rate)

Cr 111 (1112), 112 (1122) (at the exchange rate on the accounting books accounts 111,112)

Cr 515 - Revenues from financial activities (gains on forex)

g) When making payment of debts payable in foreign currencies, if the exchange rate on the accounting books of Accounts 111, 112 is less than the exchange rate on the accounting books of debt payable accounts, record :

Dr 331, 341... (the exchange rate on the accounting books)

Cr 515 - Revenues from financial activities (gains on forex)

Cr 111 (1112), 112 (1122) (the exchange rate on the accounting books accounts 111,112)

h) When receiving money from debts payable in foreign currency, if the actual exchange rate at the time of receipt of money is higher than the exchange rate recorded in accounting books of the account receivable, record :

Dr 111 (1112), 112 (1122) (actual exchange rates )

Cr 515 - Revenues from financial activities (gains on forex)

Cr 331, 136, 138... (the exchange rate on the accounting books)

i) When selling products, goods under payment on deferred term, paying by installments, then accountants shall record revenues from and services provisions of account period in cash price, the difference between deferred price, installments price and cash price shall be recorded in account 3387 ―Unearned revenues‖, record:

Dr 111, 112, 131,...

Cr 511 – Revenues from sales and service provisions (cash price net of VAT)

Cr 3387 - Unearned revenues (Difference between deferred price, installments price with cash price net of VAT)

Cr 3331 - Payable VAT

- Periodical determining and transferring revenues from interest on credit sales or installments sales in the period, record:

Dr 3387 - Unearned revenues

Cr 515 - Revenues from financial activities

k) Periodical determining and transferring revenues from interests on loans or on advance interest payment bonds, record:

Dr 3387 - Unearned revenues

Cr 515 - Revenues from financial activities

l) In case of buying Government bonds under repurchase order contract:

- When the purchaser pay to the seller the numbers of coupons that the purchaser receives on seller‘s behalf at (the) time within the term of the contract, the seller records :

Dr 111, 112, 138

Cr 515 - Revenues from financial activities

- When allocating the difference between the resale price and the buying price of Government bonds under the contract of repurchase of Government bonds into periodical revenue in accordance with the duration of the contract, the buyer records:

Dr 171 – Resale of government bonds

Cr 515 - Revenues from financial activities

m) Settlement discount received from payment of purchase money before the deadline accepted by sellers, record:

Dr 331 - Supplier payables

Cr 515 - Revenues from financial activities

n) In case of revaluating currency gold arising interest (domestic gold price is higher than the book value), accountants record financial expense, record :

Dr 1113, 1123

Cr 515 - Revenues from financial activities

o) When handling exchange differences due to revaluation of the balance of accounts derived from foreign currencies, accountants transfer all interest of revaluated exchange differences, record :

Dr 413 - Exchange differences (4131)

Cr 515 - Revenues from financial activities

p) At the end of accounting period, transferring revenues from financial activities to determine income statement, record:

Dr 515 - Revenues from financial activities

Cr 911 - ―Income Summary‖.

Source: Circular 200, Article 80