Accounting for other investments shall comply with rules prescribed in Article 40 of this Circular.

Account 222 – Investments in joint ventures or associates

1. Rules for accounting

a) This account is used to record all equity contributed into a joint venture and an associate; recovery of invested equity in joint ventures or associates; gains or losses from investments in the joint venture or associate. This account shall not record transactions in the form of business cooperation contract (BCC) which does not require a legal entity.

- A joint venture is established by joint venturers who have joint control over financial and operating policies and it is an independent accounting unit having legal status. The joint venture must do accounting separately as prescribed in regulations of law on accounting in force, take responsibility for control of assets, liabilities, revenues, other income and expenses incurred. Each joint venturer shall receive a portion of operating outcome of the associate according to the joint venture agreement.

- An investment shall be classified as an investment in the associate when investors directly or indirectly hold from 20% to under 50% voting shares of the investee without any other agreement.

b) Accounting for investments in a joint venture must comply with rules prescribed in Article 40 of this Circular.

c) When the investor no longer has joint control, a decrease in investments in joint ventures shall be recorded; when the investor no longer has significant influence over associates, a decrease in investments in associates shall be recorded.

d) Directly-attributable expenses to investments in joint ventures or associates shall be recorded to financial expenses within a period.

dd) When disposing, selling or recovering contributed capital in joint ventures or associates, a decrease in contributed capital shall be recorded according to recovered asset value. The difference between the fair value of recovered amounts and the book value of investments shall be recorded to financial income (gains) or financial expenses (losses).

e) Every investment spread over each joint venture or associate shall be kept records in details in every investment, disposal or sale.

2. Structure and contents of account 222 – Investments in joint ventures or associates

Debit: Increases in investments in joint ventures or associates

Credit: Decreases in investments in joint ventures or associates due to disposal, sale or recovery.

Debit balance: Ending balance of investments in joint ventures or associates.

3. Method of accounting for several major transactions

3.1. When contributing joint venture capital in cash to joint ventures or associates, the following accounts shall be recorded:

Dr 222 - Investments in joint ventures or associates Cr 111, 112.

3.2. When incurring directly-attributable expenses to investments in joint ventures or associates (information, brokerage, transactions investment progress), the following accounts shall be recorded:

Dr 222 – Investments in joint ventures or associates

Cr 111, 112.

3.3. In case the joint venturer contributes non-monetary assets to a joint venture or an associate:

When investing inventory or fixed assets in a joint venture or an associate, it is required to record the difference between book value (for materials or goods) or residual value (for fixed assets) and re-evaluated value of the contributed assets to other income or other expenses; when receiving the contributed assets, the joint venture or associate must record an increase in the owner's invested equity and received asset according to contractual price.

- In case the book value or the residual value of the contributed asset is smaller than re-evaluated value, an increase in asset shall be recorded to other income as follows:

Dr 222 – Investments in joint ventures or associates

Dr 214 – Depreciation of fixed assets

Cr 211, 213, 217 (contributing fixed assets or investment properties)

Cr 152, 153, 155, 156 (contributing inventories)

Cr 711 – Other income (increase in difference of evaluation).

- In case the book value or the residual value of the contributed asset is greater than re-evaluated value, a decrease in asset shall be recorded to other expenses as follows:

Dr 222 – Investments in joint ventures or associates

Dr 214 – Depreciation of fixed assets

Dr 811 – Other expenses (decrease in difference of evaluation).

Cr 211, 213, 217 (contributing fixed assets or investment properties)

Cr 152, 153, 155, 156 (contributing inventories)

3.4. Purchase of capital contribution in joint ventures or associates:

On acquisition date, the acquirer shall measure the cost of investments in the joint venture or associate as the aggregate of the fair values, on the exchange date, of assets given, liabilities incurred or assumed, and equity instruments issued by the acquirer, in exchange for control rights of the acquiree plus (+) any costs directly attributable to the purchase of capital contribution in the joint venture or associate.

- If the investments in the joint venture or associate are paid in cash or cash equivalent by the acquirer, the following accounts shall be recorded:

Dr 222 – Investments in joint ventures or associates

Cr 111, 112, 121, etc.

- If the investments in the joint venture or associate are carried out by the acquirer ‗share issuance:

+ And issue price (according to fair value) of the share on the exchange date is greater than face value of the share; the following accounts shall be recorded:

Dr 222 – Investments in joint ventures or associates (according to fair value)

Cr 4111 – Contributed capital (according to face value)

Cr 4112 – Capital surplus (positive difference between the fair value and the face value of the shares).

+ And issue price (according to fair value) of the share on the exchange date is smaller than face value of the share; the following accounts shall be recorded:

Dr 222 – Investments in joint ventures or associates (according to fair value)

Dr 4112 – Capital surplus (negative difference between the fair value and the face value of the share).

Cr 4111 – Contributed capital (according to face value)

+ Stock floatation cost actually induced will be recorded as follows:

Dr 4112 – Capital surplus

Cr 111, 112, etc.

- If the investments in the joint venture or associate are paid by non-monetary assets:

+ When exchanging fixed assets, a decrease in fixed assets shall be recorded as follows:

Dr 811 – Other expenses (residual value of the exchanged fixed assets)

Dr 214 – Depreciation of fixed assets (depreciation value)

Cr 211 – Tangible fixed asset (cost).

And, an increase in other income and investments in joint ventures or associates due to exchange of fixed assets shall be recorded as follows:

Dr 222 – Investments in joint ventures or associates (total payment)

Cr 711 – Other income (residual value of the exchanged fixed assets)

Cr 3331 – VAT payables (account 33311) (if any).

+ When dispatching goods for exchange, the following accounts shall be recorded:

Dr 632 – Costs of goods sold

Cr 155, 156, etc.

And, an increase in investments in joint ventures or associates and revenues shall be recorded as follows:

Dr 222 – Investments in joint ventures or associates

Cr 511 - Revenues

Cr 333 – Taxes and other payables to the State (33311).

- If the investments in joint ventures or associates are carried out by the acquirer ‗share issuance:

+ When paying by bonds at face value, the following accounts shall be recorded:

Dr 222 – Investments in joint ventures or associates (according to fair value)

Cr 34311 - Face value of bonds.

+ When paying by discount bonds, the following accounts shall be recorded:

Dr 222 – Investments in joint ventures or associates (according to fair value)

Dr 34312 – Bond discounts (discount amount)

Cr 34311 - Face value of bonds.

+ When paying by premium bonds, the following accounts shall be recorded:

Dr 222 – Investments in joint ventures or associates (according to fair value)

Cr 34311 - Par value of bonds.

Cr 34313 – Bond premiums (premium amount).

+ Directly-attributable expenses to investments in joint ventures or associates such as legal services, price appraisal, etc, the following accounts shall be recorded by the acquirer:

Dr 222 – Investments in joint ventures or associates

Cr 111, 112, 331, etc.

3.5. When incurring attributable expenses to joint ventures or associates within a period, such as loan interests for capital contribution or other expenses, the following accounts shall be recorded:

Dr 635 – Financial expenses

Dr 133 – Deductible VAT (if any).

Cr 111, 112, 152, etc.

3.6. Accounting for dividends or profits:

- When receiving notification of dividends or profits divided in cash from the joint venture or associate after the investment date, the following accounts shall be recorded:

Dr 138 – Other receivables (1388)

Cr 515 – Financial income.

- When receiving dividends or profits before the investment date or the dividends or profits (divided in cash) are used for re-evaluation of value of investments in joint ventures or associates in case of evaluation of the enterprise for equitization, the following accounts shall be recorded:

Dr 112, 138.

Cr 222 – Investments in joint ventures or associates

3.7. Accounting for disposal or sale of investments in joint ventures or associates:

Dr 111, 112, 131, 152, 153, 156, 211, 213, etc.

Dr 228 – Other investment (significant influence no longer exists)

Dr 635 – Financial expenses (for losses)

Cr 222 – Investments in joint ventures or associates

Cr 515 – Financial income (for gains).

3.8. When incurring expenses incurred from disposal or sale of investments in joint ventures or associates, the following accounts shall be recorded:

Dr 635 – Financial expenses

Dr 133 – Deductible VAT

Cr 111, 112, 331, etc.

3.9. When providing additional investment in order to the joint venture or associate becoming a subsidiary and hold control rights, the following accounts shall be recorded:

Dr 221 – Investments in subsidiaries

Cr 111, 112, etc.

Cr 222 – Investments in joint ventures or associates

3.10. Accounting for joint venture capital in form of land use rights allocated by the State:

- When a Vietnamese enterprise is allocated land by the State to participate in joint venture with foreign enterprises in form of land use rights, water surface use rights, sea surface use rights, after receiving decision on allocation of land issued by the State and procedures for joint venture, the following accounts shall be recorded:

Dr 222 – Investments in joint ventures or associates

Cr 411 – Owner‘s invested equity (state capital in details).

- In case the Vietnamese enterprise is allocated land by the State to participate in joint venture, when transferring contributed capital:

+ When transferring joint venture capital to foreign parties and returning land use rights to the State, the following accounts shall be recorded:

Dr 411 – Owner's invested equity

Cr 222 – Investments in joint ventures or associates.

+ If the party pays an asset other than land use rights to Vietnamese party (the joint venture changes to land lease), the following accounts shall be recorded:

Dr 111, 112, etc.

Cr 515 – Financial income.

- If the Vietnamese party transfers joint venture capital to the foreign party and returns land use rights and changes to land lease. The joint venture must record a decrease in land use rights and decrease in operating capital equivalent to land use rights. The capital shall be preserved or recorded increases depending on the following investments of the owner. Land rents paid by that enterprise shall not include in the owner‘s equity but they shall be recorded to operating costs in the equivalent periods.

3.11. Accounting for trading between joint venturers and joint venture: similarly to accounting for trading with ordinary customers (unless the owner's equity method is applied).

Source: Circular 200

Account 221 – Investments in subsidiaries

1. Rules for accounting

a) This account is used to record current value and increases or decreases in capital directly invested in subsidiaries. Subsidiary is an entity which has legal status, does independent accounting, and is controlled by another enterprise (parent company), (including associate companies of general company and other units having legal status and doing independent accounting).

b) The account 221 ―Investments in subsidiaries‖ is only recorded if the investor holds over 50% voting shares in the subsidiary (except for the case prescribed in below Point c) and has significant influence on financial and operating activities to gain economic benefits from such activities. When the parent company has no longer influence on the subsidiary, a decrease in investment in the subsidiary shall be recorded. In case the investor temporarily holds over 50% voting shares in the subsidiary, but the investor does not intend to exercise that voting shares because their investment purpose is trading in equity instruments for profit (investment held for commercial purpose and the control right is temporary), such investment shall not be recorded to this account but to short-term investments.

c) When a parent company holds under 50% voting shares in a subsidiary, the following investments are still recorded to account 221 ―Investments in subsidiaries‖ if there are other agreements:

- Other investors agree to give the parent company over 50% voting shares;

- The parent company has influence on financial or operating policies under agreed regulations;

- The parent company has right to assign or dismiss most of board of directors‘ members or equivalent;

- The parent company has right to vote a majority of ballots at Board of Directors‘ meetings or at equivalent management level‘s meetings;

d) When buying an investment in a subsidiary in the business combination transaction, the buyer must determine the acquisition date, the cost of the business combination and follow accounting procedures as prescribed in VAS ―Business combination‖.

dd) Accounting for investments in subsidiaries must comply with rules prescribed in Article 40 of this Circular.

e) In case the parent company dissolves the subsidiary and merge all assets and liabilities of the subsidiary into the parent company (the parent company inherits all interests and liabilities of the subsidiary), the accounting shall be done according to rules below:

- A decrease in book value of investments in subsidiaries of the parent company shall be recorded,

- All assets or liabilities of the dissolved subsidiary shall be recorded to balance sheet of the parent company according to fair value on the date on which the subsidiary is merged into the parent company;

- The difference between the cost of investment in subsidiary and the fair value of assets and liabilities shall be recorded to financial income or financial expenses.

g) The profits shall be allocated to owners of the parent company according to non-allocated post-tax profits under ownership of the parent company on the consolidated financial statements. When allocating profits in cash, the enterprise must consider following issues:

- There is enough cash flow to allocate;

- The profits from negative goodwill shall not be allocated until disposal of the subsidiary;

- The profits from transactions related to revaluation (differences upon re-valuation of asset contributed as capital or financial instruments) shall not be allocated until disposal or sale of investments;

- The profits from applying equity capital method shall not allocate until such profits are received in cash or other assets from joint-venture companies.

d) The enterprise may not convert investments in subsidiaries into trade securities or other investments unless such investments are disposed leading out of control. The control right to the subsidiary shall not consider temporary even if the enterprise has intention of disposing the subsidiary in the future.

2. Structure and contents of account 221 – Investments in subsidiaries

Debit: Increases in actual value of investments in subsidiaries.

Credit: Decreases in actual value of investments in subsidiaries.

Debit balance: Actual value of existing investments in subsidiaries of the parent company.

3. Method of accounting for several major transactions

3.1. Capital contribution

a) When a parent company invests money in subsidiaries, the following accounts shall be recorded according to amounts of investments and directly-attributable expenses:

Dr 221 – Investments in subsidiaries

Cr 111, 112, 3411, etc.

And every type of shares at face value shall be kept records in details (investments in subsidiaries in the form of purchase of shares).

b) Capital contribution in non-monetary assets:

When the parent company contributes capital to the subsidiary by inventory or a fixed asset (other than business combination transactions), the parent company must record the difference between book value (for materials or goods) or residual value (for fixed assets) and re-evaluated value of the contributed asset to other income or other expenses; when receiving the contributed asset, the subsidiary must record the increase in the owner's invested equity and received asset according to contractual price.

- In case the book value or the residual value of the contributed asset is smaller than re-evaluated value, the increase in asset shall be recorded to other income as follows:

Dr 221 – Investments in subsidiaries

Dr 214 – Depreciation of fixed assets

Cr 211, 213, 217 (contributing fixed assets or investment properties)

Cr 211, 213, 217 (contributing inventories)

Cr 711 – Other income (increase in difference of evaluation).

- In case the book value or the residual value of the contributed asset is greater than re-evaluated value, the decrease in asset shall be recorded to other expenses as follows:

Dr 221 – Investments in subsidiaries

Dr 214 – Depreciation of fixed assets

Dr 811 – Other expenses (decrease in difference of evaluation).

Cr 211, 213, 217 (contributing fixed assets or investment properties)

Cr 152, 153, 155, 156 (contributing inventories)

3.2. Purchase of capital contribution:

In this case, the cost of investment shall be determined in accordance with VAS ―Business combination‖. On acquisition date, the acquirer shall measure the cost of a business combination as the aggregate of the fair values, on the exchange date, of assets given, liabilities incurred or assumed, and equity instruments issued by the acquirer, in exchange for control rights of the acquiree plus (+) any costs directly attributable to the business combination. Concurrently, the acquirer, which is the parent company, shall record the acquirer‘s interest in the subsidiary similarly to an investment in subsidiary.

a) If the trading in business combination is paid in cash or cash equivalent by the acquirer, the following accounts shall be recorded:

Dr 221 – Investments in subsidiaries

Cr 111, 112, 121, etc.

b) If the trading in business combination is carried out by the acquirer ‗share issuance:

- And issue price (according to fair value) of the share on the exchange date is greater than face value of the share; the following accounts shall be recorded:

Dr 221 – Investments in subsidiaries (according to fair value)

Cr 4111 – Contributed capital (according to face value)

Cr 4112 – Capital surplus (positive difference between the fair value and the face value of the share).

- And issue price (according to fair value) of the shares on the exchange date are smaller than face value of the share, the following accounts shall be recorded:

Dr 221 – Investments in subsidiaries (according to fair value)

Dr 4112 – Capital surplus (negative difference between the fair value and the face value of the share).

Cr 4111 – Contributed capital (according to face value)

- Stock floatation cost actually induced will be recorded as follows:

Dr 4112 – Capital surplus

Cr 111, 112, etc.

c) If the trading in business combination is carried out by exchange of assets between the acquirer and the acquiree:

- When exchanging fixed assets, a decrease in fixed assets shall be recorded as follows:

Dr 811 – Other expenses (residual value of the exchanged fixed assets)

Dr 214 – Depreciation of fixed assets (depreciation value)

Cr 211 – Tangible fixed asset (cost).

And, an increase in other income and investments in subsidiaries due to exchange of fixed assets shall be recorded as follows:

Dr 221 – Investments in subsidiaries (total payment)

Cr 711 – Other income (residual value of the exchanged fixed assets)

Cr 3331 – VAT payables (account 33311) (if any).

- When dispatching goods for exchange, the following accounts shall be recorded:

Dr 632 – Costs of goods sold

Cr 155, 156, etc.

And, an increase in investments in subsidiaries and revenues shall be recorded as follows:

Dr 221 – Investments in subsidiaries

Cr 511 - Revenues

Cr 333 – Taxes and other payables to the State (33311).

d) If the trading in business combination is carried out by the acquirer‘s bond issuance:

- When paying by bonds at par value, the following accounts shall be recorded:

Dr 221 – Investments in subsidiaries (according to fair value)

Cr 34311 - Par value of bonds.

- When paying by discount bonds, the following accounts shall be recorded:

Dr 221 – Investments in subsidiaries (according to fair value)

Dr 34312 – Bond discounts (discount amount)

Cr 34311 - Par value of bonds

- When paying by premium bonds, the following accounts shall be recorded:

Dr 221 – Investments in subsidiaries (according to fair value)

Cr 34311 - Par value of bonds.

Cr 34313 – Bond premiums (premium amount).

dd) Directly-attributable expenses to business combination such as legal services, price appraisal, etc, the following accounts shall be recorded by the acquirer:

Dr 221 – Investments in subsidiaries

Cr 111, 112, 331, etc.

3.3. Accounting for dividends or profits which are divided in cash or non-monetary assets (excluding receipt of dividends in shares):

a) When receiving notification of dividends or profits divided issued by the subsidiary after investment date, the following accounts shall be recorded:

Dr 138 – Other receivables (1388)

Cr 515 – Financial income.

When receiving dividends or profits divided, the following accounts shall be recorded:

Dr, relevant accounts (according to fair value)

Cr 138 – Other receivables (1388)

b) When receiving notification of dividends or profits divided before the date on which investments in subsidiaries are made, the following accounts shall be recorded:

Dr 138 – Other receivables (1388)

Cr 221 – Investments in subsidiaries

c) When receiving the dividends or profits which are used for re-evaluation of cost of investments in subsidiaries in case of evaluation of the parent company for equitization, an increase in state capital shall be recorded as follows:

Dr 138 – Other receivables (1388)

Cr 221 – Investments in subsidiaries

3.4. When providing additional investment in order to convert investments in joint-venture companies or financial instruments into investments in subsidiaries, the following accounts shall be recorded:

Dr 221 – Investments in subsidiaries

Cr 121, 128, 222, 228

Cr, relevant accounts (fair value of additional investment amounts)

3.5. When disposing a part or total investments in subsidiaries, the following accounts shall be recorded:

Dr, relevant accounts (fair value of collected amounts from disposal)

Dr 222 - Investments in joint ventures or associates (the subsidiary becomes a joint venture or an associate)

Dr 228 – Other investments (the subsidiary becomes ordinary investment)

Dr 635 – Financial expenses (for losses)

Cr 221 – Investments in subsidiaries (book value)

Cr 515 – Financial income (for gains).

3.6. When dissolving a subsidiary to merge all their assets and liabilities to their parent company, a decrease in investments in subsidiaries and assets or liabilities of the subsidiary according to the fair value on the merging date, the following accounts shall be recorded:

Dr, accounts recording assets (according to fair value on the merging date)

Dr 635 – Financial expenses (positive difference between book value of the investment and the fair value of merged assets or liabilities)

Cr, accounts recording liabilities (according to fair value on the merging date)

Cr 221 – Investments in subsidiaries (book value)

Cr 515 – Financial expenses (negative difference between book value of the investment and the fair value of merged assets or liabilities)

Source: Circular 200

Investments in associates include investments in subsidiaries, joint ventures and other investments for long-term held. The investment may be conducted

217 – Investment properties

Account 214 – Depreciation of fixed assets

1. Rules for accounting

a) This account is used to record increases or decreases in depreciation value and accumulated depreciation of fixed assets and investment properties due to deduction from depreciation of fixed assets, investment properties and other increases or decreases of depreciation of fixed assets or investment properties.

b) In principle, all fixed assets or investment properties of the enterprise for lease related to operation (including unused, unnecessary or liquidation-pending assets) must be depreciated as prescribed in regulations in force. The depreciation of fixed assets used for operation and depreciation of investment properties shall be recorded to operating costs within a period; depreciation of unused, unnecessary, or liquidation-pending fixed assets shall be recorded to other expenses. With regard to special cases not subject to depreciation (such as fixed assets for reservation or common use in society, etc), the enterprise must comply with regulations of law in force. It is not required to depreciate fixed assets used for non-business activities or welfare, only depreciation of such fixed asset are calculated and decreases in funds for those fixed assets acquisition are recorded.

c) Pursuant to regulations of law and management requests of the enterprise, one of methods of calculation or deduction of depreciation as prescribed in conformity with every fixed asset or investment property in order to develop business and ensure the recovery of payback promptly, sufficiently and in conformity with financial ability of the enterprise.

The depreciation method applying to every fixed asset or investment property must be conducted consistently and may be changed when there is any change in method of recovering economic benefits of the fixed asset or investment property.

d) The useful life and depreciation method must be re-considered at least at the end of every fiscal year.

If the estimated useful life of the asset is different significantly from previous estimated useful life, the useful life must be changed equivalently. The method of depreciation of fixed assets shall be changed once there is a significant change in payback of economic benefits of the fixed assets. In this case, the depreciation costs of the current year and succeeding years shall be adjusted and they shall be presented in the financial statements.

dd) If a fixed asset is fully depreciated (the capital is fully paid back), but it is still be used in operation, it shall not be kept depreciating. If a fixed asset is not fully depreciated (the capital is not fully paid back), but it is damaged or pending liquidation, it is required to uncover reasons, responsibility of groups or individuals for compensation; and the residual value of the fixed asset which is not paid back or compensated shall be compensated by the amounts collected from the liquidation of such fixed asset, the amounts of compensation shall be decided by the leaders of the enterprise. If the amounts collected from liquidation or compensation is not enough to compensate the residual value of the fixed asset which is not paid back or the value of the lost fixed asset, the remaining difference shall be considered loss from liquidation and recorded to other expenses. With regard to state-owned enterprises, they shall be handled according to current financial policies of the Government.

e) Regarding intangible fixed assets, depending on the effective period of time of such assets for depreciating from they are put into use (according to the contract, commitment or decision of the competent agency) Regarding intangible fixed assets which are land use rights, only term land use rights are depreciated. If it fails to determine useful life, they shall be not depreciated.

g) Regarding financial lease fixed assets, during the period in which the assets are used; the lessee must depreciate over the lease term and charge to operating costs in order to recover all capital.

h) Regarding investment properties for operating lease, they shall be depreciated and recorded to operating costs within a period. The enterprise may estimate the useful life and determine the appropriate depreciation method according to owner-occupied property in kind. If an investment property is held for capital appreciation, the enterprise shall not depreciate but determine the loss due to depreciation.

2. Structure and contents of account 214 – Depreciation of fixed assets

Debit: Decreases in depreciation of fixed assets, investment properties because the fixed assets or investment properties are liquidated, sold, or transferred to other enterprises or contributed to other enterprises as capital.

Credit: Increases in depreciation of fixed assets or investment properties because the fixed assets or investment properties are depreciated.

Debit balance: Accumulated depreciation of existing fixed assets or investment properties of the enterprise.

Account 214 – Depreciation of fixed assets, comprise 4 sub-accounts:

- Account 2141 – Depreciation of tangible fixed assets: records the depreciation value of tangible fixed asset during the using period and other increases or decreases of tangible fixed assets.

- Account 2142 – Depreciation of financial lease fixed assets: records the depreciation value of tangible fixed asset during the using period and other increases or decreases of financial lease fixed assets.

- Account 2143 – Depreciation of intangible fixed assets: records the depreciation value of intangible fixed asset during the using period and other increases or decreases of intangible fixed assets.

- Account 2147 – Depreciation of investment properties: records depreciation value of investment properties used for operating lease of the enterprise.

3. Method of accounting for several major transactions

a) Periodically, when calculating, deducting and recording fixed assets to operating costs, the following accounts shall be recorded:

Dr 623, 627, 641, 642, 811

Cr 214 – Depreciation of fixed assets (appropriate sub-account)

b) When receiving used fixed assets which are transferred intra-company between dependent accounting units having no legal status, the following accounts shall be recorded:

Cr 211 – Tangible fixed assets (historical cost).

Cr 336, 411 (residual value)

Cr 214 – Depreciation of fixed assets (2141) (depreciation value)

c) Periodically, when deducting depreciation of investment properties for operating lease, the following accounts shall be recorded:

Dr 632 – Costs of goods sold (investment property operating expenses)

Cr 214 – Depreciation of fixed assets (2147)

d) If there is any decrease in fixed assets or investment properties, decreases in both historical costs of the fixed assets and depreciated value of the fixed assets or investment properties shall be recorded (refer to accounts 211, 213, and 217).

dd) When calculating depreciation value of fixed assets for non-business activities at the end of the fiscal year, the following accounts shall be recorded:

Dr 466 – Non-business funds used for fixed asset acquisitions

Cr 214 – Depreciation of fixed assets

e) When calculating depreciation value of fixed assets for cultural activities or welfare at the end of the fiscal year, the following accounts shall be recorded:

Dr 3533 – Welfare funds used for fixed asset acquisitions

Cr 214 – Depreciation of fixed assets.

g) At the end of the fiscal year, the enterprise shall review the useful life and the depreciation methods for fixed assets, if there is any change in the depreciation rate, the depreciation recorded in the accounting records shall be adjusted as follows:

- If the depreciation rate rises against the depreciated amounts in the year leading an increase in the depreciation difference due to the adjustment of the depreciation methods or period, the following accounts shall be recorded:

Dr 623, 627, 641, 642 (increase in depreciation difference)

Cr 214 – Depreciation of fixed assets (appropriate sub-account)

- If the depreciation rate falls against the depreciated amounts in the year leading a decrease in the depreciation difference due to the adjustment of the depreciation methods or period, the following accounts shall be recorded:

Dr 214 – Depreciation of fixed assets (appropriate sub-account)

Cr 623, 627, 641, 642 (decrease in depreciation difference)

h) Accounting for value of tangible fixed assets which are undergone re-valuation: According to dossier on revaluation of the enterprise, the value of the tangible fixed assets shall equal: Increase in residual value of fixed asset which is recorded to Cr 412 - Differences upon asset revaluation; Decrease in residual value of fixed asset which is recorded to Dr 412 - Differences upon asset revaluation and such differences must be recorded in details according to every fixed asset In particular:

- In case the value of re-evaluated fixed asset is greater than book value and historical cost of the fixed asset or re-evaluated accumulated depreciation is greater than book value, the following accounts shall be recorded:

Dr 211 - Historical costs of fixed assets (the increase value)

Cr 412 - Differences upon asset revaluation (value of additional assets)

Cr 214 – Depreciation of fixed assets (the increase value)

- In case the value of re-evaluated fixed asset is smaller than book value and historical cost of the fixed asset or re-evaluated accumulated depreciation is smaller than book value, the following accounts shall be recorded:

Dr 214 – Depreciation of fixed assets (the decrease value)

Dr 412 - Differences upon asset revaluation (value of additional assets)

Cr 211 - Historical costs of fixed assets (the decrease value)

The enterprise shall deduct depreciation of fixed assets according to new historical cost after re-evaluation. Time for re-evaluation of depreciation of fixed assets when evaluating a joint-stock company is the date on which the equitized enterprise is granted Certificate of Business registration of a joint-stock company.

i) Equitization of dependent accounting units of independent state-owned companies, groups, general companies, parent companies, independent accounting units of the general companies:

When transferring a fixed asset to the joint-stock company, an increase in asset transferred to joint-stock company shall be recorded, according to receipt slip of assets, special appendixes on transfer of assets to joint-stock company and relevant documents or accounting records:

Dr 411 – Owner's invested equity (residual value)

Dr 214 – Depreciation of fixed assets (depreciated value)

Cr 211,213 (historical cost).

Source: Circular 200

 Account 213 – Intangible fixed assets

1. Rules for accounting

a) This account is used to record current value and increases and decreases in intangible fixed assets of the enterprise; Intangible fixed assets mean assets which have no physical form but the value of which can be determined and which are held and used by the enterprises in their business or leased to other entities in conformity with the recognition criteria of intangible fixed assets.

b) Historical costs of intangible fixed assets means all costs incurred by the enterprises to acquire intangible fixed assets up to the time of putting these assets into use as expected.

- The historical cost of an intangible fixed asset purchased separately shall equal its purchase price (minus (-) any trade discounts and rebates), taxes (excluding refundable taxes) and directly-attributable expenses incurred from putting the asset into use as expected;

- If the intangible fixed asset is purchased in instalment or deferred payment, their historical cost shall be recorded to the cash price. The difference between the deferred price and the cash price shall be recorded to operating costs according to the payment period, unless such difference is recorded to the historical cost of the intangible fixed assets (capitalization) as prescribed in VAS ―Borrowing costs";

- If an intangible fixed asset is purchased in the form of exchange with another dissimilar intangible fixed asset, their value shall equal the fair value of the received asset or the fair value of the exchanged asset after adjustment. If the exchange and payment against documents is related to the capital ownership of the enterprise, the historical cost shall equal the fair value stated in such documents.

- The historical cost of an intangible fixed asset which is land use rights means an amount of money paid to acquire lawful land use rights (including expenses paid to the transferor or expenses incurred from compensation for land clearance, leveling of premises, property transfer taxes, etc) or an amount agreed by contracting parties when contributing capital. The land use rights shall be considered whether or not intangible fixed assets in accordance with regulations of relevant law provisions.

- The historical cost of an intangible fixed asset granted by the State or presented shall equal the initial fair value plus (+) directly-attributable expenses incurred from putting the asset into use as expected.

- The historical cost of the intangible fixed assets transferred shall be the historical cost recorded in the accounting records of the receiver.

c) All actual expenses incurring during the development stage which fails to be recognized as intangible fixed asset shall be recorded to operating costs in the period. If the development stage of the asset meets recognition criteria of intangible fixed assets as prescribed in VAS ―Intangible fixed assets‖, expenses of the development stage shall be recorded to account 241 ―Construction in progress‖ (2412). At the end of the development stage, those expenses incurred from historical cost of intangible fixed assets acquisitions during the development stage must be transferred to the Dr 213 "Intangible fixed assets".

d) During the operation process, it is required to depreciate and record the intangible fixed asset to the operating costs as prescribed in VAS for intangible fixed assets. With regard to fixed assets which are land use rights, only intangible fixed assets which are termed land use rights are depreciated.

dd) Costs related to intangible fixed assets, which are incurred after initial recognition, must be recognized as operating costs in the period; if they meet all two following criteria, an increase in the historical costs of the intangible fixed asset shall be recorded:

- These costs can help intangible fixed assets generate more future economic benefits than the original operation evaluation;

- These costs are appraised in a certain way and associated with a specific intangible asset.

e) The costs incurred to generate future economic benefits for the enterprises include enterprise establishment cost, personnel-training cost and advertising cost incurred before the newly-set up enterprises start to operate, costs for the research stage, relocation cost, shall be recorded to operating costs in the period or gradually allocated into operating costs in the maximum period of three years.

g) Costs related to intangible assets, which have been recorded by the enterprises to costs of determining the business operation results in the previous period, shall not be re-recorded to the historical cost of intangible fixed assets.

h) Trademarks, brand names, distribution right, customers‘ name list and similar items which are internally established in the enterprise shall not be recognized as intangible fixed assets.

i) Intangible fixed assets shall be kept records in details according to every item in the ―Fixed assets register‖.

2. Structure and contents of account 213 – Intangible fixed assets

Debit: Increases in historical costs of intangible fixed assets.

Credit: Decreases in historical costs of intangible fixed assets.

Debit balance: Historical costs of existing intangible fixed assets of the enterprise.

Account 213 – Intangible fixed assets comprise 7 sub-accounts:

- Account 2131 – Land use rights: records land use rights which are recognized as intangible fixed assets as prescribed.

Value of intangible fixed assets which are land use rights shall equal actual expenses directly related to land use rights, such as: money paid for the land use rights, expenses incurred from compensation, land clearance, leveling of premises (if the land use rights are acquired separately from any investment in buildings and structures on land), property transfer taxes (if any), etc. This account shall not record any expenses incurred from constructions on land.

- Account 2132 – Copy rights: records value of intangible fixed assets which are total actual expenses paid to acquire copyrights.

- Account 2133 – Patents and inventions: records value of intangible fixed assets which are total actual expenses paid to acquire patents and inventions.

- Account 2134 – Trademarks and trade names: records value of intangible fixed assets which are total actual expenses paid for trademarks of goods.

- Account 2135 – Computer software: records value of intangible fixed assets which are total actual expenses paid for computer software.

- Account 2136 - Licenses and franchises: records value of intangible fixed assets which are expenses incurred from licenses and franchises, such as: development permits, permits for production of new products, etc.

- Account 2138 – Other intangible fixed assets: records value of other intangible fixed assets which are not recorded to above accounts.

3. Method of accounting for several major transactions

3.1. Purchase of intangible fixed assets:

- When purchasing intangible fixed assets used for business which are subject to VAT using credit-invoice method, the following accounts shall be recorded:

Dr 213 – Intangible fixed assets (VAT-exclusive prices)

Dr 133 – Deductible VAT (1332)

Cr 112 – Cash in bank

Cr 141 - Advances

Cr 331 – Trade payables

- When purchasing intangible fixed assets used for business which are not subject to VAT, the following accounts shall be recorded:

Dr 213 – Intangible fixed assets (total payments)

Cr 112, 331, etc (total payments)

3.2. Purchase of intangible fixed assets in instalment or deferred payment:

- When purchasing intangible fixed assets used for business which are subject to VAT using credit-invoice method, the following accounts shall be recorded:

Dr 213 – Intangible fixed assets (VAT-exclusive cash prices)

Dr 242 – Prepaid expenses (deferred interest shall equal (=) difference between total payment minus (-) cash price and input VAT (if any))

Dr 133 – Deductible VAT (1332)

Cr 111, 112

Cr 331 – Trade payables

- When purchasing intangible fixed assets used for business which are not subject to or subject to VAT using subtraction method, the following accounts shall be recorded:

Dr 213 – Intangible fixed assets (VAT-exclusive cash prices)

Dr 242 – Prepaid expenses (deferred interest shall equal (=) difference between total payment minus (-) cash price)

Cr 331 – Trade payables (total payments).

- When paying the interest for purchase of intangible fixed assets in instalment or deferred payment periodically, the following accounts shall be recorded:

Dr 635 – Financial expenses.

Dr 242 – Prepaid expenses

- When making payment to the seller, the following accounts shall be recorded:

Dr 331 – Trade payables

Cr 111, 112, etc.

3.3. Purchase of intangible fixed assets in the form of exchange

a) Exchange of two similar intangible fixed assets: When receiving an intangible fixed asset in exchange of a similar intangible fixed asset and putting into operation, the following accounts shall be recorded:

Dr 213 – Intangible fixed assets (the historical cost of the received intangible fixed asset shall be recorded according to the residual value of the exchanged intangible fixed asset)

Dr 214 – Depreciation of fixed assets (2143) (depreciation of exchanged fixed asset)

Cr 213 – Intangible fixed assets (2143) (historical cost of exchanged fixed asset)

b) Exchange of two dissimilar intangible fixed assets:

- A decrease in the exchanged intangible fixed assets shall be recorded as follows:

Dr 214 – Depreciation of fixed assets (depreciation value)

Dr 811 – Other expenses (residual value of the exchanged fixed asset)

Cr 213 – Intangible fixed assets (historical cost)

- And the revenue from exchange of fixed assets shall be recorded as follows:

Dr 131- – Trade receivables (total payments)

Cr 711 – Other income (fair value of exchanged fixed asset)

Cr 3331 –VAT payables (33311) (if any).

- An increase in the exchanged intangible fixed assets shall be recorded as follows:

Dr 213 – Intangible fixed assets (fair value of the received fixed asset)

Dr 133 – Deductible VAT (1332) (if any)

Cr 131 – Trade receivables (total payments).

3.4. Value of intangible fixed assets acquired intra-company in the development stage:

a) When incurring expenses in the development stage, if the results do not satisfy recognition criteria of intangible fixed assets, such expenses shall be recorded to operating costs within a period or prepaid expenses, the following accounts shall be recorded:

Dr 242 – Prepaid expenses (for great value) or

Dr 642 – General administration expenses

Cr 111, 112, 152, 153, 331, etc.

b) If the result of development stage satisfies recognition criteria of intangible fixed assets:

- When collecting actual expenses incurring in the development stage to add to the historical cost of the intangible fixed assets, the following accounts shall be recorded:

Dr 241 – Construction in progress

Dr 133 – Deductible VAT (1332 - if any)

Cr 111, 112, 152, 153, 331, etc.

- When completing development stage, total actual expenses incurring which shall be recorded to the historical cost of the intangible fixed asset, the following accounts shall be recorded:

Dr 213 – Intangible fixed assets

Cr 241 – Construction in progress

3.5. When purchasing intangible fixed assets which are land use rights associated with buildings or structures on land, the intangible fixed assets which are land use rights and tangible fixed assets which are buildings or structures must be separately recorded as follows:

Dr 211 – Tangible fixed assets (historical costs of buildings or structures)

Dr 213 – Intangible fixed assets (historical costs of land use rights)

Dr 133 – Deductible VAT (1332 - if any)

Cr 111, 112, 331, etc.

3.6. When an intangible fixed asset acquired by exchange of documents on capital ownership of joint-stock companies, the historical cost of such intangible fixed asset shall be the fair value stated in those documents, and the following accounts shall be recorded:

Dr 213 – Intangible fixed assets

Cr 411 – Owner's invested equity.

3.7. Granted, donated or presented intangible fixed assets which are put into operation:

- When receiving a granted, donated or presented intangible fixed asset, the following accounts shall be recorded:

Dr 213 – Intangible fixed assets

Cr 711 – Other income

- When incurring expenses related to donated or presented intangible fixed assets, the following accounts shall be recorded:

Dr 213 – Intangible fixed assets

Cr 111, 112, etc.

3.8. When receiving land use rights as capital, the following accounts shall be recorded according to dossiers on transfer of land use rights:

Dr 213 – Intangible fixed assets

Cr 411 – Owner's invested equity.

3.9. When converting use purposes of the investment properties which are land use rights to intangible fixed assets, the following accounts shall be recorded:

Dr 213 – Intangible fixed assets (2131)

Cr 217 – Investment properties.

And when transferring cumulative depreciation of the investment properties to cumulative depreciation of the intangible fixed assets, the following accounts shall be recorded:

Dr 2147 – Depreciation of investment properties

Cr 2143 – Depreciation of tangible fixed assets

3.10. When investing in subsidiaries or joint-venture companies in the form of contribution of intangible fixed assets, according to re-evaluated value of intangible fixed assets:

a) In case the re-evaluated value is smaller than the residual value of the contributed intangible fixed asset, the following accounts shall be recorded:

Dr 221, 222 (according to re-evaluated value)

Dr 214 – Depreciation of fixed assets (2143) (depreciation value)

Dr 811 – Other expenses (the negative difference between the re-evaluated and the residual value of the intangible fixed asset)

Cr 213 – Intangible fixed assets (historical cost).

b) In case the re-evaluated value is greater than the residual value of the contributed intangible fixed asset, the following accounts shall be recorded:

Dr 221, 222 (according to re-evaluated value)

Dr 214 – Depreciation of fixed assets (2143) (depreciation value)

Cr 213 – Intangible fixed assets (historical cost).

Cr 711 – Other expenses (the positive difference between re-evaluated value and the residual value of the intangible fixed asset).

3.11. The sale or liquidation of intangible fixed assets shall be recorded similarly to the sale or liquidation of tangible fixed assets (refer to account 211).

Source: Circular 200

Account 212 – Financial lease fixed assets

This account is used to record current cost and decrease and increase in total tangible fixed assets of an enterprise according to their historical costs.

 Rules for accounting for fixed assets, investment properties and construction in progress

1. Fixed assets, investment properties and construction in progress must be kept track, recorded, managed and used in accordance with regulations of law in force.
2. The source acquiring fixed assets shall be kept track to distribute depreciation costs following the rules below:

- If the fixed assets are acquired from loan capital or owner's equity for operation, their depreciation costs shall be allocated to operating costs;

- If the fixed assets are acquired from welfare funds, science and technology development funds or funding source, their depreciation costs shall be recorded as decreases in such funds or funding source.

3. Fixed assets and investment properties shall be classified according to their use purposes. If there is an asset used for multiple purposes, e.g. a mixed-use building for offices, lease and sale, their fair value (every part) shall be estimated in conformity with their use purposes.

- If a major part of the asset is used for a specific purpose other than purposes of remaining parts, the total asset shall be classified according to that major part;

- If there is any change in function of parts of the asset, the asset shall be re-classified according to use purposes prescribed in relevant VAS.

4. When buying fixed assets, if they are bundled with equipment or spare parts for replacement (provision for break down), the equipment or spare parts for replacement shall be recorded separately with fair value. If equipment or spare parts for replacement meet requirements for fixed assets, they shall be recorded to fixed assets account, if not, they shall be recorded to inventory account. Historical cost of a fixed asset purchased shall equal total cost of the fixed asset minus (-) cost of equipment or spare parts for replacement.

Fixed assets, investment properties and construction in progress related to foreign currencies shall be accounted for in accordance with Article 69 – Guidance on accounting method for exchange rate differences.

Source: Circular 200