NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF ACCOUNTING AND AUDITING

-------***-------

ESSAY ON ACCOUNTING

TOPIC: Accounting for accounts receivable in businesses today in Vietnam

Student name: Hoang Tuyet Nhi

Student ID: 11219314

Class: Accounting CFAB K63

Supervisor: Nguyen Phuong Thao

Hanoi, 2024

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LIST OF ABBREVIATIONS
Từ viết tắt Nghĩa của từ viết tắt

TNHH Trách nhiệm hữu hạn

CP Cổ phần

TP. HCM Thành phố Hồ Chí Minh

DP Dược phẩm

PA1 Phương án 1

PA2 Phương án 2

TBYT Thiết bị y tế

GTGT Gía trị gia tăng

VAT Thuế giá trị gia tăng

PX Phiếu xuất

HTK Hàng tồn kho

CK Chuyển khoản

CTGS Chứng từ ghi sổ

DN Doanh nghiệp

BTC Bộ Tài Chính

PS Phát sinh

ĐK Đầu kỳ

CK Cuối kỳ

HĐ Hóa đơn

TK Tài khoản

PT Phiếu thu

GBN Giấy báo nợ

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INTRODUCTION
In the dynamic landscape of business operations, tangible fixed assets represent crucial
components of a company's financial structure, playing a pivotal role in its operational
efficiency and overall success. The accurate accounting for the acquisition and disposal of
tangible fixed assets is imperative for maintaining transparency, ensuring compliance with
regulatory standards, and facilitating informed decision-making processes. Within the context
of Vietnam's rapidly evolving economy, characterized by burgeoning industries and
increasing foreign investment, understanding the intricacies of accounting for tangible fixed
assets holds significant relevance for both domestic enterprises and multinational corporations
operating within the country.

This essay aims to delve into the nuances of accounting practices concerning tangible
fixed assets acquisition and disposal within the Vietnamese business environment. By
examining the regulatory framework, prevalent accounting standards, and practical
considerations, this essay seeks to provide a comprehensive understanding of the processes
involved, challenges encountered, and best practices employed in managing tangible fixed
assets throughout their lifecycle. Furthermore, it aims to highlight the implications of these
accounting practices on financial reporting, taxation, and strategic decision-making within
Vietnamese organizations.

As Vietnam continues to emerge as a key player in the global economy, navigating the
complexities associated with tangible fixed asset accounting becomes indispensable for
entities seeking sustainable growth and competitive advantage. Through this exploration, we
endeavor to shed light on the critical aspects of this fundamental accounting process,
empowering businesses, professionals, and stakeholders to navigate the intricacies of tangible
fixed asset management effectively within the Vietnamese business landscape.

My essay is divided into 3 parts:

Part 1: Introduction

Part 2: Research about tangible fixed assets

Chap 1: Overview and accounting treatment for tangible fixed assets

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 Chap 2: Evaluation and recommendation

Part 3: Conclusion

CHAPTER 1: OVERVIEW AND ACCOUNTING TREATMENT FOR TANGIBLE

FIXED ASSETS:
1.1. Overview of the tangible fixed assets:
1.1.1. The nature of tangible fixed assets:

Physical assets that are held by a business and used for its operations are referred to as
tangible fixed assets, provided they satisfy the requirements for tangible fixed asset
recognition.

Tangible fixed assets can be independent structures or linked parts that work together to form
a system that can do one or more tasks; a system cannot function if any one of its components
is missing. If an asset meets all four of the following recognition criteria, it is considered a
fixed asset:

- Its useful life must be at least one year;

- Its historical cost must be accurately determined;

- It is expected to yield future economic benefits; and

- It must meet all specified value criteria as stated in the current regulations.

Tangible fixed assets frequently make up a sizable portion of overall assets and are crucial in
communicating the company's financial situation. The business's performance report will
therefore be greatly impacted by the decision of whether an asset is reported as a tangible
fixed asset or as a business expense for the duration of the period.

Based on available data at the time of initial recognition, the firm must assess each tangible
fixed asset's first requirement to ascertain the degree of certainty of achieving future
economic benefits. Even though they don't immediately generate income like other fixed
assets, assets used to protect the environment or ensure production and company safety are
nonetheless vital for firms to maximize the profits from other assets. These assets' historical
cost and the historical cost of any connected assets, however, must not exceed the entire
recoverable value from those assets and other linked assets for them to be classified as
tangible fixed assets. For instance, in order to produce and store hazardous chemicals in
accordance with environmental protection regulations, a chemical factory may need to install

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machinery and put new chemical containment and storage practices into place. The business
cannot function and sell its chemical goods without related installation assets, which are only
recorded as tangible fixed assets.

Since the historical cost of the asset is established through acquisition, exchange, or self-
construction, the second prerequisite for the recognition of tangible fixed assets is typically
met.

Businesses must apply the tangible fixed asset standards for each unique situation when
identifying the elements that make up tangible fixed assets. Businesses have the ability to
combine distinct, non-essential components, including dies, tools, and molds, and apply the
standards for tangible fixed assets to that overall value. When utilized, auxiliary equipment
and spare components are expensed and are frequently regarded as current assets. When an
organization determines that major spare parts and maintenance equipment have a useful life
of more than a year, they are classified as tangible fixed assets. Spare parts and maintenance
equipment are treated as distinct tangible fixed assets and are depreciated over a shorter
period of time than their useful life if they are only sometimes used in conjunction with
tangible fixed assets.

It is feasible to divide the asset's overall cost among its constituent elements in each unique
instance and account for each component independently. This situation applies when various
depreciation rates and techniques should be applied because each component of an asset has a
distinct useful life or helps to generate economic advantages in accordance with various
prescribed standards. For instance, if the useful lifetimes of an aircraft's engine and fuselage
differ, they must be treated as two distinct tangible fixed assets with separate depreciation
rates.

1.1.2. The characteristics of tangible fixed assets

One significant characteristic of tangible fixed assets is that their value is partly transferred to
production and business expenses during the period in which they are used in the production
and business processes, resulting in a gradual depreciation of the asset.

Businesses can have a variety of tangible fixed assets, some of which are physical structures
like buildings, machinery, or equipment.Although each type has unique qualities, they are all
comparable in that they all have a high initial cost and a payback period longer than a year.

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Goods and tangible fixed assets are different. A computer purchased by a business for sale,
for instance, would be considered a good; yet, if the computer is purchased for internal use, it
becomes a fixed asset.

It's also important to distinguish between long-term investments and tangible fixed assets.
Long-term investments are not employed for upcoming production and business activities,
even though both categories are maintained during an accounting period. Land kept for
potential future production development, for instance, is categorized as a long-term
investment. Conversely, the fixed asset of an enterprise is the ground upon which its factory is
constructed

1.1.3. The classification of tangible fixed assets:

A wide range of factors, including ownership, usage scenario, and mode of
expression, are used to classify tangible fixed assets.
Every classification scheme will satisfy certain management requirements and have
unique outcomes.
a) Form of expression:
- Structures and buildings: this group includes common construction projects such as
fences, buildings, and residences as well as infrastructure such as highways, bridges,
and railroads.
- Machinery and equipment: This category includes all forms of business and
manufacturing machinery and equipment, such as labor machinery and equipment,
specialist machinery, and technical equipment lines.
- Transmission equipment: this category includes the automobiles, tractors, trucks,
pipes, and other vehicles used for specialized transportation, including pipelines and
trains.
- Management tools and equipment: This category includes measurement instruments,
computers, and air conditioners.
- Working commodities and animals, like rubber, coffee, chives, and breeding
animals; examples of working animals are dairy cows.
- Other tangible fixed assets: refers to tangible fixed assets that are not controlled or
included in the above listed categories.
By using the differentiation by form of expression approach, businesses may gain
insight into the value and longevity of their present labor resources, which gives them
guidance on how to use their tangible fixed assets.

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 b) Sort by ownership
- Self-Owned Tangible Fixed Assets: Products that are developed, purchased, or
manufactured using business money; these funds may originate from bank loans, joint
venture funds, self-administered funds, or budgetary funds.
- Leased tangible fixed assets: These are items that businesses hire out to cover their
production and operational requirements. This group includes assets covered by
financing and operating leases.
c) Sort by acquisition sources:
Purchased Tangible Fixed Assets: Items obtained by outright purchases.
Tangible Fixed Assets Acquired via Capital Investment: This category includes assets
funded by venture capital, the company's own funds, and other sources of investment.
Exchangeable Tangible Fixed Assets: Assets obtained by trading them in for
alternative or different tangible fixed assets.
Giving information on the capital source structure of tangible fixed assets by categorizing
them based on where they were formed. From there, there is a direction to use capital to
depreciate tangible fixed assets effectively and reasonably.
1.1.4. The valuation of tangible fixed assets:
The method of valuation of tangible fixed assets according to VAS (Vietnamese
Accounting Standards) can be carried out through the following methods:
**Cost Method**
-This approach values physical fixed assets according to their historical cost, which
comprises the asset's initial purchase price plus any expenses that may be directly
linked to it, such installation, shipping, and legal fees. This is a popular and simple
strategy, particularly for assets that haven't changed much since they were acquired.
**Market Value Method**
- The market value approach entails determining the current market value of physical
fixed assets, or the amount that interested buyers and sellers may exchange for the
item in an open market transaction.
- This method is suitable when there is an active market for similar assets and their
market value can be readily determined through market transactions or appraisals.
**Fair Value Method**
- Tangible fixed assets are evaluated at their fair value under the fair value method,
which is the amount that would be obtained at the measurement date to sell the asset in
a well-ordered transaction between market players. Fair value represents the asset's

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 current value rather than its previous cost by taking into account all relevant facts and
market circumstances. This approach is frequently applied to assets that have special
qualities or for which it is difficult to estimate their market worth.
**Revaluation Method**
- Revaluing tangible fixed assets on a regular basis to account for shifts in their fair
worth over time is the revaluation approach.
- The current fair value of an asset is used to revalue it; this value may differ from its
previous cost. The purpose of this modification is to maintain the asset's carrying
amount at its current market value. Usually, revaluation is done on a regular basis, and
the financial statements reflect any upward or downward changes.

5. **Recoverable Value Method**:

Assessing the recoverable amount of tangible fixed assets—the greater of its fair value
minus selling expenses and its value in use—is the main goal of the recoverable value
method.
The present value of the asset's anticipated future cash flows from its ongoing usage
and final disposition is known as value in use. When there are signs of impairment,
such as a considerable drop in the asset's market value or unfavorable modifications to
its intended use or the prevailing economic conditions, this approach is especially
pertinent.
- Any impairment loss is recorded if the asset's carrying amount is more than its recoverable
value.
b, IFRS
Under International Financial Reporting Standards (IFRS), there are several methods
for valuing tangible fixed assets:

1. **Cost Model**:
- Under IFRS, the cost model is the standard technique for evaluating tangible fixed
assets. When an asset is first recognized, its initial cost is determined by adding up all
of the expenses required to restore it to its original state and usage location. Assets are
held at cost less cumulative depreciation and any impairment losses following first
recognition.

2. **Revaluation Model**:

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 - Tangible fixed assets can be valued by entities using the revaluation model at their
fair value, which is the price at which they might be traded in an arm's length
transaction between willing and informed parties. Periodically, assets are revalued,
and the carrying amount of each asset is changed to reflect its fair value on the
revaluation date. Unless it reverses a revaluation reduction for the same asset
previously recorded as a cost, any revaluation surplus is reported in other
comprehensive income and accumulates in equity. An asset is written down to its
recoverable amount if its carrying amount after revaluation is greater than its
recoverable amount.

3. **Depreciated Replacement Cost (DRC)**:

- Tangible fixed assets are valued using the DRC model at their current cost of
replacement less accumulated depreciation. This approach is comparable to the cost
model, aside it accounts for the asset's current replacement cost.
- DRC is employed in situations where it is impossible to determine an asset's fair
value, such as when there isn't a market for it or when it is extremely unique or
specialized.

4. **Fair Value Model**:

- Tangible fixed assets are valued fairly at every reporting date under the fair value
concept. Fair value changes are recorded in profit or loss
- This model is used when fair value can be reliably measured and provides more relevant
information to users of financial statements, particularly in industries where asset values
fluctuate significantly.
1.2. Accounting for tangible fixed assets:
1.2.1. Accounting documents:
Fixed assets in an enterprise fluctuate mainly to meet the production needs of the enterprise.
Fixed assets in an enterprise fluctuate due to many reasons, but in any case, there must be
reasonable and valid documents to prove the economic operations arising.
01- Fixed Assets Fixed asset delivery and receipt minutes: used to record and monitor
changes in tangible fixed assets.
02-TSCD Minutes of liquidation of fixed assets (made when there is a liquidation activity)
03-TSCD Minutes of handover of fixed assets for completed major repairs
04-TSCD Minutes of re-evaluation of fixed assets

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 05-TSCD Fixed asset inventory record (made when there is an inventory activity)
06-Fixed Assets Calculation and allocation of depreciation of fixed assets (made when
changing value standards, this is evidence of recording an increase or decrease in fixed
assets).
1.2.2. Accounts used:

Account 211 – Tangible fixed assets

Dr CrCr

- Purchases
- Completed construction - -joint venture contributions
- Capital contributions - -liquidations
- Grants - transfers to other businesses
- Surpluses - revaluation
- Donations - dismantling of one or more
- Equipment after components.
adjustment - revaluation
- Additional construction
- Revaluation.

Tangible fixed assets, Account 211, is divided into six subaccounts:

- Account 2111 – Buildings and structures: Tracking the costs related to construction projects,
such as those involving bridges, railroads, piers, wharves, hedges, basins, water towers, and
ground,…

Account 2112: Machinery and Equipment: Keep account of the costs associated with any
equipment or machinery used in the day-to-day operations of your firm. This covers
specialized machinery, specific machines, and technological lines.

- Account 2113 – Means of transportation and transmitters: Road, rail, watercraft, canal, air,
pipeline, and transmitter costs are tracked

- Account 2114 – Office equipment and furniture: Records furniture and equipment costs for
management, business, and administrative uses.

- Account 2115 - Perennial plants, animal production, and working animals: records the costs
incurred by these types of fixed assets.

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- The account 2118, "Other Fixed Assets," is used to record fixed asset costs that do not fall
under any of the aforementioned subaccounts.

1.2.3. Accounting rules for tangible fixed assets:

Each tangible fixed asset must have its own records kept, and the costs of such fixed assets
must be recorded in accordance with their historical costs when taking account of 211. The
following principles are followed in determining the historical costs of tangible fixed assets,
depending on the acquisition source:
d1) Purchased tangible fixed assets:
Expenses incurred in preparing the site for use, initial delivery and material handling,
installation or testing costs (net of any recoverable values on products or scraps from testing),
professional fees, and other directly attributable expenses are included in the historical costs,
along with purchase prices (net of trade discounts or rebates) and taxes (excluding refundable
taxes). The interest paid on loans for completed fixed assets—those that don't require
construction expenditure and can be used right away—isn't incorporated into the fixed asset's
historical costs.

Historical Expense
Purchase Trade Unrefundable
cost of incurred in
price discounts taxes
purchased = + preparing - or rebates +
tangible fixed the site for
assets use
When bundled equipment or replacement spare parts are bought with fixed assets, they are
recognized and recorded separately according to their fair worth. The entire cost of getting an
asset ready for operation less the cost of replacement spare parts or bundled equipment is the
historical cost of a fixed asset that was acquired.
Historical costs of fixed assets acquired through installment payments: This is the sum of
the purchase price (lump sum payment) and the directly linked expenses (not including
refundable taxes) associated with preparing the assets for use. In accordance with the payment
schedule, the difference between the installment price and the lump sum price is documented
as operating costs.
Historical costs of fixed assets associated with properties: When buying properties, it is
necessary to make a distinction between the value of the properties on the land and the rights
to use it for land use. Land usage rights are documented as intangible fixed assets or prepaid
costs depending on specific conditions, whereas properties on the land are recognized as
tangible fixed assets.

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d2) Historical costs of tangible fixed assets acquired through capital investment:
- Historical costs of fixed assets acquired through contract awarding: These costs include, if
applicable, property transfer taxes and any directly attributable expenses, in addition to the
settled costs of construction works as specified in the current regulations on investment and
construction management. The historical costs of fixed assets, such producing animals,
working animals, or perennial gardens, are calculated using the entire real costs incurred from
the time of their conception until the point of implementation, including directly connected
charges.
Tangible fixed assets that are self-made or self-constructed: The historical cost of the tangible
fixed assets is matched by the settled cost of the building project at the time of usage.
The historical cost of the fixed asset is first recorded as provisional and is amended after the
building work is finished if it is used without a final settlement.
The asset's real cost as well as any directly related costs paid to prepare it for use are included
in the historical cost of a self-made tangible fixed asset.
- In the two aforementioned situations, installation and testing expenses are included in the
historical cost of the fixed asset, and any recoverable values from goods or scraps that come
from testing are subtracted. The historical cost of tangible fixed assets does not account for
irrational expenses (labor, waste from raw materials, or other costs beyond normal) or internal
profits.
d3) The historical cost of a tangible fixed asset obtained through exchange for another
tangible fixed asset or other assets is calculated using the fair value of the received tangible
fixed assets or the fair value of the exchanged ones, after deducting any additional cash
amounts or cash equivalents paid or received, directly attributable expenses incurred to
prepare the asset for use, and refundable taxes.
No gain or loss is recorded during an exchange when a tangible fixed asset is purchased in
return for another that is similar to it, or it may be created by selling it in return for the
ownership of other assets that are similar to it in terms of sharing comparable utilities,
operating in the same industry, and having a similar value. The residual value of the
exchanged fixed asset is used in both cases to determine the historical cost of the receiving
fixed asset..
d4) To determine the historical cost of a given or transferred tangible fixed asset, apply the
formula below: The residual value is recorded in the fixed assets account in the accounting
records of the donating or presenting business, or it is assessed by the Board of Exchange or
an independent professional assessment agency, as applicable. Included are also the directly

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associated expenses that the asset receiver incurred before the fixed asset was ready for use,
such as transportation, material handling, modifications, installation, testing, and property
transfer taxes (if any).
Historical cost for tangible fixed assets shifted between dependent accounting units that are
not recognized as enterprises by law is determined by the transferor's record, which comes
after the fixed asset's supporting documentation. Based on the historical cost, cumulative
depreciation, and residual value stated in the accounting records and accompanying
paperwork, the receiving unit registers the fixed assets in their accounting records..
Instead of being added to the historical cost of fixed assets, costs related to donations of fixed
assets between dependent accounting entities without legal status are documented as operating
costs over time.
d5) The agreement between the company and its contributors, or the original members or
shareholders, identify the historical cost of a physical fixed asset presented as capital or in
return for capital. As an alternative, it can be evaluated by a qualified appraisal agency in
accordance with the guidelines and consent of the original shareholders or members.
d6) When a tangible fixed asset is given or donated, its historical cost should be the assessed
actual value as decided by the Board of Exchange or a qualified appraisal organization, plus
any associated costs that the recipient bears directly until the fixed asset is prepared for use,
including, but not limited to, transportation, material handling, installation, testing, and
property transfer taxes.
d7) Article 69's instructions, which offer guidance on accounting techniques for managing
exchange rate variations, must be followed when determining the historical cost of a fixed
asset bought in a foreign currency.
dd) Only the following situations allow for an adjustment to a tangible fixed asset's historical
cost:
dd) A tangible fixed asset's historical cost may only be modified in the following situations:
- The asset is reassessed in accordance with state legislation.
- An addition is made to the asset or it is constructed.
- A portion of the asset is altered to increase its capacity or extend its useful life.
- Upgrades to certain components of the asset result in a noticeably higher-quality outcome.
- In order to save operating costs, new technology procedures are introduced.
- The asset is disassembled in one or more parts.

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Any change in the amount of tangible fixed assets requires that exchange reports and fixed
asset liquidation reports be prepared, and that the established protocols be followed. The
accountant is in charge of preparing and completing the fixed asset accounting records.
e) Expenses incurred during the period should be documented instead of being included in the
fixed assets ledger for the costs of maintaining and repairing a fixed asset. When dealing with
fixed assets that need to be repaired or maintained on a regular basis (such turbines in power
plants or engines in airplanes), a provision for payable expenses needs to be made and
documented as operating costs for the appropriate time period.
g) The existing VAS and financial policies continue to subject tangible fixed assets under
operating leases to depreciation.
h) It is necessary to keep thorough records of all tangible fixed assets, including details on
each item, the kind of asset, and the location of usage, management, and storage.

1.2.4. Accounting treatment for

a) The following entries have to be made after acquiring capital or owner's equity in the form
of physical fixed assets:

Dr 211 - Tangible fixed assets (at negotiable prices)

Cre 411 - Owner's invested equity.

b) Purchased fixed assets:

- Purchase documentation must be used to determine the asset's historical cost when
purchasing a tangible fixed asset with deductible input VAT. The following accounts need to
be recorded, together with accounting records and a receipt sheet for the fixed asset:

Dr 211 – Tangible fixed assets (VAT-exclusive prices)

Dr 133 – Deductible VAT (1332)

Cr 111, 112, etc.

Cr 331 – Trade payables

Cr 341 – Borrowings and finance lease liabilities (3411).

- When buying packaged machinery or replacement components along with tangible fixed
assets, the following accounts must be kept on file:

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Dr 211 – Tangible fixed assets (fixed asset purchased and equipment or spare parts for
replacement treated as fixed assets in details)

Dr 153 – Tools and supplies (1534) (equipment or spare parts for replacement)

Dr 133 – Deductible VAT (1332)

Cr 111, 112, etc.

Cr 331 – Trade payables

Cr 341 – Borrowings and finance lease liabilities (3411).

- When the input VAT is not deductible, the VAT is included in the historical cost of the fixed
asset.

If the fixed asset is acquired through capital expenditure for operational use and the financial
report is accepted by the relevant authority, a growth in operating capital and a drop in capital
must be shown in the following ways:

Dr 441 – Capital expenditure funds

Cr 411 – Owner’s invested equity.

c) When purchasing tangible fixed assets with postponed payment or in installments:

- The following accounts must be kept on file when purchasing tangible fixed assets and using
them:

Dr 211 – Tangible fixed assets (historical cost – cash prices)

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

Dr 242 – Prepaid expenses (deferred interest equals (=) total payment minus (-) cash price and
VAT (if any).

Cr 111, 112, 331.

- When making recurrent payments to suppliers, the following accounts need to be noted:

Dr 331 – Trade payables

Cr 111, 112 (periodical payables, including periodical principal and interest in deferred
payment or instalment payables).

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- The following method of periodic recording must be used for interest on delayed payment or
installment liabilities:

Dr 635 – Financial expenses

Cr 242 – Prepaid expenses.

d) The following accounts are to be kept on file if the business receives tangible fixed assets
that have been donated or bestowed for use:

Dr 211 – Tangible fixed assets

Cr 711 - Other income.

It is necessary to provide historical cost documentation for the following directly linked
expenses incurred from gifted or donated tangible fixed assets:

Dr 211 – Tangible fixed assets

Cr 111, 112, 331, etc.

"dd) Internally produced tangible fixed assets:

Upon transforming the company's produced items into tangible fixed assets, it is necessary to
maintain the following accounts:

Dr 211 – Tangible fixed assets

Cr 155 – Finished goods (dispatched from inventories)

Cr 154 – Work in progress (put into use).

"e) Acquiring tangible fixed assets through exchanges:

- Exchange between two comparable tangible fixed assets: Upon receiving comparable
tangible fixed assets through exchange and putting them into use, the following accounts
should be documented:"

Dr 211 – Tangible fixed assets (historical cost of the received tangible fixed asset shall be
recorded according to residual value of the exchanged fixed asset)

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

Cr 211 – Tangible fixed assets (historical cost of exchanged fixed asset)

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- Trade of two different tangible fixed assets:

The following accounts must be recorded upon the tangible fixed asset's transfer to the
exchanging entity:

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

Dr 214 – Depreciation of fixed assets (depreciated value)

Cr 211 – Tangible fixed assets (historical cost).

+ Additionally, a growth in revenue resulting from the exchange of fixed assets must be
recorded:

Dr 131 – Trade receivables (total payment)

Cr 711 – Other expenses (residual value of exchanged fixed asset)

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

+ The following accounts need to be recorded upon receiving the exchanged fixed asset :

Dr 211 – Tangible fixed assets (residual value of received fixed asset)

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

Cr 131 – Trade receivables (total payment)

+ In the event that the cost of the exchanged fixed asset exceeds the cost of the received fixed
asset, the following accounts have to be recorded at the time of the additional payment:

Dr 111, 112 (additional payment)

Cr 131 – Trade receivables.

+ The following accounts need to be noted when additional payment is received. The residual
value of the traded fixed asset is lower than the value of the acquired fixed asset:

Dr 131 – Trade receivables.

Cr 111, 112, etc.

g) The following accounts must be kept on file while acquiring fixed assets, which include
buildings and other structures connected to rights of use over land.

Dr 211 – Tangible fixed assets (historical cost – buildings, structures in details).

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Dr 213 – Intangible fixed assets (historical cost – land use rights).

Dr 133 – Deductible VAT (if any)

Cr 111, 112, 331, etc.

h) Augmentation in tangible fixed assets resulting from capital investment fulfillment: When
construction work or related tasks reach completion and are operational, yet their capital
expenses have not been sanctioned, the historical cost should be tentatively established based
on the actual capital outlay to document any increase or decrease in fixed assets (for
depreciation calculation of the utilized fixed asset). Upon approval of the capital expenditure
settlement, any variance with the provisional value of the fixed asset shall be adjusted by
accommodating the increase or decrease in the difference.

- If the progress of capital investment is documented within the enterprise's accounting

system:

+ When construction is completed and assets are put into operation, the following accounts
should be recorded:

Dr 211 – Intangible fixed assets (historical cost).

Cr 241 – Construction in progress.

+ The following accounts should be recorded if the documentation for self-constructed assets
does not meet the recognition requirements specified in the tangible fixed asset accounting
standard:

Dr 152, 153 (if they are materials, inventoried tools and supplies)

Cr 241 – Construction in progress.

If the advancement of capital investment isn't documented within the enterprise's accounting
framework but instead managed by a separate project management board with its distinct
accounting system, the investor, upon receiving construction, should log the progress in the
following manner:

Dr 111, 112, 152, 153, 211, 213

Cr 136 – Intra-company receivables

Cr 331, 333, etc (accept receivables, if any)

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Whenever a capital expenditure is used to purchase a fixed asset, and the appropriate authority
approves the settlement, the owner's invested equity will increase as follows:

Dr 441 – Capital expenditure funds

Cr 411 – Owner’s invested equity.

If the settlement price differs from the preliminary price, the historical cost of the fixed asset
should be adjusted as follows after acceptance of the settlement:

+ The following format should be used to document a decrease in historical costs:

Dr 138 – Trade receivables (amounts of recovery shall not be settled)

Cr 211 – Tangible fixed assets.

+ The following format should be used to demonstrate an increase in historical cost:

Dr 211, 213, 217, 1557

Cr, relevant accounts.

i) The following accounts must be reported after fixed assets are obtained from an internal
general company (unpaid):

Dr 211 – Tangible fixed assets (historical cost).

Cr 214 – Depreciation of fixed assets (depreciated value)

Cr 336, 411 (residual value).

k) The following accounts are to be recorded when fixed assets purchased with non-business
funds are used for non-business purposes:

Dr 211 – Tangible fixed assets

Cr 111, 112

Cr 241 – Construction in progress.

Cr 331 – Trade payables

Cr 461 – Non-business funds (4612).

The increase in non-business funds that were used to purchase the fixed asset must be
recorded in the way that follows:

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Dr 161 – Non-business expenditure (1612).

Cr 466 – Non-business funds used for fixed asset acquisitions.

The company should maintain records of withdrawn estimates for fixed asset purchases that
were included in the financial statement presentation.

l)When utilizing fixed assets purchased with welfare money for cultural and welfare activities,
the following accounts must be kept on file:

Dr 211 – Tangible fixed assets (total payment)

Cr 111, 112, 331, 3411, etc.

- Furthermore, the subsequent accounts should be documented:

Dr 3532 – Welfare fund

Cr 3533 – Welfare funds used for fixed asset acquisitions.

m) Expenses incurred for improvements, inventions, or repairs that come about after tangible
fixed assets are first recognized:

- When expenses are incurred for inventions, repairs, or upgrades after tangible fixed assets
are first recognized:

Dr 241 – Construction in progress.

Dr 133 – Deductible VAT (1332)

Cr 112, 152, 331, 334, etc.

- Completing any inventions, maintenance, or improvements to the operational fixed assets:

+ If there is a rise in the historical cost of tangible fixed assets, the following accounts need to
be noted:

Dr 211 – Tangible fixed assets

Cr 241 – Construction in progress.

+ If the historical cost of tangible fixed assets has not increased, the following accounts have
to be maintained on file:

Dr 623, 627, 641, 642 (if their value is small)

20
Cr 242 – Prepaid expenses. (if their value is great, they must be allocated gradually)

Cr 241 – Construction in progress.

3.2. Accounting for reductions in tangible fixed assets

A reduction in the tangible fixed asset's historical cost brought about by a sale, liquidation,
loss, shortfall found during a physical inventory count, participation in a joint venture or
transfer to another business, disassembly of one or more components, etc. In the event that
tangible fixed assets decline, the appropriate processes must be followed in order to precisely
calculate any losses and, if any, income. Every individual instance must be documented in the
manner described below, per pertinent documentation:

3.2.1. If fixed assets used for business or non-business purposes are sold, the purchased fixed
asset is considered inefficient or unnecessary. The procedures specified by law must be
followed while buying the fixed asset. According to the documents pertaining to the sale of
the fixed asset and the receipt sheet for it:

a) When fixed assets utilized for business are sold, the following accounts should be recorded:

Dr 111, 112, 131, etc.

Cr 711 – Other income (VAT-exclusive prices)

Cr 3331 – VAT payables (33311).

VAT must be included in other income if it cannot be separated. Reduced VAT payables must
be reported under other income.

- The fixed asset receipt slip must be used to document any decrease in bought fixed assets.

Dr 214 – Depreciation of fixed assets (2141) (depreciated value)

Dr 811 – Other expenses (residual value)

Cr 211 – Tangible fixed assets (historical cost).

- Costs associated with the disposal of fixed assets should be recorded on Debit 811,
"Miscellaneous expenses".

b) Should fixed assets utilized for non-business purposes be sold, the reduction in the sold
asset must be documented in accordance with the receipt slip for the fixed asset, as shown
below:

21
Dr 466 – Funds used for fixed asset acquisitions (residual value)

Dr 214 – Depreciation of fixed assets (depreciated value)

Cr 211 – Tangible fixed assets (historical cost).

- Revenue and costs associated with the sale of the fixed asset must be documented in the
appropriate accounts in accordance with the requirements of the relevant authorities.

c) While disposing of fixed assets for cultural or welfare purposes:

- The fixed asset's receiving slip should be used to document the decrease in the sold fixed
asset as follows:

Dr 353 – Welfare fund (3533) (residual value)

Dr 214 – Depreciation of fixed assets (depreciated value)

Cr 211 – Tangible fixed assets (historical cost).

The following processes should be followed to document the income received from the sale of
the fixed asset:

Dr 111, 112, etc.

Cr 353 – Welfare fund (3532)

Cr 333 – Taxes and other payables to the State (3331) (if any)

- To record the costs associated with the sale of the fixed asset, the following procedures must
be adhered to:

Dr 353 – Welfare fund (3532)

Cr 111, 112, etc.

3.2.2. Fixed asset disposal: When fixed assets become irreparably damaged, outdated, or
unusable for operating purposes, they are disposed of. When a fixed asset has to be disposed
of, the business must declare its intention to do so and form a Fixed Asset Disposal
Committee. This committee's duties include generating a "Fixed Asset Disposal Report" as
required by law and supervising the disposal procedure in compliance with financial
management laws. The report has to be created in two copies; one copy should be delivered to

22
the accounting department for documentation, and the second copy should be sent to the
department in charge of fixed asset management and utilization.

Documentation of the liquidation of fixed assets must follow the same guidelines as fixed
asset sales, according to the report on fixed asset liquidation and other documents relating to
revenues and expenses made during the process.

3.2.3 While giving tangible fixed assets as capital to subsidiaries and joint ventures, the
following accounts have to be maintained on file:

Dr 221, 222 (re-evaluated value)

Dr 214 – Depreciation of fixed assets (depreciated value)

Dr 811 – Other expenses (re-evaluated value is smaller than residual value of the fixed asset)

Cr 211 – Tangible fixed assets (historical cost).

Cr 711 – Other expenses (re-evaluated value is greater than residual value of the fixed asset)

3.2.4. Shortage or excess of tangible fixed assets: Any shortage or excess of fixed assets has
to have an explanation. In accordance with the "Report on physical inventory count of fixed
assets" and the Inventory Board's Conclusion, which is given for the following reasons, the
shortfall or excess must be precisely and immediately recorded:

a) Fixed asset surplus:

If an unrecorded surplus of fixed assets is found, a growth in fixed assets must be reported in
compliance with the fixed asset dossier:

Dr 211 – Tangible fixed assets

Cr 241, 331, 338, 411, etc.

- If the fixed assets in surplus are being used, the following accounts must be recorded in
addition to the increase in tangible fixed assets and the depreciation value used to compute
and deduct additional depreciation of fixed assets used for welfare, non-business, or project
purposes:

Dr, operating costs (fixed assets used for business)

Dr 3533 – Welfare funds used for fixed asset acquisitions (used for welfare)

23
Dr 466 – Non-business funds used for fixed asset acquisitions.

Cr 214 – Depreciation of fixed assets (2141).

- The owner of any fixed assets that are in excess must be notified if they are the fixed assets
of other businesses. It shall notify the finance agency and superior agency for handling (with
reference to state-owned companies) if it is unable to identify the owner of such fixed assets.
Those fixed assets must be temporarily stored and closely observed during the handling time
in accordance with documentation regarding the physical inventory count.

b) Shortage of fixed assets: as directed by the current financial framework, it is necessary to

identify the cause, the offenders, and the appropriate course of action.

If a decision is made regarding how to handle a shortage, the approved "Report on handling of
shortage of fixed assets" and the fixed asset dossier must be accurately consulted in order to
determine the asset's historical cost and depreciated value. A decrease in fixed assets must
then be recorded, and the residual value of the fixed assets must be managed. The following
accounts must be kept on file in accordance with the decision about addressing the shortage:

+ The following should be noted when there is a scarcity of fixed assets utilized for business:

Dr 214 – Depreciation of fixed assets (depreciated value)

Dr 111, 112, 334, 138 (1388) (if the offender is required to make compensation)

Dr 411 – Owner’s invested equity (if the decrease in equity is permitted to be recorded)

Dr 811 – Other expenses (if the enterprise suffers losses)

Cr 211 – Tangible fixed assets.

+ The following should be noted when fixed assets are depleted for non-business purposes:

If the fixed asset decreases, it must be documented as follows:

Dr 214 – Depreciation of fixed assets (depreciated value)

Dr 466 – Funds used for fixed asset acquisitions (residual value)

Cr 211 – Tangible fixed assets (historical cost).

The decision on addressing the shortfall must be followed in order to recover the residual
value of the fixed asset shortage, and the following accounts must be kept on file:

24
Dr 111, 112 (if collecting money)

Dr 334 – Payables to employees (deducted from salaries of employees)

Cr, relevant accounts (according to report on handling).

+ The following documentation must be made of the lack of fixed assets utilized for cultural
or welfare-related activities:

If the fixed asset decreases, it must be documented as follows:

Dr 214 – Depreciation of fixed assets (depreciated value)

Dr 3533 – Funds used for fixed asset acquisitions (residual value)

Cr 211 – Tangible fixed assets (historical cost).

The decision on addressing the shortfall must be followed in order to recover the residual
value of the fixed asset shortage, and the following accounts must be kept on file:

Dr 111, 112 (if collecting money)

Dr 334 – Payables to employees (deducted from salaries of employees)

Cr 3532 – Welfare fund

If the causes of the fixed asset deficit are not identified and remedies are not being sought
after:

+ The following documentation must be made regarding the lack of fixed assets utilized for
business:

The residual value of the fixed asset deficit will be represented by a decline in fixed assets:

Dr 214 – Depreciation of fixed assets (2141) (depreciated value)

Dr 811 – Other expenses (residual value)

Cr 211 – Tangible fixed assets (historical cost).

In the event that the residual value of a shortfall of fixed assets has to be handled, the
following accounts need to be documented:

Dr 111, 112 (compensation)

Dr 138 – Other receivables (1388) (if the offender is required to make compensation)

25
Dr 334 – Payables to employees (deducted from salaries of employees)

Dr 411 – Owner’s invested equity (if the decrease in equity is permitted to be recorded)

Dr 811 – Other expenses (if the enterprise suffers losses)

Cr 138 - Other income (1381).

+ The following should be noted when fixed assets are depleted for non-business purposes:

If the fixed asset decreases, it must be documented as follows:

Dr 214 – Depreciation of fixed assets (depreciated value)

Dr 466 – Funds used for fixed asset acquisitions (residual value)

Cr 211 – Tangible fixed assets (historical cost).

Account 1381, "Assets in shortage awaiting resolution," is where the following should be
recorded for the remaining amount of the fixed asset shortage:

Dr 1381 – Assets in shortage awaiting resolution

Cr 138 - Other payables or receivables.

When a decision is taken on compensation for residual value of the shortage of fixed assets,
the following accounts have to be recorded:

Dr 111, 334, etc.

Cr 1381 – Assets in shortage awaiting resolution

Simultaneously, in accordance with the ruling made by the appropriate agency, the residual
value of the fixed asset shortfall compensation will be recorded to the appropriate accounts in
the following manner:

Dr 138 - Other payables or receivables.

Cr, relevant accounts (333, 461, etc).

+ The following record must be made of the shortfall in fixed assets utilized for cultural or
welfare-related activities:

A reduction in the fixed asset should be recorded in the following manner:

Dr 214 – Depreciation of fixed assets (depreciated value)

26
Dr 3533 – Funds used for fixed asset acquisitions (residual value)

Cr 211 – Tangible fixed assets (historical cost).

The remaining amount of the fixed asset deficiency must be reported in the following manner
to account 1381, "Assets in shortage awaiting resolution":

Dr 1381 – Assets in shortage awaiting resolution

Cr 3532 – Welfare fund

The following accounts must be documented when a decision is made about compensation for
residual value of the shortfall of fixed assets:

Dr 111, 334, etc.

Cr 1381 – Assets in shortage awaiting resolution

3.2.5. For supplies and equipment that do not meet all criteria to be recognized as tangible
fixed assets used for business activities, the following accounts must be maintained on file:

Dr 623, 627, 641, 642 (if their residual value is small)

Dr 242 – Prepaid expenses. (if their value is great, they must be allocated gradually)

Dr 214 – Depreciation of fixed assets (depreciated value)

Cr 211 – Tangible fixed assets (historical cost of fixed asset).

3.2.6. Accounting for sales and leasebacks of tangible fixed assets, or operational leases (see
to accounts 811 or 711).

3.3. Counting tangible fixed assets as part of the physical inventory count when evaluating
businesses to determine whether to equitize completely state-owned businesses

a) Physical inventory count reports: After receiving notice from the competent agency
regarding equitization, the equitized enterprise must conduct a physical inventory count and
categorize tangible fixed assets under management and use of the enterprise during the
enterprise's evaluation period.

- In the event that there are insufficient tangible fixed assets, the following accounts need to
be noted:

Dr 1381 – Assets in shortage awaiting resolution (residual value)

27
Dr 214 – Depreciation of fixed assets (cumulatively-depreciated value)

Cr 211 – Tangible fixed assets (historical cost).

If the company has more fixed assets than it needs, it should include a note about it in the
presentation of its financial statements. The causes for the excess should be noted in pertinent
accounts on the balance sheet as soon as they are determined and a resolution decision is
made by the appropriate authority.

b) Accounting for excess or deficiency of tangible fixed assets during physical inventory
counts: the business must determine the reasons for the excess or deficiency and determine
who is materially responsible for any compensation that must be paid to persons or groups in
accordance with rules. It is necessary to record the amount of the lack of tangible fixed assets
(subtracted from remuneration) as additional costs.

Regarding the shortfall of assets found during the physical inventory count, the following
accounts need to be included in the "Report on resolution to shortage or surplus of assets
under physical inventory count":

Dr 111 – Cash (individual or organization paying compensation)

Dr 1388 - Other receivables (individual or organization paying compensation)

Dr 334 – Payables to employees (deducted from salaries of employees)

Dr 811 – Other expenses (residual value of shortage of fixed assets detected under physical
inventory count shall be recorded to losses of the enterprise)

Cr 1381 – Assets in shortage awaiting resolution.

- The following accounts must be noted in the "Report on resolution to shortage or surplus of
assets under physical inventory count" in relation to the excess of assets found during the
physical inventory count:

Dr 3381 – Surplus of assets awaiting resolution.

Cr 331 – Trade payables (if the assets in surplus belong to sellers)

Cr 138 - Other payables or receivables (3388)

Cr 411 – Owner's invested equity (regarding tangible fixed assets impossible to uncover
reasons and determine the owner).

28
c) Recording the sale or liquidation of unsold or unnecessary assets that are in the process of
being liquidated: the firm must sell or liquidate assets in accordance with the guidelines after
obtaining clearance from the agency that determines the equitization. The following is how
the income, costs, and asset declines must be recorded:

- Profits from the sale or liquidation of fixed assets that are not needed or that are in the
process of being liquidated must be reported as follows:

Dr 111,112,131

Cr 711 - Other income.

Cr 3331 – VAT payables (if any).

- The following expenses should be recorded when selling or liquidating obsolete fixed assets
or fixed assets that are in the process of being liquidated:

Dr 811 – Other expenses

Dr 133 – Deductible VAT (if any)

Cr 111, 112, 331.

- Decreases in sold or liquidated fixed assets must be recorded in the manner described below:

Dr 811 – Other expenses (residual value)

Dr 214 – Depreciation of fixed assets

Cr 211 – Tangible fixed assets.

d) When the company transfers tangible fixed assets that are unnecessary or in the process of
being liquidated, the following accounts have to be maintained on file:

Dr 411 – Owner’s invested equity.

Dr 214 – Depreciation of fixed assets

Cr 211 – Tangible fixed assets.

dd) Accounting for welfare constructs that are transfer assets:

- The following accounts must be kept on file when officials or workers of the business
funded by welfare funds have their housing transferred to the local government's real estate
authority for management:

29
Dr 3533 – Funds used for fixed asset acquisitions (residual value)

Dr 214 – Depreciation of fixed assets (depreciated value)

Cr 211 – Tangible fixed assets (historical cost).

- If the equitized enterprise uses the welfare constructions financed by state capital for
operations, the following accounts have to be maintained on file:

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

Cr 411 – Owner’s invested equity.

e) Accounting for the revalued tangible fixed assets.

The value of the tangible fixed assets will be equivalent to the following, per the enterprise
revaluation dossier: an increase in the residual value of the fixed asset reported at Cr 412 and
a decrease in the residual value of the fixed asset recorded at Dr 412.

- And each fixed asset's variances need to be itemized. In particular:

If the reevaluated fixed asset's value surpasses both its book value and historical cost, or if the
reevaluated cumulative depreciation exceeds book value, the following accounts have to be
recorded:

Dr 211 – Historical costs of fixed assets (increase evaluation).

Cr 214 – Depreciation of fixed assets (increase evaluation).

Cr 412 - Differences upon asset revaluation (value of fixed asset in increase).

- The following accounts, as well as the fixed asset's historical cost or reevaluated cumulative
depreciation, have to be recorded if the value of the reevaluated fixed asset is less than its
book value:

Dr 214 – Depreciation of fixed assets (decrease evaluation).

Dr 412 - Differences upon asset revaluation (value of fixed asset in decrease).

Cr 211 – Historical costs of fixed assets (decrease evaluation).

Following a reevaluation, the company depreciates the fixed asset based on the revised
historical cost.

g) Asset Transfer to Joint-Stock Companies

30
- Independent Enterprise Equitization

Compliance with legislation pertaining to the transfer of assets, accounts payable, and capital
funds of joint-stock firms is necessary for the equitization of independent businesses. The
equalized enterprise's required archive of accounting papers, accounting records, and financial
statements must all be transferred to the joint stock company for further preservation.

- With the equitization of parent corporations, groups, independent accounting companies of

the general companies, or dependent accounting enterprises of state-owned companies.

Transferring assets, accounts payables, and capital funds to joint-stock corporations should be
done in compliance with the receipt slip of assets, appendices, relevant accounting documents,
or papers establishing the value of tangible fixed assets:

Dr 411 – Owner’s invested equity.

Dr 214 – Depreciation of fixed assets (depreciated value).

Cr 211 – Tangible fixed assets.

CHAPTER 2: EVALUATION AND RECOMMENDATION

2.1. Evaluation of this accounting procedure in Vietnam

IAS 16 (International Accounting Standard 16) and VAS 03 (Vietnamese Accounting

Standard 03) both address the accounting treatment of tangible fixed assets, but they may
differ in certain aspects due to variations in regulatory frameworks, cultural contexts, and
economic environments. Here are some key differences between IAS 16 and VAS 03
regarding tangible fixed assets:

Disparities in Tangible Fixed Asset Accounting Between IAS 16 and VAS 03

IAS 16 excludes:

(a) Equipment, plant, and machinery (PPE) designated as being held for sale.

(a) Biological resources connected to agricultural operations.

(c) Rights pertaining to mineral reserves and other non-renewable resources such as gas, oil,
and mineral reserves.

VAS 03 does not regulate the following issues:

31
IAS 16 mandates the utilization of its accounting principles for properties undergoing
construction or development intended for future utilization as investment properties, even if
they don't fulfill the investment property criteria. In contrast, VAS 03 doesn't address this
specific scenario. IAS 16 introduces the concepts of fair value and impairment loss. It posits
that an asset's recoverable amount may surpass both its net selling price and its utility value.
Conversely, VAS 03 suggests that the recoverable amount can be obtained from the asset's
prospective usage, encompassing any residual value upon liquidation.

2. Recognition Criteria of IAS 16 and VAS 03

IAS 16 acknowledges acquired property, plant, and equipment (PPE), which may not
inherently yield economic advantages but are essential for facilitating the economic
productivity of other assets, such as ensuring safety or environmental compliance.
Conversely, VAS 03 exclusively delineates economic benefits directly associated with
assets.

In contrast, VAS 03 imposes two supplementary prerequisites for acknowledging tangible

fixed assets compared to IAS 16:

1. The asset's useful life extends beyond one year.

2. Compliance with prevailing regulatory requisites is met.

IAS 16 references the utilization of properties, plant, and equipment over durations
exceeding a single accounting period, emphasizing the significance of long-term asset
productivity and continuity.

3. Initial Recognition

The assessment and identification of asset disassembly, removal, and restoration expenses is
not covered by VAS 03. VAS 03 solely takes into account expenses spent during the
installation of a single item of PPE when calculating its cost.

4. Depreciation And Disposal

32
Businesses must calculate the depreciation expenses for each major component of a PPE
item individually in accordance with IAS 16. The depreciation costs for each major piece of
PPE are not specified in VAS 03.

Each financial year's conclusion will see an assessment of the asset's residual value in
accordance with IAS 16. Should the anticipated numbers deviate considerably from prior
approximations, the modifications will be clarified as adjustments to accounting estimates.
The asset's residual value may rise to a level that is at least as high as its book value.
Consequently, the asset's depreciation expense is equal to "0". The evaluation of residual
value is not covered by VAS 3.

Under IAS 16, until an asset has been completely depreciated, depreciation does not stop
when it is idle or no longer in use. On the other hand, in the event of no production activity,
the depreciation expenditure may be zero under the manufacturing units approach.

Clearer instructions on when to dispose of an item and how to account for revenue from
delayed earnings from asset sales are provided by IAS 16.

5. Measurement Subsequent To Initial Recognition

Two accounting approaches are regulated by IAS 16: (a) recording assets at cost and (b)
revaluation to fair value. Only reporting and recording at cost is permitted under VAS 03.

Cost model: The original cost of an asset is recorded less cumulative depreciation and
cumulative impairment losses.

Revaluation model: The revalued amount is recorded for assets. The fair value as of the
revaluation date less cumulative impairment losses and depreciation is the revalued amount.
According to IAS 16, this approach must only be applied when it is possible to determine
the asset's fair value.

It's crucial to remember that all permanent assets of such kind need to have their values
updated whenever a PPE item is. Tangible fixed assets are categorized by IAS accounting

33
rules into the following categories: land, land and buildings, machinery, ships, aircraft, cars,
major furniture and equipment, and office equipment.

The financial statements must both show the asset's original cost (which hasn't been
revalued) and the assumptions used in the valuation when employing the revaluation model
for assets. Consequently, investors are still aware of the fair value as well as the initial cost
(less cumulative depreciation).

Accounting for revaluation of fixed assets, increase in value, recording of increased equity:

Debit 211 Fixed assets 5,000,000

Credit 412 Surplus equity from asset revaluation 5,000,000

Note: Surplus equity from asset revaluation is a part of equity, recorded as profit in the
income statement. Unless it adjusts previously recorded losses, it is now recorded as profit
to offset previously recorded losses.

6. Disclosure Requirements: Specific disclosure requirements may differ, but both standards
call for the financial statements to include information regarding tangible fixed assets.
Additional disclosure requirements unique to the Vietnamese context, such as information
on government grants pertaining to tangible fixed assets or particular disclosures pertinent to
sectors that are common in Vietnam, may be included in VAS03.

7. Transition provision: There may be variations in the transitional requirements between

VAS 03 and IAS 16 when implementing the standard. These provisions may have an impact
on how organizations account for their current tangible fixed assets as well as any
modifications needed when the standard is adopted.

These are some of the main distinctions in the accounting treatment of tangible fixed assets
under VAS 03 and IAS 16. To appropriately reflect the financial position and performance
of their tangible fixed assets, it is crucial for businesses operating in Vietnam to be aware of
these variances and to maintain compliance with the applicable accounting standards.

34
 2.2. Some suggestions – recommendations to complete accounting of tangible
fixed assets

Based on the examination of VAS03 regarding the accounting for tangible fixed assets in
Vietnam, the following recommendations can be proposed to enhance its effectiveness and
applicability:

1. **Clarify Recognition Criteria**: Provide clearer guidance on the recognition criteria for
tangible fixed assets to ensure consistency and accuracy in asset recognition across
enterprises. This could include specific examples or case studies to illustrate the application of
recognition criteria in different scenarios.

2. **Alignment with International Standards**: Continuously review and align VAS03 with
relevant international accounting standards, such as IAS 16, to enhance comparability and
facilitate integration with global accounting practices. Harmonizing local standards with
international ones can also improve the attractiveness of Vietnamese financial statements to
foreign investors.

3. **Guidance on Revaluation**: Offer comprehensive guidance on the revaluation of

tangible fixed assets, including the frequency of revaluation, valuation methods, and
disclosure requirements. This would assist enterprises in accurately reflecting changes in asset
values over time and provide users of financial statements with more relevant information.

4. **Disclosure Requirements**: Strengthen disclosure requirements to ensure transparency

and completeness of financial information related to tangible fixed assets. Clearer disclosure
guidelines can help stakeholders make informed decisions and assess the financial health and
performance of enterprises more effectively.

5. **Training and Education**: Enhance training and educational programs for accounting
professionals, auditors, and other stakeholders on the application of VAS03. This could

35
involve conducting workshops, seminars, and online courses to increase awareness and
understanding of the standard's requirements and implications.

6. **Periodic Review and Update**: Establish a process for periodic review and update of
VAS03 to reflect changes in business practices, regulatory requirements, and emerging
accounting issues. Regular revisions would ensure that the standard remains relevant and
responsive to the evolving needs of the business environment.

7. **Consultation with Stakeholders**: Encourage active engagement and consultation with

relevant stakeholders, including accounting firms, industry associations, regulatory bodies,
and academia, during the standard-setting process. Gathering feedback and insights from
diverse perspectives can lead to more robust and practical accounting standards.

By implementing these recommendations, VAS03 can be strengthened to provide clearer

guidance, enhance transparency, and promote consistency in the accounting treatment of
tangible fixed assets, thereby contributing to the overall quality and reliability of financial
reporting in Vietnam.

CONCLUSION
In conclusion, the accounting practices for tangible fixed assets acquisition and disposal in
Vietnam are governed by a set of regulations and standards, including both international
standards such as IAS 16 and local standards like VAS 03. These guidelines provide a
framework for enterprises to appropriately record, recognize, and manage their fixed assets
throughout their lifecycle.

Throughout this essay, we have explored various aspects of accounting for tangible fixed
assets, including the initial recognition, subsequent measurement, depreciation, disposal, and
revaluation. We have observed differences and similarities between international and local
accounting standards, highlighting areas such as recognition criteria, measurement methods,
and disclosure requirements.

36
Furthermore, we have discussed specific scenarios such as deferred payment, exchange
transactions, self-made assets, and transfers to joint-stock companies, elucidating the
accounting treatments prescribed for each situation.

Overall, effective management of tangible fixed assets is essential for enterprises to accurately
reflect their financial position and performance. By adhering to relevant accounting standards
and ensuring compliance with regulatory requirements, enterprises in Vietnam can maintain
transparency, reliability, and accountability in their financial reporting practices regarding
tangible fixed assets acquisition and disposal.Phạm Phương Thảo

REFERENCE
Circular 200/2014/TT-BTC

IFRS Accounting Standards, IASB

VAS

APENDIX
*Some transactions arise that increase receivables

Transaction 1 :

Invoice No. X: Sales to A, no payment yet. Discharged according to delivery note No. Y

+Related original documents: Invoice X and Y

Table 1_receiving transaction

Company: Form 02 - VT

Adress (According to Circular No. 200/2014/TT-BTC

dated December 22nd 2014 of the Ministry of

Finance)

37
 GOOD DELIVERY NOTE

Date: Debit

No: Credit

Receiver's Full Name:

Reason for Issuing:

Issuing site (Lot):

QUANTITY
ITEM
NO. ITEM NAME UOM VOUCHER RECEIVE PRICE AMOUNT
CODE
D
A B C D 1 2 3 4

TOTAL

In Words:

No. of Original Document(s):

Dated ......../ ......../ ...........

Prepared by Deliverer Storekeeper Chief Accountant

(Signature, full name) (Signature, full name) (Signature, full name) (Signature, full name)

Table 2_VAT tracking book

Company Form: S61 - DN

Adress (According to Decision No. 200/2014/TT-BTC

38
 dated December 22nd 2014 of the Ministry of
Finance)

VAT TRACKING BOOK

ACCOUNT: 33311PAYABLE VAT – DOMESTIC

Date:

OPENING BALANCE:

VOUCHER PAYABLE
ACCOUNT: 33311PAYABLE PAID VAT
DATE, VAT
NO. VAT – DOMESTIC AMOUNT
MONTH AMOUNT
A B C 1 2

TOTAL DEBIT AMOUNT:

TOTAL CREDIT AMOUNT:

CLOSING BALANCE:

There are 01 pages in this book, numbered from page 01 to page 01

Date opened:

Dated ......../ ......../ ...........

Prepared By Chief Accountant

(Signature, full name) (Signature, full name)

+ Accounting entry

Debit 632 Costs of goods sold

Credit 155 Finished goods

Debit 131 Trade receivables

Credit 511 Revenues

Credit 3331 Value Added Tax (VAT)

39
*Some transactions arise that increase receivables
Transaction 2:
Receipt No. X, A paid the monthly debt.
+ Related original documents: Receipt X
Table 3_Receipt

Form: 01-TT
Company:
(According to Circular No. 200/2014/TT-BTC
Adrress:
Dated december 22nd 2014 of the Ministry of Finance)
RECEIPT
No: Account:
Date: Crsp acct:
Payer:
Address:
For:
Amount:
In words:
Enclosure: document(s)

Chief accountant Settlement account Cashier Payer

(Sign, full name) (Sign, full name) (Sign, full name) (Sign, full name)
Received the amount (in words):
Date:
+ Accounting entry

Debit 111 Cash

Credit 131 Trade receivables

Transaction 3:

Bank credit notice number X, A repays the debt for goods.

+ Related original documents: X

Table 4_Bank credit notice

Company: Form: 01-TT

40
 (According to Circular No. 200/2014/TT-BTC
Adrress:
Dated december 22nd 2014 of the Ministry of Finance)
BANK CREDIT NOTICE
Date: Book no:
Number:
Payer:
Company:
Address:
Reason:
Amount:
Enclosure: document(s)
Director Chief accountant Payer Prepared by Cashier
(Sign, full name) (Sign, full name) (Sign, full name) (Sign, full name) (Sign, full name)
Received the amount (in words):
In words:

+ foreign exchange rate (or gold)

+ exchanged money

+ Accounting entry

Debit 112 Cash in banks

Credit 131 Trade receivables

* Accounting details of payments with customers at the Company

- Account used: Account 131 “Customer receivables”

- Payment details book is opened for each customer

- Basis of recording method: Based on sales invoices and payment documents, each
original document is recorded in 1 line on the detailed book in chronological order. At the end
of the month, add 131 to the detailed book. The data is recorded in the corresponding detailed
account summary book.

Table 5_Detailed customer tracking book

Company Form S31-DN

41
 Adress

(According to Circular No. 200/2014/TT-BTC

dated december 22nd 2014 of the Ministry of Finance)

DETAILED CUSTOMER TRACKING BOOK

(Account: 131, 331)

Currency: VND

Voucher Ref. Discounted Arising amount Balance

Date Description
No Date account term Dr Cr Dr Cr

A B C D E F 1 2 3 4

- Opening balance
- Arising amount

- Total arising x x x

- Closing balance x x x

There are 01 pages in this book, numbered from page 01 to page 01

Date opened:

Date…/…/…
Director
Prepared by Chief accountant
(Sign, full name)
(Sign, full name) (Sign, full name)

On a daily basis, the accountant records transactions from original documents like sales
invoices and receipts. These transactions are then used to prepare bookkeeping documents,
including a register of book-entry vouchers. Original documents are also recorded daily in
detailed books for each subject. At the end of the period, data from the recording vouchers is
added to the ledger, along with information from the detailed books. The total from the ledger
is transferred to a detailed summary table.

- Recording vouchers:

+ Is a separate-sheet diary reflecting economic and financial transactions arising during the
period in chronological order

42
+ Can be prepared according to original documents, can be prepared according to accounts,
can be prepared according to periods or can be prepared according to periods combined
according to economic and professional content

+ Only has legal value when attached to original documents

Table 6_ Recording vouchers for customers

Company Form S02a-DN

Adress (According to Circular No. 200/2014/TT BTC

dated december 22nd 2014 of the Ministry of

Finance)

RECORDING VOUCHERS

No:

Date…./..../ ....

Account number
Description Amount Note
Debit Credit

A B C 1 D

Total x x x

Attached with... original documents

Date .../ ... ...

Prepared by Chief accountant Legal representative
(Sign, full name) (Sign, full name) (Sign, full name)

The completed book-entry vouchers are checked, approved by the chief accountant and then
transferred to the general accountant to be recorded in the book-entry voucher registration
book.

- Register of recording documents:

43
+ Is a journal book used to reflect the accounting documents created during the period and to
compare data with the balance sheet.

+ Basis of recording method: Based on the book-recording vouchers created during the
period, each book-recording voucher is recorded in 1 line on the book-recording voucher
register in chronological order. At the end of the month, add the register of bookkeeping
documents, the data must match the balance sheet arising in the same month.

Table 7_ Register of accounting vouchers for customers

Form S02b-DN
(According to Circular No. 200/2014/TT BTC
Company
dated december 22nd 2014 of the Ministry of Finance)
Address

REGISTER OF ACCOUNTING VOUVHERS FOR CUSTOMERS

Year…

Vouchers Vouchers
Amount Amount
No. Date No. Date

A B 1 A B 1

- Total amount - Total amount

- Accumulated amount - Accumulated amount

There are 01 pages in this book, numbered from page 01 to page 01

Date opened:...

Date .../ ... ...

Prepared by Chief accountant Legal representative
(Sign, full name) (Sign, full name) (Sign, full name)

- General Ledger

44
 Basis of Recording Method: Based on the documented evidence registered in the journal
after being recorded in the journal of registered vouchers, accountants sequentially record
related accounts in the General Ledger according to the chronological order. At the end of the
month, the General Ledger is totaled, and the account figures are recorded in the balance sheet
of arising numbers.

Table 7_ General ledger

Company: Form S03b-DN

(According to Circular No. 200/2014/TT BTC
Address
dated december 22nd 2014 of the Ministry of Finance)

GENERAL LEDGER

Year…
Account…

Voucher General ledger Amount

Ref.
Date Description
Account
No. Date Page Line Dr Cr

A B C D E G H 1 2

- Balance at the
beginning of the year

- Number arising during

the month

- Add monthly numbers

- Balance at the end of

the month

- Cumulative addition
from the beginning of

45
 the quarter

There are 01 pages in this book, numbered from page 01 to page 01

- Opened date

Date .../ ... ...

Prepared by Chief accountant Legal representative
(Sign, full name) (Sign, full name) (Sign, full name)

46