CIRCULAR

AMENDING AND SUPPLEMENTING THE ENTERPRISE ACCOUNTING REGIME

THE MINISTRY OF FINANCE

Pursuant to the June 17, 2003 Accounting Law;
Pursuant to the Government's Decree No. 129/2004/ND-CPofMay31,2004, detailing and guiding a number of articles of the Accounting Law concerning business activities;
Pursuant to the Government's Decree No. 123/2008/ND-CP of December 8, 2008, detailing and guiding a number of articles of the Law on Value-Added Tax;
Pursuant to the Government's Decree No. 124/2008/ND-CP of December II. 2008, detailing and guiding a number of articles of the Law on Enterprise Income lax;
The Ministry of Finance guides revision of the accounting of some economic operations and supplementation of the accounting of newly arising economic operations not yet regulated by the enterprise accounting regime as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular guides accounting applicable to enterprises in all fields and of all economic sectors nationwide.

Article 2. Accounting regime applicable to foreign contractors

Foreign organizations and individuals conducting production and business on the basis of contracts, agreements or commitments with Vietnamese organizations or individuals (referred to as foreign contractors) and having permanent establishments in Vietnam shall implement accounting under the Accounting Law, the system of accounting standards and the enterprise accounting regime of Vietnam. If they do not need to make any revision or supplementation, they are not required to register the applied accounting regime with the Ministry of Finance and should only notify this to local tax agencies with which they have registered tax payment.

Article 3. Submission of financial statements by enterprises in export processing zones, industrial parks and hi-tech parks

Enterprises (both domestic and foreign - invested) based in export processing zones, industrial parks or hi-tech parks shall, in addition to submitting annual financial statements to concerned agencies under the financial statement regime issued together with Decision No. 15/2006/QD-BTC, submit annual financial statements to the management boards of export processing zones, industrial parks or hi-tech parks as requested.

Chapter II

ACCOUNTING MONETARY UNIT

Article 4. Accounting monetary unit

"Accounting monetary unit" is Vietnam dong (having the national sign "" and international sign "VND"), used for recording accounting books and making and presenting financial statements of enterprises. An accounting unit that collects revenues and makes expenditures mainly in foreign currency may choose a foreign currency prescribed by the Ministry of Finance as a monetary unit for recording accounting books and making and presenting financial statements.

Article 5. Selection of accounting monetary units by enterprises and organizations with foreign capital

1. Enterprises and organizations with foreign capital (collectively referred to as enterprises) that collect revenues and make expenditures mainly in foreign currency shall, in pursuance to the Accounting Law, consider and decide to select their accounting monetary units and take responsibility for such decision before law. Once selecting an accounting monetary unit, enterprises shall notify it to their managing tax agencies.

2. When selecting an accounting monetary unit, enterprises must meet all the following criteria:

- Such monetary unit must be mainly used in their goods sale and service provision transactions, greatly affect the selling prices of goods and services and normally be the one used in taking decisions on selling prices of goods;

- Such monetary unit must be mainly used in their purchase of goods and services and normally be the one used for computing revenues and labor costs and purchasing materials, goods and services.

3. An enterprise whose parent company is based overseas may only use the accounting monetary unit used by its parent company when falling into any of the following cases:

- It is established mainly for the purpose of producing and processing products for its parent company, with most of raw materials bought from and products exported and sold by its parent company;

- The proportion of its operations to its parent company's or that of its business transactions conducted in the accounting monetary unit used by its parent company is material (over 70%).

Article 6. Conversion of financial statements made in the accounting monetary unit being foreign currency into Vietnam dong for submission to state management agencies

1 Enterprises and organizations with foreign capital established and operating in Vietnam and using foreign currency as accounting monetary unit shall concurrently make financial statements in the accounting monetary unit (foreign currency) and convert these statements into Vietnam dong for submission to state management agencies.

2. Principle for conversion of financial statements made in an accounting monetary unit being foreign currency into Vietnam dong

All items in the financial statements of enterprises (including reported and comparison data) shall be converted at the inter-bank average exchange rate on the final date of the accounting period. If such exchange rate is not available on the final dale of the accounting period, the inter- ­bank average exchange rate of the dale preceding the final day of the accounting period may be used.

Article 7. Audit of financial statements in which an accounting monetary unit being foreign currency is used

Financial statements in which an accounting monetary unit being foreign currency is used must be audited. Once converted into Vietnam dong, these statements arc not required to be audited but only need to be certified by auditors of the exchange rate used in the conversion and the preciseness of the conversion.

Article 8. Change of accounting monetary units

1. When there are major changes in managerial and business operations resulting in the accounting monetary unit used in economic transactions failing to satisfy the criteria specified in Clause 2, Article 5. Chapter II of this Circular, enterprises may change their accounting monetary units. The change of a monetary unit for recording accounting books to another may be effected only at the beginning of a new accounting year. Enterprises shall notify their managing tax agencies of this change within 10 working days after the final day of the accounting year.

2. Exchange rate applicable to items in the balance sheet upon change of the accounting monetary unit:

The items in the balance sheet shall be converted into the new accounting monetary unit at the inter-bank average exchange rate on the date of change of the accounting monetary unit.

3. Presentation of comparison information upon change of the accounting monetary unit

In the first accounting period following the change of the accounting monetary unit, enterprises shall make financial statements using the new accounting monetary unit and re-present data on comparison information (the column "Figures at beginning of year" in the balance sheet and the column "Previous year" in the report  on business results and the cash flow report), specifically:

- The column "Figures at beginning of year" in the balance sheet shall be presented based on the balance sheet made at the beginning of a fiscal year (time of change of the accounting monetary unit) by using the inter-bank average exchange rate on the date of change of the accounting monetary unit.

- The column "Previous year" in the report on business results and the cash flow report shall be presented based on the report on business results and the cash flow report made at the beginning of a year by using the inter-bank average exchange rate of the year preceding the year of change of the accounting monetary unit.

Article 9. Notes to the financial statements

When converting financial statements (made in a foreign currency) into Vietnam dong or when changing the accounting monetary unit, enterprises shall clearly state in the notes to the financial statements the reason for such change and impacts (if any) on financial statements exerted by the conversion of financial statements from a foreign currency into Vietnam dong or change of the accounting monetary unit.

Chapter III

GUIDANCE ON THE IMPLEMENTATION OF THE ACCOUNTING REGIME BY FOREIGN CONTRACTORS

Article 10. Principles of application of the accounting regime

Foreign contracts shall:

1. Base themselves on the provisions of the Accounting Law. Vietnam's enterprise accounting regime and this Circular to organize accounting for each contract (contracting license) as a basis for contract and tax finalization with the Vietnamese State.

2. When applying Vietnam's accounting regime, they may select to apply a chart of accounts, documents, accounting books and forms of accounting books suitable to their operation characteristics and fully meeting their and the Vietnamese State's management requirements (particularly tax administration requirements), specifically:

- In case foreign contractors pay both value-added tax and enterprise income tax by the presumption method, they shall base themselves on Vietnam's enterprise accounting regime to select and apply appropriately a chart of accounts, documents and forms of accounting books to meet their management requirements.

- In case foreign contractors pay value-added tax by the credit method and enterprise income tax by the method of revenues minus (-) expenses or by the presumption method, they shall select and apply accounts reflecting assets, liabilities, capital sources, revenues and expenses and deter­mine relevant results according to the enterprise accounting regime in order to meet the Vietnamese Slate's tax administration requirements and their own management requirements.

3. When wishing to make supplementation or modification (of contents mentioned in Article 11 below), foreign contractors shall register these modified or supplemented contents (enclosed with detailed explanations) and may only realize them after obtaining written approval of the Ministry of Finance. Within 15 (working) days after receiving complete dossiers, the Ministry of Finance shall issue written replies to registering foreign contractors.

Article 11. Modified and supplemented contents of the accounting regime to be registered with the Ministry of Finance

1. Modified contents and structure of compulsory accounting documents;

2. Supplementation or modification of level-I or level-II accounts in terms of name, code and content and method of accounting particular economic transactions that arise:

3. Modification of items in financial statements or change of the structure and method of making financial statements.

Article 12. Provisions on making and submission of financial statements and audit of financial statements

Foreign contractors shall make balance sheets (according to a set form) and notes to the financial statements. Those that pay value-added tax by the credit method and enterprise income tax by the method of revenues minus (-) expenses, shall also make reports on business results. The State encourages foreign contractors to have their financial statements audited for tax purposes (excluding those declaring and paying tax by the presumption method). Foreign contractors shall submit their financial statements to provincial-level Tax Departments, agencies issuing contracting permits or operation licenses, and provincial-level Statistics Offices.

Chapter IV

GUIDANCE ON MODIFICATION AND SUPPLEMENTATION OF METHODS OF ACOUNTING SOME OTHER ECONOMIC OPERATIONS

Article 13. Accounting of expenses for share issuance

1. For joint-stock companies transformed from enterprises with 100% state capital, expenses for share issuance shall be accounted under Circular No. 106/2008/TT-BTC of November 18, 2008, of the Ministry of Finance.

2. For joint-stock companies issuing shares and recognizing expenses directly related to share issuance, record:

Debit account 4112 - Equity surplus

Credit accounts 111. 112...

Article 14. Accounting of increase and decrease of investment capital of owners in join-stock companies

1. Accounting of increase of investment capital of owners

1.1. General provisions:

- Increase of investment capital of owners (equity) additionally guided in this Circular includes additional issuance of shares to the public without collection of money, such as additional issuance of shares from equity surplus, from the development investment fund, from undistributed after-tax earnings (payment of dividends in shares) and from reward and welfare funds.

- In all cases of additional issuance of shares without collection of money, joint-stock companies shall carry out all procedures provided by law. Once an additional issuance of shares is adopted by the shareholders' general meeting and approved by competent authorities, joint-stock companies shall record it in accounting books so as to adjust their equity under the approved plan.

1.2. Accounting of specific operations:

- In case a joint-stock company is allowed to additionally issue shares from its equity surplus and implement accounting based on related accounting records and documents, record:

Debit account 4112 - Equity surplus

Credit account 4111 - Investment capital of owners.

- In case a joint-stock company is allowed to issue bonus shares from its development investment fund, record:

Debit account 414 - Development investment fund

Credit account 4111 - Investment capital of owners

Credit account 4112 - Equity surplus (if any).

- In case a joint-stock company is allowed to issue bonus shares from undistributed after-tax earnings (paying dividends in shares), record:

Debit account 421 - Undistributed after-tax earnings

Credit account 4111 - Investment capital of owners;

Credit account 4112 - Equity surplus (if any).

- In case a joint-stock company is allowed to additionally issue shares from its reward fund to increase investment capital of owners, record:

Debit account 3531 - Reward fund

Debit account 4112 - Equity surplus (difference between selling price lower than par value, if any)

Credit account 4111 - Investment capital of owners

Credit account 4112 - Equity surplus (difference between selling price higher than par value - if any).

2. Accounting of decrease of investment capital of owners

In all cases of decrease of investment capital of owners, joint-stock companies shall carry out all procedures as provided by law. Once adopted by the shareholders' general meeting and approved by competent authorities, joint-stock companies shall record it in accounting books so as to adjust their equity under the approved plan. Cases of decrease of investment capital of owners (equity capital), such as redemption and cancellation of fund shares; and cancellation of fund shares comply with Decision No. 15/2006/QD-13TC of March 20, 2006, of the Minister of Finance.

Article 15. Accounting in case investors receive shares from the increase of investment capital of owners by join-stock companies

1. When investors receive additional shares without having to pay any money since joint-stock companies use equity surplus, funds of owners' capital and undistributed after-tax earnings (dividing dividends in shares) in order to increase investment capital of owners, investors shall only monitor the increased quantity of shares on the notes to the financial statements without recognizing the value of received shares, financial revenues and increase of the value of investments in joint-stock companies.

2. The provisions of Clause 1 of this Article apply from the financial year 2010 on.

Article 16. Accounting of recognition of revenues from management charges

To add account 5118- Other revenues.

This account shall be used to reflect such revenues as management charges paid by subordinate units and revenues other than revenues from sale of goods, sale of semi-­finished products, provision of services, government grants and price subsidies, and revenues from real estate investment dealings.

Periodically, superior units shall recognize revenues from management charges paid by subordinates. Accountants shall record:

Debit account 131 - Receivables from customers (management charges collected from subsidiaries)

Debit account 136 - Internal receivables (management charges collected from member companies, subordinate units)

Debit accounts 111. 112 (if cash is collected at once)

Credit account 5118 - Other revenues

Article 17. Accounting of unemployment insurance

To add account 3389 - Unemployment insurance

This account shall be used to reflect the situation of deduction and payment of unemployment insurance contributions for employees in a unit under the unemployment insurance law. Enterprises shall open detailed accounting books to separately monitor and finalize unemployment insurance.

Structure and contents of account 3389 -Unemployment insurance

Debit side: Unemployment insurance amounts already paid to the unemployment insurance fund-managing agency.

Credit side:

- Deduction of unemployment insurance contributions as production, business expenses

- Deduct ion of unemployment insurance contributions from workers' and employees' salaries.

Balance on the Credit side: Deducted unemployment insurance contributions not yet paid to the unemployment insurance fund-managing agency.

Method of accounting some major economic operations

- Periodically deducting unemployment insurance contributions as production, business expenses, record:

Debit accounts 622. 627, 641, 642...

Credit account 338 - Other payables (3389).

- Calculating unemployment insurance amounts subtracted from workers' and employees' wages, record:

Debit account 334 - Payables to employees

Credit account 338 - Other payables (3389).

- When paying unemployment insurance contributions to the unemployment insurance fund-managing agency, record:

Debit account 338 - Other payables (3389)

Credit accounts 111, 112.

Article 18. Accounting of reward and welfare funds

1. To change the code of account 431 - Reward and welfare funds

- To change the code of account 431 - Reward and welfare funds into account 353 - Reward and welfare funds;

- To change the code of account 4311 -Reward fund into account 3531 - Reward fund;

- To change the code of account 4312 -Welfare fund into account 3532 - Welfare fund:

- To change the code of account 4313 -Reward fund used for fixed assets acquisition into account 3533 - Reward fund used for fixed assets acquisition.

The structure, contents and method of accounting of account 353 - Reward and welfare funds are unchanged compared to account 431.

2. To add account 3534 - Reward fund for the company's management and executive board

To move the content reflecting the reward fund for the company's management and executive board from account 418 - Other funds of owners' capital to account 3534 - Reward fund for the company's management and executive board. The method of accounting the reward fund for the company's management and executive board on account 3534 is similar to that stipulated for account 418.

Article 19. Accounting of the scientific and technological development fund

To add account 356 - Scientific and technological development fund

This account shall be used to reflect the existing amount and situation of increase and decrease of the scientific and technological development fund of an enterprise. This fund may be used only for scientific and technological investments in Vietnam.

Accounting of this account should respect the following provisions:

- The formation and use of this fund must comply with law.

- This fund shall be accounted as enterprise management expenses to determine business results in a period. Annually, enterprises shall determine by themselves their scientific and technological funds under law and make reports on the formation and use of these funds, and declare the level and amount of money used for the formation in enterprise income tax finalization declarations. Such report shall be submitted together with enterprise income tax finalization declarations.

Structure and content of account 356 -Scientific and technological development fund:

Debit side:

- Expenses from the fund.

- Decrease of the fund already used for fixed assets acquisition when calculating depreciation of fixed assets, residual value of fixed assets upon sale, liquidation, expenses for liquidation fiom fixed assets acquired from this fund.

- Decrease of the fund already used for fixed assets acquisition when fixed assets acquired from this fund are shifted to serve production, business purposes.

Credit side:

- Deductions for forming I lie fund as enterprise management expenses.

- Proceeds from the liquidation and sale of fixed asses acquired from the fund used for fixed assets acquisition.

Credit side balance: The remaining scientific and technological development fund of the enterprise at the end of the reporting period

Account 356 - Scientific and technological development fund, has two secondary accounts:

Account 3561 - Scientific and technological development fund, reflecting the existing amount and situation of formation and use of the fund:

Account 3562 - Scientific and technological development fund used for fixed assets acquisition, reflecting the existing fund and the situation of increase and decrease of the fund used for fixed assets acquisition (scientific and technological development fund already used for fixed assets acquisition).

Method of accounting some major economic operations

- In a year, when making deductions to form the scientific and technological development fund, record:

Debit account 642 - Enterprise management expenses

Credit account 356 - Scientific and technological development fund.

- When spending the fund for scientific and technological research and development objectives of the enterprise, record:

Debit account 356 - Scientific and technological development fund.

Debit account 133 - Creditable value-added tax (if any)

Credit accounts 111, 112, 331...

- When investing in and procuring fixed assets from the scientific and technological development fund used for scientific and technological research and development purposes, record:

Debit account 211. 213 (historical costs)

Debit account 133 - Creditable value-added tax (if any)

Credit accounts 111, 112, 331... Concurrently record:

Debit account 3561 - Scientific and technological development fund

Credit account 3562- Scientific and technological development fund used for fixed assets acquisition

- At the end of an accounting period, calculate the depreciation of fixed assets invested in or formed with the scientific and technological development fund used for scientific and technological research and development purposes, record:

Debit account 3562 - Scientific and technological development fund used for fixed assets acquisition

Credit account 214 - Depreciation of fixed assets.

- When liquidating or selling fixed assets invested in and procured with the scientific and technological development fund.

+ Record the decrease of fixed assets liquidated and sold:

Debit account 3562 - Scientific and technological development fund used for fixed assets acquisition (residual value)

Debit account 214 - Depreciation of fixed assets (depreciated value)

Credit accounts 211, 213.

+ Record the proceeds from the liquidation and sale of fixed assets:

Debit accounts 111, 112 and 131

Credit account 3561 - Scientific and technological development fund

Credit account 3331- Payable valued-added tax (33311).

+ Record expenses directly related to the liquidation and sale of fixed assets:

Debit account 3561 - Scientific and technological development fund

Debit account 133 - Creditable valued-added tax

Credit accounts 111, 112, 331.

- When fixed assets acquired from the scientific and technological development fund arc shifted to serve production and business upon completion of the process of scientific and technological research and development, accountants shall record:

Debit account 3562 - Scientific and technological development fund used for fixed assets acquisition (residual value of acquired fixed assets not yet fully depreciated)

Credit account 711 - Other incomes.

From the time fixed assets are shifted to serve production and business, their depreciation shall be included in production and business costs according to the current enterprise accounting regime.

Article 20. Accounting of internally consumed products, goods and services

Internally consumed products, goods and services are those produced or provided by a business establishment and used or consumed within the establishment, excluding those used for continuing its production and business process. The determination of creditable value-added tax, payable value-added tax and the declaration of value-added tax and enterprise income tax comply with tax laws.

- If products, goods and services subject to payment of value-added tax by the credit method are used internally for the production and trading of goods and the provision of services which are subject to payment of value-added tax by the credit method, when delivering them for internal use, accountants shall reflect revenues from the sale of goods for internal use according to their production costs or costs of goods sold, and record:

Debit accounts 623, 627, 641, 642 (production costs or costs of goods sold)

Credit account 512 - Revenues from internal sale of goods.

Concurrently, accountants shall declare value added tax for products, goods and services already internally used, and record:

Debit account 133 - Creditable value-added tax

Credit account 3331 - Payable value-added tax (33311).

- If products, goods and services subject to payment of value-added tax by the credit method are used internally for the production and trading of goods and the provision of services which are not subject to value-added tax or are subject to payment of value-added tax by the direct method, when delivering them for internal use, accountants shall reflect revenues from the sale of goods for internal use according to their production costs or costs of goods sold, and record:

Debit accounts 623, 627, 641, 642... (production costs or costs of goods plus (+) output value-added tax)

Credit account 512 - Revenues from internal sale of goods (production costs or costs of goods)

Credit account 3331 - Payable value-added tax (33311).

Article 21. Additional guidance on the method of accounting differences resulting from the re-valuation of assets when parent companies contribute non-monetary assets as capital to subsidiaries

When a parent company contribute inventories or fixed assets as capital to a subsidiary (rather than payment upon enterprise acquisition in business consolidation transactions), it shall recognize the difference between the book value (for inventories) or residual value (for fixed assets) and the valuated value of contributed assets, which are re-valuated by the involved parties, as other incomes or other expenses. The subsidiary, when receiving the assets contributed as capital by the parent company, shall record the increase of investment capital of owners and received assets using the price agreed upon by the parties.

- In case the book value (for inventories) or the residual value (for fixed assets) contributed as capital is smaller than the value re-valuated by the parties, accountants shall reflect the difference resulting from the asset re-valuation as other incomes, and record:

Debit account 221 - Investment in subsidiaries Debit account 214 - Depreciation of fixed assets

Credit accounts 211, 213, 217 (if fixed assets or invested real estate are contributed as capital)

Credit accounts 152, 153, 155 and 156 (if inventories are contributed as capital)

Credit account 711 - Other incomes (increase difference resulting from asset re-valuation).

- In case the book value or the residual value of assets contributed as capital is larger than the value re-valuated by the parties, accountants shall reflect the difference resulting from the asset re­valuation into other expenses, and record:

Debit account 221 - Investment in subsidiaries

Debit account 214 - Depreciation of fixed assets

Credit account 811 - Other expenses (decrease difference resulting from re-valuation)

Credit accounts 211, 213, 217 (if fixed assets or invested real estate are contributed as capital)

Credit accounts 152, 153, 155 and 156 (if inventories arc contributed as capital).

Article 22. Guidance on modification and .supplementation of accounting methods for some transactions between joint-venture capital contributors and jointly controlled business establishments

To modify and supplement accounting methods when joint-venture capital contributors contribute non-monetary assets as capital to jointly controlled business establishments or sell goods to these establishments as follows:

1. On separate financial statements of joint-venture capital contributors

1.1. In case joint-venture capital contributors contribute non-monetary assets as capital to jointly controlled business establishments

When contributing non-monetary assets as capital (inventories, fixed assets...) to jointly controlled business establishments, contributors shall recognize the whole difference between there-valuated value (agreed upon by the parties) larger than the book value of contributed non-monetary assets as other incomes, and record:

- In case the re-valuated value of inventories contributed as capital is larger than the book value, record:

Debit account 222 - Contributed joint-venture capital (re-valuated value)

Credit account 152, 153, 155, 156 and 611 (book value)

Credit account 711 - Other incomes (difference between the re-valuated value larger than the book value of supplies and goods contributed as capital).

- In case the re-valuated value of fixed assets contributed as capital is larger than the book value:

Debit account 222 - Contributed joint-venture capital (re-valuated value)

Debit account 214 - Depreciation of fixed assets (depreciated value)

Credit accounts 211, 213 and 217 (historical cost)

Credit account 711 - Other incomes (difference between the re-valuated value larger than the book value of fixed assets contributed as capital).

In case the re-valuated value (agreed upon by the parties) of non-monetary assets contributed as joint-venture capital is smaller than the book value, accountants shall comply with the provisions of the current enterprise accounting regime.

1.2. In case joint-venture capital contributors sell inventories and fixed assets to jointly controlled business establishments

- Revenues, cost of goods sold, other incomes, other expenses arising from the sale by joint-venture capital contributors of inventories and fixed assets to jointly controlled business establishments shall be accounted according to the current enterprise accounting regime.

- At the end of a period, accountants shall carry over all revenues and other incomes arising from the sale by joint-venture capital contributors of inventories and fixed assets to jointly controlled business establishments (without deferring the benefit amount corresponding to their ownership rate in jointly controlled business establishments), and record:

Debit account 511- Revenues from the sale of goods and provision of services

Debit account 711- Other incomes

Credit account 911- Determination of business results.

2. On consolidated financial statements of joint-venture capital contributors

2.1. In case of contributing inventories as capital to or sell inventories to jointly controlled business establishments

a/ Recognize unrealized revenues corresponding to earnings of the joint-venture capital contributors arising from the transaction of contributing inventories as capital or selling inventories in a period.

At the end of the period, when making consolidated financial statements, joint-venture capital contributors shall base themselves on the value of inventories contributed as capital or sold (at a profit) to jointly controlled business establishments in the period but the latter have not yet sold these goods to independent third parties, joint-venture capital contributors shall reflect the deferment and recognize as unrealized revenues the earnings from the contribution as capital or sale of inventories corresponding to their benefit amount in the joint ventures. Adjustment entries shall be made on the summary table of adjusted items as follows:

- In case of contributing inventories as capital at a profit:

Debit Other revenues (deferred earnings from the contribution of inventories as capital corresponding to the benefit amount in the joint venture)

Credit Unrealized revenues.

- In case of selling inventories at a profit:

Debit Revenues from the sale of goods and provision of services (deferred earnings from the sale of inventories corresponding to the benefit amount in the joint venture)

Credit Unrealized revenues.

b/ When jointly controlled business establishments sell inventories (contributed as capital or sold by joint-venture capital contributors) to third parties in the subsequent period:

- Recognize unrealized revenues at the beginning of the period: On the basis of unrealized earnings related to inventories not yet sold by the jointly controlled business establishment to a third party at the end of the previous period, accountants shall recognize as unrealized revenue the deferred earnings corresponding to the benefit amount in the joint venture at the beginning of the period:

Debit Undistributed after-tax earnings (unrealized earnings at the beginning of the period)

Credit Unrealized revenues.

- Recognize earnings realized in the period: On the basis of inventories already sold by the jointly controlled business establishment to a third party in the period, accountants shall carry over the unrealized revenues to revenues from the sale of goods and provision of services or other incomes for determining business results in the period:

Debit Unrealized revenues

Credit Revenues from the sale of goods and provision of services (for sale of inventories)

Credit Other revenues (for inventories contributed as capital).

c/ Adjusting impacts of deferred enterprise income tax:

- Recognize the deferred tax asset as a result of recognizing unrealized revenues arising from the transaction of contributing inventories as capital or selling inventories to the jointly controlled business establishment in the period:

At the end of an accounting period, when making consolidated financial statements, accountants shall base themselves on unrealized revenues recognized in the period to recognize the deferred tax asset arising in the period:

Debit Deferred enterprise income tax asset

Credit Deferred enterprise income tax expense.

- Recognize the deferred income tax asset as a result of recognizing unrealized revenues at the beginning of the period: On the basis of unrealized revenues at the beginning of the period, accountants shall recognize the deferred tax asset at the beginning of the period:

Debit Deferred income tax asset

Credit Undistributed after-tax earnings.

- Return of the deferred tax asset as a result of the carry-over of unrealized revenues arising in the period in the reports on business results: On the basis of unrealized revenues carried over to revenues from the sale of goods and provision of services or other incomes when the jointly controlled business establishment sells goods to a third party in the period, accountants shall return the deferred tax asset corresponding to the unrealized revenues changed to realized ones in the period:

Debit Deferred enterprise income tax expense Credit Deferred income tax asset.

2.2. In case of contributing fixed assets as capital or selling fixed assets to jointly controlled business establishments

a/ Recognizing unrealized revenues corresponding to the earnings of joint-venture capital contributors from the transaction of contributing fixed assets as capital or selling fixed assets in a period

At the end of the period, when making consolidated financial statements, joint-venture capital contributors shall base themselves on the unrealized earnings arising from the transaction of contributing fixed assets as capital or selling them (at a profit) to jointly controlled business establishments in the period and the duration of fixed asset depreciation applied by the jointly controlled business establishments. They shall reflect the deferment and recognize as unrealized revenues the earnings from the contribution as capital or sale of fixed assets corresponding to their earnings in the joint ventures. Adjustment entries shall be made on the summary table of adjusted items as follows:

Debit Other incomes (deferred earnings from the contribution of fixed assets as capital corresponding to the benefit amount in the joint venture)

Credit Unrealized revenues.

b/ When jointly controlled business establishments depreciate fixed assets contributed as capital by or bought from joint-venture capital contributors in the subsequent period:

- Recognize unrealized revenues at the beginning of a period: On the basis of the unrealized earnings related to fixed assets which the jointly controlled business establishment has received as capital contribution or bought in the previous period, accountants shall recognize as unrealized revenues the deferred earnings corresponding to the benefit amount in the joint venture at the beginning of the period.

Debit Undistributed after-tax earnings (unrealized earnings at the beginning of the period)

Credit Unrealized revenues.

- Recognize earnings already realized in a period: On the basis of the period of fixed asset depreciation applied by jointly controlled business establishments, accountants shall gradually allocate unrealized revenues into other incomes for determining business results in the period:

Debit Unrealized revenues

Credit Other incomes.

c/ Adjusting impacts of deferred enterprise income tax:

- Recognize the deferred tax asset as a result of recognizing unrealized revenues arising from the transaction of contributing fixed assets as capital or selling fixed assets to the jointly controlled business establishment in the period:

At the end of an accounting period, when making consolidated financial statements, accountants shall base themselves on unrealized revenues recognized in the period to recognize the deferred tax asset arising in the period:

Debit Deferred enterprise income lax asset

Credit Deferred enterprise income tax expense.

- Recognize the deferred income lax asset as a result of recognizing unrealized revenues at the beginning of the subsequent period: ()n the basis of unrealized revenues at the beginning of the period, accountants shall recognize the deferred tax asset at the beginning of the period:

Debit Deferred income tax asset

Credit Undistributed after-tax earnings.

- Return of the deferred tax asset as a result of the allocation of unrealized revenues arising in the period in the reports on business results: On the basis of unrealized revenues allocated to other incomes when the jointly controlled business establishment depreciates the fixed assets in the period, accountants shall return the deferred lax asset corresponding to the unrealized revenues changed to realized ones in the period:

Debit Deferred enterprise income tax expense

Credit Deferred income tax asset.

Article 23. Guidance on supplementation of accounting methods for the re-valuation of assets and conversion of the balance on accounting books, presentation of financial statements upon transformation of enterprise ownership

1. Cases of transformation of enterprises with 100% stale capital into joint-stock companies

Enterprises shall practice accounting under Circular No. 106/2008/TT-BTC of November 18, 2008, of the Ministry of Finance guiding accoun­ting work upon transformation of enterprises with 100%' state capital into joint-stock companies.

2. Cases of transformation into other forms of enterprise ownership

2.1. Accounting of re-valuation of assets

In case enterprises are allowed to re-valuate their value al the time of transformation under law. accountants shall recognize differences resulting from the re-valuation as other incomes or other expenses, recording:

- For increases from the re-valuation of assets, record:

Debit related accounts

Credit account 711 - Other incomes

- For decreases from the re-valuation of assets, record:

Debit account 811 - Other expenses

Credit related accounts.

Incomes liable to enterprise income tax and reasonable expenses for deducting enterprise income tax shall be determined under the enterprise income tax law.

2.2. Conversion of the balance on accounting books and presentation of financial statements

When transforming their form of ownership, enterprises shall close accounting books and make financial statements under law. In the first accounting period after transformation, enterprises shall record accounting books and present financial statements on the following principles:

- For accounting books reflecting assets, liabilities and owners' capital: All the balances of assets, liabilities and owner capital on accounting books of the old enterprise shall be recognized as arising figures on accounting books of the new enterprise. The line for recording the balance at beginning of period on accounting books of the new enterprise has no data.

- For balance sheets: All the balances of assets, liabilities and owners' capital taken over from the old enterprise before transformation shall be recognized as newly arising figures of the new enterprises and presented in the column "Year-end figures." The column "Figures at beginning of year" has no data.

- For reports on business results: To present only data from the time of transformation to the end of the first reporting period in the column "Current year." The column "Previous year" has no data.

- For reports on cash How: To present only data from the time of transformation to the end of the first reporting period in the column "Current year." The column "Previous year" has no data.

Article 24. Modification of the second pan-System of financial statements of the enterprise accounting regime promulgated together with Decision No. 15/200C/QD-BTC of March 20, 2006, of the Minister of Finance

1. Modifying and supplementing some items in the balance sheet

- To change the code of the item "Reward and welfare funds"- code 431 in the balance sheet into code 323 in the balance sheet. Data to be recorded in this item arc the Credit balance on account 353- Reward and welfare funds" in the ledger or ledger log.

- To add the item "Unrealized revenues" -code 338 in the balance sheet. This item reflects revenues unrealized at the time of reporting. Data to be recorded in this item are the Credit balance in account 3387- Unrealized revenues, in the detailed accounting book of account 3387.

- To change the item "Pre-payment by buyers"- code 313 in the balance sheet. This item reflects total sums of money prepaid by buyers for assets, goods, invested real estate and services at the time of reporting. This item does not reflect unrealized revenues (including revenues received in advance). Data to be recorded in this item are the Credit balance on account 131- Receivables from customers, opened for each customer in the detailed accounting book of account 131.

- To add the item "Scientific and technological development fund"- Code 339 in the balance sheet. This item reflects the scientific and technological development fund not yet used at the reporting time. Data to be recorded in this item are the Credit balance on account 356-Scientific and technological development fund, in the accounting book of account 356.

- To add the item "Enterprise reorganization support fund" - Code 422 in the balance sheet. This item reflects the enterprise reorganization support fund not yet used at the reporting time. Data to be recorded in this item are the Credit balance on account 417- Enterprise reorganization support fund, in the accounting book of account 417.

2. Modifying and supplementing notes to the financial statements

2.1. When using foreign currency for recording accounting books, making and presenting financial statements, an enterprise shall convert its financial statements into Vietnam dong under the guidance in Chapter II of this Circular. When explaining financial statements, for items with figures at beginning of year, arising in the year and at year end. if there are exchange rate differences resulting in the figures at beginning of year (converted at the exchange rate at the beginning of period) added (or subtracted) by figures arising in the year (converted at the exchange rate on the date of transaction) compatible with year-end figures (converted at the period-end exchange rate), additional information should be given on these exchange rate differences directly related to the explained item.

2.2. Modifying and supplementing Point 2 "Short-term financial investments"- Section V-Notes to the financial statement, as follows:

"2- Short-term financial investments	Year end		Beginning of year
	Quantity	Value	Quantity	Value
- Short-term investment shares (detailed by each type of share)	-	-	-	-
- Short-term investment bonds (detailed by each type of bond)	-	-	-	-
- Other short-term investments		-		-
- Provisions for devaluation of short-term investments		-		-
- Reason for change with respect to each investment/share/bond: + Quantity + Value."

2.3. Modifying and supplementing Point 13 "Other long-term investments"- Section V- Notes to the financial statement to elaborate on item 250 on the balance sheet as follows:

" 13- Long-term financial investments	Year end		Beginning of year
	Quantity	Value		Quantity
a/ Investments in subsidiaries (detailed by type of share of each subsidiary) Reason for change of each investment/type of share of subsidiary: + Quantity (of shares) + Value
b/ Investments in joint-venture companies and associated companies (detailed by share of each company) Reason for change of each investment/type of share of company: + Quantity (of shares) + Value
c/ Other long-term investments - Share investment - Bond investment - Bill investment - Long-term loans - Reason for change of each investment/type of share of share, bond: + Quantity (of shares, bonds) + Value."

Chapter V

ORGANIZATION OF IMPLEMENTATION

Article 25. This Circular takes effect 45 days from the date of its signing. Other relevant accounting matters not guided in this Circular comply with the enterprise accounting regime promulgated together with Decision No. 15/2006/QD-BTC of March 20, 2006, of the Minister of Finance. The accounting regime of construction and installation units promulgated together with Decision No. 1864/1998/QD-BTC of December 120, 1998, of the Ministry of Finance; provisions on accounting applicable to enterprises and organizations with foreign capital in Circulars No. 55/2002/TT-BTC of June 26, 2002, and No. 122/2004/TT-BTC of December 22, 2004, are no longer valid.

Article 26. Corporations and companies applying extraordinary accounting regimes promulgated under separate circulars or approved by the Ministry of Finance shall guide and revise these regimes in compliance with this Circular.

Article 27. Ministries and branches and People's Committees. Finance Departments and Tax Departments of provinces and centrally run cities shall guide enterprises in implementing this Circular. Any problems arising in the course of implementation should be reported to the Ministry of Finance for study and settlement.