Chapter 3

FIXED ASSETS
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 Research documents
Circular
Textbook,
200/2014/TT-
Chapter 4
BTC

Circular Other related

VAS 03, VAS
45/2013/TT- circulars and
04
BTC documents

7/28/2023 Accounting Faculty, Academy of Finance 2

 Research purposes
Students need to qualify these basic contents after
chapter 3:
1. Fixed assets accounting works;
2. Fixed assets accounting basic contents, including:
i. Classification
ii. Measurement
iii. Related accounting documents
iv. Account used
v. Related accounting processes
vi. Related accounting ledgers
vii. Disclosure

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 Research contents
1. Fixed assets accounting works;
2. Fixed assets reclassification and measurement;
3. Detail fixed assets accounting;
4. General fixed assets accounting;
5. Depreciation and amortisation;
6. Repair and mainternance;
7. Ledger used;
8. Disclosure

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 3.1. FIXED ASSETS ACCOUNTING WORKS

Role: - FA is 1 out of 3 main basic elements of

manufacturing processes;
- FA is very important to businesses.
Administrative requirements: should be
considered in 2 aspects: value and object.
FA accounting works: refer to page No.123 in
textbook.

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 3.2. CLASSIFICATION AND MEASUREMENT

3.2.1. Reclassification
Why do the accountant need to reclassify FA?
By physical appearance
Which ways
to reclassify By technical characteristic
FA?
By owner right
Others
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 By physical appearance

Tangible FA (VAS 03) Intangible FA (VAS 04)

Definition: textbook page 124

Recognition: An asset meeting all four recognition criteria below
shall be treated as a FA:
(a) it is probable that future economic benefits associated with the
item will flow to the entity;
(b) the historical cost of the item can be measured reliably;
(c) estimated useful life is at least 1 year; and
(d) it meets all value criteria as prescribed in regulations in force
(from and over 30 mils VND)
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 Buildings and structures
Machinery and equipment
Means of transportation and transmitters

Tangible FA Office equipment and furniture

Perennial plants, working and producing
animals
Others
By technical Land use rights
characteristic
Copy rights
Patents and inventions
Intangible FA Trademarks and trade names
Computer software
Licenses and franchises
Others
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 Owning (1)
Operating lease
By owner
right Renting (2) Financial lease
(VAS 06)
(1) FA is owned by the entity, it is bought or
built by entity’s resources.
(2) FA is not owned by the entity, and it is rented
by the entity for using purposes for a period

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 3.2.2. Measurement
1. Definition
2. Principle: - history cost
- consistency
Definition of
initial cost
Measurement For tangible
by initial cost FA
Measurement
For
intangible FA

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 For tangible FA
1, Purchasing FA

Non- Initial
commercial Directly
refundable
price related exp cost
tax

In which:
Commercial price = invoice price less discounts and less
deductable VAT
Nonrefundable tax includes import tax, special consumption
tax, registration fee,…
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• Purchasing 10 equipments from supplier A on
credit: 300 exclude 10% VAT. ABC enjoy 5% trade
discount. Transportation fee paid by cash on hand
to delivery company: 11, include 10% VAT. This
equipment was handed over to ABC company
• Sub: 300 - 5%*300 = 285 10
• VAT: 28,5 1
• Total: 313,5 11
• Cost of this equipment = 295 (deductable VAT)
• Dr 211: 324,5
• Dr 133(1,2): 29,5
• Cr 111: 11
• Cr 331: 313,5

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• Company applies deductable VAT method
• FA is treated similarly as a company that
applies non-deductable
• - FAs are used to produce non-taxable
products taxable products with 0% tax rate
• - FAs are used for welfare being purposes
• Dr 153, 211, 213
• Dr 133(1)
• Cr 331

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• Installed fee
• Landing preparation exp
• Consultation fee

• Administrative exp
• Training fee for employees to learn how to
operate a FA
• Abnormal exp (damage during transportation)
• IAS 16 – Plant, properties and equipments,
VAS 03 – tangible FA

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 For tangible FA
2, FA is result from exchange

Fair value of
has commercial received/acquired
substance/ for a FA
Exchan dissimilar assets Fair value of exchanged
FA + adj
ge
has no commercial
substance/ for a carrying amount of the
exchanged fixed asset
similar FA

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 For tangible FA
3, self-made FA

Actual/ma directly- Initial

nufacturin attributable
g cost expenses cost

4, self-construction FA
Initial cost = the settled cost of the building work which is put
into use

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 For tangible FA
5, FA acquired from capital investment
Initial cost = settled costs of building works as prescribed in
Regulations on investment and construction management
in force plus (+) directlyattributable expenses and property
transfer taxes (if any)
6, FA is granted or transfered
Initial cost = carrying amount that is recorded to fixed assets
account in the accounting records of the donating or
presenting enterprise or the value assessed by the Board of
exchange or a professional appraisal organization as
prescribed plus (+) directly-attributable expenses

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 For tangible FA
7, FA is donated or presented
Initial cost = actual value assessed by the Board of exchange
or a professional appraisal organization plus (+) directly-
attributable expenses

8, FA is contributed as capital or return of capital

Initial cost = the value assessed by founding members or
shareholders or agreed by the enterprise and contributors
or assessed by a professional appraisal organization as
prescribed and approved by the founding members or
shareholders
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 For intangible FA
Historical cost of intangible FA is measured by the same
ways in each situation as initial cost of tangible FA.
Exclude:
- FA is land use rights;
- FA is generated internally;
- FA is acquired in a business combination.

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 For intangible FA
1, FA is land use rights
- In case the land use right has expiry date
- In case the land use right does not have expiry date

2, FA is generated internally
Expenses incurred are seperated into 2 stages:
- Research stage
- Development stage

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 CARRYING AMOUNT
Historical
cost

Carrying
amount
Accumulated
depreciation
charge

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 Historical cost & Carrying amount
1, Record FA by historical cost:
- Allow information users to have overall evaluation
about infrustructure facilities level of an entity
- Based on historical cost: calculating depreciation
amount, monitoring capital return process and
analysing how FA is used
2, Record FA by carrying amount:
- Allow investors identify how much capital is being
relocated in FA
- Allow managers to evaluate FA => make decision
about repairment and maintenance, renewing FA…
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 Re-evaluation
1. When is a FA need to re-evaluation?
2. After re-evaluation FA:

Cost after Depreciation Carrying

re- amount after amount after
evaluating re-evaluating re-evaluating

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 3.3. FA accounting in detail
3.3.1. Identify an item is FA?
3.3.2. Supporting documents?
3.3.3. How to organize FA accounting in detail?

(Refer textbook)

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 3.4. Increase FA
3.4.1. Account used:
- Acc 211- tangible FA
- Acc 213 - intangible FA
* Content:
Record the increase/decrease in historical cost of FA
* Structure: Acc 211, Acc 213

Increase in historical FA: Decrease in historical FA:

• completed constructions,
purchase, receipt of capital
contribution, grant, donation,
present, or surplus
• after adjustment
• Re- evaluation
Current historical costs of
the fixed assets of the
enterprise
• transfer to other enterprises,
liquidation or contribution into
joint venture, etc.
• after adjustment
• Re- evaluation
25
 3.4. Increase FA
FA value of an entity increase when:
1, purchasing for new FAs
2, constructing/making new FAs
3, Importing new FAs
4, Capital investment by FAs
5, Being granted or transferred FAs
6, Being donated or presented by Fas
7, Surplus found in stocktake…
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 (1) Purchasing FAs

In case after purchasing for FA, this asset is used

immediately for its using purposes
Acc 211
Historical cost/ Initial cost
Acc 111, 112…

Acc 133

VAT (if any)

If the input VAT is not deductible, the historical cost of the

fixed asset includes VAT
27
 (1) Purchasing FAs

In case there is duration needed for installation,

testing, registration…

111, 112,
331... 133 Acc 2411
Payment for FA 211, 213

Testing exp in case there is no sample Cost of FA

product
TK 154 TK 155 TK 111, 112
Testing exp Actual cost Gaining from
in case there of samples selling
are samples samples
Testing exp > gaining from samples

Testing exp < gaining from samples

28
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 Recording funding for FA investment

• If the FA is purchased by capital expenditure used for operation, if

the financial report is approved by the competent agency, an
increase in operation capital and a decrease in capital shall be
recorded as follows :
Db acc 441 – Capital expenditure funds
Cr acc 411 – Owner‘s invested equity

• If the FA is purchased by development investment funds:

Db acc 414 – Development investment funds
Cr acc 411 – Owner‘s invested equity

29
 Recording funding for FA investment

• If the FA is invested by welfare funds and put into use for the
purpose of culture, welfare of enterprises, record :
Dr 3532 - Welfare fund
Cr 3533 - Welfare fund that forms fixed assets.
• If the FA is funded by scientific and technological development
fund used for purposes of research, development of science and
technology :
Dr 3561 - Science and technology development fund
Cr 3562 – Science and technology development fund
that forms fixed assets

30
 (1) purchasing tangible fixed assets in deferred
payment or instalment
111,112 331 211, 213
Total 2a. historical
2b. Pay for supplier payment cost means cash
amount prices

242 635
Interest due to 2c. periodical
deferred payment payment

133
Deductable VAT (if any)

Record FA funding like above

31
(2) purchasing tangible fixed assets in the form of
exchange
Exchange between two similar tangible FAs
acc 214
Accumulated depreciation
Acc 211 charge of exchanged fixed
historical cost of asset
exchanged fixed
asset acc 211

Carrying amount of the

exchanged fixed asset

32
Exchange between two dissimilar tangible fixed assets
211 (1a) Delete exchanged FA 811

historical cost Carrying amount of

exchanged FA 214
depreciated value

711 131 211

(1b)Other income from (2) residual value of received
exchange FA
133
Fair total Deductible VAT
value payment
111, 112
333(1) (3a) additional payment

VAT (3b) additional payment

33
 (3) Self-made tangible fixed assets

211
154, 155
(3a ) cost of finished good

111, 112...
(3b) Directly exp

34
 (4) Self-constructed tangible fixed assets
a. In case the capital b. In case the capital investment
investment progress is progress is not recorded in the same
recorded in the same accounting book system of the enterprise
accounting book system TK 211, 213
TK 411
of the enterprise Owner‘s invested
TK 211, 213
equity
TK 2412
TK 341
Loans

TK 343
Bonds released

TK 136
Intra-company
receivables
35
(5) Intangible fa generated internally in development stage

5a. Incurring exp in development stage is not measured into cost of FA (VAS
04, term 38)
242
111, 112, 152, 153, 331.. In case allocation exp

642
Incurring exp in In case recording as
development stage administrative exp
133
VAT if any

5b. If the result of development stage satisfies recognition

criteria of intangible FA (VAS 04, term 40)
111, 112, 152, 153, 331.. 241 213
When completing development
Incurring exp in stage, total actual expenses
development stage incurring be recorded to the
historical cost
36
(6) Intangible FA is land use rights

411 213
-When receiving land use rights as capital

111, 112,
When receiving land use rights from individuals

(6b). In case land use rights associated with buildings or structures

on land :
211
historical costs of
buildings or structures
111, 112, 331.. 213
Total payment historical costs of land
use rights

VAT if any 133

37
(7). Donated or presented FA

911 acc 211

acc 3334 acc 8211 acc
711
(3) Transfer
(5) Transfer historical (1) When
(4) Income tax calculated
tax cost receiving FA
on historical cost

acc411 acc421 acc LQ,..

(7) Increase (6) Transfer FA
owner value after tax
(2) Directed exp
equity

38
 (8) Capital investment by FA

acc 411 211, 213

receiving owner‘s equity or capital in form of FA

Acc 221, 222

return of capital

111, 112
Directed exp

(9) FA is transferred from other entities

411 acc 211,213

Carrying amount
214 Historical cost
Depreciation amount
39
 3.5. Decrease FA value amount

FA value of an entity decrease when:

1, selling FAs
2, transfer FAs into tools
3, contributing FAs as capital to subsidiaries, joint-
venture companies
4, Re-evaluation FAs
7, Shortage found in stocktake…

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 (1) Selling FAs
1. When? How?
2. Establish a Board for selling Fas. The FAs must
be purchase following procedures prescribed in
regulations of law
3. Income/Exp related to selling FAs shall be
recorded as other income/exp
4. Accountants recorded as follow:

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 (1) Selling FAs
1a. selling fixed assets used for business
operational activities
111, 112, 331... 133 811 911 711 111, 112, 131...
4a. Transfer 4b. Transfer 3. Income
Exp related to income related to
(2). Exp related selling FAs selling FAs
to selling FAs
33311
211, 213
(1). Carrying amount

214 421
5a. Income
depreciated exceeds exp
value

5b.Exp
exceeds
income 42
 (1) Selling FAs
1b. selling fixed assets used for culture or activities
welfare

353 (3533)

Carrying amount
211
depreciated value 214
Historical cost

466
Carrying amount (Funds used for
fixed asset acquisitions )

43
 (2) Transfer Fas into tools
2a. fixed assets used for business

211
627, 641, 642
Small carrying Carrying
amount 214 amount

242
Large carrying Periodical
amount residual value allocation

44
 (2) Transfer Fas into tools
2b. fixed assets used for culture or activities welfare
214
depreciated value
211
3533
Historical cost Carrying amount (if FA used for
culture and welfare activities)

Carrying amount (Funds used for 466

fixed asset acquisitions

45
(3). Transfer FAs internally

211, 213 2141, 2143

Historical Depreciation
cost value
136
Carrying
amount
(4) Transfer FAs to Investment properties
 Historical cost:

TK 211, 213 TK 217

Historical cost

Depreciation value:
TK 2147 TK 2141, 2143
Depreciation
value
46
 3.6. Depreciation
3.6.1. Definitions
What is depreciation? (VAS 03)
Note: depreciation amount? Useful life?
Depreciable amount is the cost of an asset, or other
amount substituted for cost, less its residual value
The residual value of an asset is the estimated amount
that an entity would currently obtain from disposal
of the asset, after deducting the estimated costs of
disposal, if the asset were already of the age and in
the condition expected at the end of its useful life
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 3.6. Depreciation
3.6.2. Depreciation methods
• the straight-line method
• the declining balance method
• the units of production method

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 3.6.2. Depreciation methods
a, the straight-line method
Straight-line depreciation results in a constant charge
over the useful life if the asset’s residual value does not
change
Formular:
Depreciation charge Depreciation amount
per year/quarter/month
=
Useful life
Or:

Depreciation charge per Depreciation Depreciation

year/quarter/month
= amount x percentage

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 3.6.2. Depreciation methods
b, the declining balance method
The declining balance method results in a decreasing
charge over the useful life
Formular:

Depreciation charge per Remaining x Depreciation

year/quarter/month
= depreciation amount percentage

In which:

-Depreciation percentage is stable during useful life of FAs

- Remaining depreciation amount is calculated as depreciation
amount when FA is first used less (-) prior accumulated depreciation
amount
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 3.6.2. Depreciation methods
c, the units of production method
The units of production method results in a charge
based on the expected use or output
Formular:
Depreciation charge Depreciation amount
per unit of production
=
Total units of production
during the useful life of FA
At the end of financial period, calculating the depreciation amount
in the period:
Depreciation charge Total units of
Depreciation charge per= per unit of production in
x
year/quarter/month production year/quarter/month
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* Princiles of calculating depreciation amount
According to Cir. 45 on 25/4/2013 by Ministry of Finance
- All FA of an entity have to be calculated depreciation amount
- Starting/finishing calculating depreciation amount when increase/decrease
FAs
-…
- Choosing 1 depreciation method as above
- Reviewing depreciation method at the end of financial period, if any
changes, accountants have to raise adj

52
3.6.3. Depreciation accounting

a, Account used: * Acc 214 “Depreciation of FAs”

This account is used to record increases or decreases in depreciation value
and accumulated depreciation of fixed assets and investment properties
Acc 214
decreases in increases in
depreciation value depreciation value
Debit balance: Accumulated
depreciation of existing FAs or
investment properties of the enterprise
- Acc 2141: Depreciation of tangible fixed assets

4 sub-accounts: - Acc 2142: Depreciation of financial lease fixed assets

- Acc 2143: Depreciation of intangible FAs
- Acc2147: Depreciation of investment properties
53
b. Method of accounting for several major transactions
(1). fixed assets used for business:
214
627
FAs used for production activities
211, 213
641
Related (1) Calculate FAs used for selling activities
(5) Depreciation
acc
Decrease
FAs 642…
FAs used for administrtive activities

412 (2) FAs for non-business activities/ 3533, 466

(4b) decrease cultural activities or welfare
depreciation
amount due to re- 412
evaluation (4a) increase DA due to re-evaluation

DA 411 (3) Granted FAs 211, 213

54
(2). FAs for non-business activities/ cultural activities or welfare:
466
214
calculating depreciation FAs for non-business
value at the end of activities
financial period

3533
FAs for cultural
activities or welfare

note:
*At the end of financial period, the useful life and depreciation method need to be
reviewed, if any changes, accountants need to raise adj:

In case re-evaluated accumulated depreciation is greater than book value:

Nî TK 627, 641, 642/ Cã TK 214;
In case re-evaluated accumulated depreciation is smaller than book value:
Nî TK 214/Cã TK627, 641, 642.
55
3.7. Repair and mainternance
. FAs structure
* Why FAs need to be repaired…? .FAs characteristics
* Cases:
Frequent Mainternance, repair or replace small detail of
R&M FAs

repair or replace important detail of FAs

major repair

Self - repaired

How to
R&M?
Using external services

Due to cases/ways to R&M, accountants deal with incurring

exp in different ways

56
 (1). Frequent R&M

111, 152, 334… 627, 641, 642…

Incurring exp for R&M

133

Deductable
VAT (if any)

57
(2). Major repair

• Acc 241(3) – Major repairs of fixed assets

• Các TK CP: 627, 641, 642..
Acc 241(3) records major repairs expenses of fixed assets and
settlement of major repairs expenses of fixed assets.

Acc 241(3)

- Exp incurred from major Value of major repairs of fixed assets

repair. which is completed and transferred
when the settlement report is approved

Debit balance: Exp incurred

from major repair in progress or
Value of major repairs of FAs
which are finished, but settlement
report is not yet approved
58
58
(2). Major repair
Self - repaired: (a). Exp incurred in major repair
111, 112, 133
2413
141... 623, 627, 641,642..
TK TK 154 Business exp
621,622,627
(1a). Exp (1b).Transfer
incurred Exp (1c).Transfer
cost of 242
finished FAs (3).transfer
exp of major allocation
External 133 repair when
services: finish
331 352
(2).Total Exp of major There is
note: payment repair provision

211, 213
-In case there is increase in cost of FAs, accountants
need to record funds of major repair: Increase
-Db 441, 414/Cr 411 (if major repair is funded by capital cost of
investment or development investment funds) FAs
59
(b). Provision for major repair and allocation major repair exp
(2a). Provision for major repair :
352 627, 641, 642,...
(1). Make provision
241 (2413)
(3). Transfer major
repair exp when finish
(4a) if actual exp > provision

(4b). if actual exp < provision

(2b). allocation major repair exp :

241 (2413) 242 623, 627, 641, 642...

(3) Transfer major repair (4) Periodically allocate
exp when finish exp into business exp
60