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VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán Standard No 01 GENERAL STANDARD (Isuued and promulged in pursuance of the Minister of Finance Decision No 165/QD-BTC dated December 31, 2002) GENERAL PROVISIONS 01 This standard aims to prescribe and guide the basic accounting principles and requirements, elements of the enterprises’ financial statements and the recognition thereof, in order to: a/ Serve as a basis for formulating and perfecting specific accounting standards and accounting regimes after uniform models b/ Assist enterprises in making accounting entries and financial statements in a uniform manner according to the promulgated accounting standards and accounting regimes and handle matters not yet specified in order to ensure true and reasonable information in the financial statements c/ Assist auditors and accounting controllers in giving comments on the conformity of the financial statements with the accounting standards and accounting regimes d/ Assist users of the financial statements in understanding and evaluating financial information supplied in accordance with the accounting standards and accounting regimes 02 The basic accounting principles and requirements as well as elements of the financial statements, which are prescribed in this standard and specified in each accounting standard must be applied to all enterprises of all economic sectors nationwide This standard shall not replace specific accounting standards Implementation shall be based on specific accounting standards For cases not yet prescribed in specific accounting standards, they shall comply with the general standard STANDARD CONTENTS Basic Accounting Principles Accrual basis 03 All economic and financial operations of enterprises, which are related to assets, liabilities, owners’ equity, revenues, and costs must be recorded in accounting books at the time they arise, not at the time of the actual receipt or payment of cash or cash equivalents Financial statements made on the basis of accrual shall reflect the financial status of enterprises in the past, at present and in the future Continuous operation 04 Financial statements must be made on the basis of the assumption that enterprises are operating continuously and will continue business activities normally in the near future, i.e., they have no intention or are not compelled to cease operation or to substantially downscale their operation Where reality differs from the continuous operation assumption, the financial statements must be made on another basis, which must be explained Historical cost 05 Assets must be recognized according to their historical cost The historical cost of an asset shall be calculated according to the cash amount or cash equivalent already paid or to be paid, or according to the reasonable value of the asset at the time the asset is recognized The assets’ historical costs must not be modified except otherwise prescribed in specific accounting standards Matching 06 The recognition of revenues and that of costs must match When a revenues is recognized, a corresponding cost related to the creation of such revenue must be recognized Costs corresponding to revenues include costs of the period in which revenues are created and costs of the previous periods or payable costs related to the revenues of such period Consistency Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán 07 The accounting policies and methods selected by enterprises must be applied consistently within at least one accounting year Where appear changes in the selected accounting policies or methods, the reasons for and impacts of such changes must be presented in the explanations of financial statements Prudence 08 Prudence means the examination, consideration and anticipation needed to establish accounting estimates under uncertain conditions The prudence principle requires that: a/ The reserves must be set up, which must not be too big; b/ The values of assets and incomes are not overestimated; c/ The values of liabilities and costs are not underestimated; d/ Revenues and incomes shall be recognized only when there are solid evidences of the possibility of obtaining economic benefits, while costs must be recognized when there are evidences of the possibility of arising costs Materiality 09 Information shall be considered material in cases where the insufficiency or inaccuracy of such information may distort significantly the financial statements, thus affecting the economic decisions of the users of the financial statements Materiality depends on the amount and nature of information or errors assessed in particular circumstances The materiality of information must be examined both quantitatively and qualitatively Basic Requirements For Accounting Honesty 10 Accounting information and data must be recorded and reported on the basis of adequate and objective evidences and true to the actual situation, content, nature and values of arising economic operations Objectivity 11 Accounting information and data must be recorded and reported according to reality, not be distorted nor falsified Fullness 12 All arising economic and financial operations related to the accounting period must be recorded and reported in full, not be omitted Timeliness 13 Accounting information and data must be recorded and reported in time, according to or ahead of prescribed schedule, without delay Understandability 14 Accounting information and data presented in the financial statements must be explicit and easily understandable to users Users mean people with average knowledge about business, economics, finance and accounting Information on complicated matters in the financial statements must be expounded in the explanation part Comparability 15 Accounting information and data of different accounting periods of an enterprise and of different enterprises may be comparable only when they are calculated and presented in an uniform way In case of lack of uniformity, expositions must be given in the explanation part so that the users of the financial statements may compare information of different accounting periods, different enterprises, or between execution information and projected or planned information 16 The accounting requirements mentioned in paragraphs 10, 11, 12, 13, 14 and 15 above must be satisfied simultaneously For example: The honesty requirement also embraces the objectivity, timeliness, fullness, understandability and comparability requirements Elements Of Financial Statements 17 The financial statements reflect the financial status of enterprises through summing up economic and Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán financial operations of the same economic nature in their elements The elements directly related to the determination of the financial status in the balance sheets include assets, liabilities and owners’ equity The elements directly related to the assessment of the business situation and results in the statements on business results are revenues, other incomes, costs and business results Financial status 18 The elements directly related to the determination and evaluation of the financial status are assets, liabilities and owners’ equity These elements are defined as follows: a/ Assets mean resources that are controlled by enterprises and may yield future economic benefits b/ Liabilities mean the current obligations of an enterprise, arising from the past transactions and events, which must be settled by the enterprise with its own resources c/ Owners’ equity means the value of the enterprises’ capital, being equal to the difference between the value of the enterprise’s assets minus (-) its liabilities 19 When determining the items in the elements of a financial statement, attention must be paid to their ownership forms and economic contents In some cases, though assets not fall under the enterprises’ ownership, they are still reflected in the elements of the financial statements due to their economic contents For example, in case of financial leases, the economic form and content are that the lesseeenterprises obtain economic benefits from the use of leased assets during most of the useful life of the assets; in return the lessee-enterprises are obliged to pay a sum that approximates the reasonable value of the assets as well as related financial costs The financial leasing operation gives rise to the item "Assets" and the item "Liabilities" in the balance sheets of the lessee-enterprises Assets 20 Future economic benefits of an asset are the potential to increase the sources of cash and cash equivalents of an enterprise or to reduce cash amounts to be paid by the enterprise 21 Future economic benefits of an asset are demonstrated in such cases as : a/ Being used in isolation or in combination with other assets in the manufacture of products for sale or in the provision of services for customers; b/ For sale or exchange for another asset; c/ For payment of liabilities; d/ For distribution to the enterprise’s owners 22 Assets may have the physical form such as workshops, machinery, equipment, supplies, goods or the non-physical form, such as copyright or patents but must gain future economic benefits and are under the control of enterprises 23 Assets of enterprises also include assets that enterprises not own but can control them and gain future economic benefits therefrom, such as assets given for financial leases; or assets that enterprise own and can gain future economic benefits therefrom but may not control them legally, such as technical know-hows obtained from development activities, which may satisfy the conditions required in the asset definition when they are still kept secret and enterprises can still gain economic benefits therefrom 24 Assets of enterprises are formed from the past transactions or events, such as capital contribution, procurement, self-production, grants or donations Transactions or events expected to arise in future will not lead to an increase in assets 25 Normally, when costs are incurred, they will create assets Costs which not bring about future economic benefits will not create assets; or in other cases, no costs are incurred but assets are still created, such as contributed capital, allocated or donated assets Liabilities 26 Liabilities determine the current obligations of an enterprise when it receives an asset, participates in a commitment or is bound to legal obligations 27 The settlement of current obligations may be effected in many ways, such as: a/ Payment in cash; Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán b/ Payment with another asset; c/ Provision of a service; d/ Replacement of this obligation with another; e/ Conversion of the liability obligation into owners’ equity 28 Liabilities arise from past transactions and events, such as purchase of goods without payment, use of services without payment, borrowing, to merchandise warranty commitment, contractual obligation commitment, payables to employees, remittable taxes, and other payables Owners’ equity 29 Owners’ equity is reflected in the balance sheets, including investors’ capital, equity surplus, retained profits, funds, undistributed profits, exchange rate differences and differences from asset revaluation a/ Investors’ capital may be enterprise owners’ capital, contributed capital, equities, and the State’s capital b/ Equity surplus is the difference between the share par value and the actual issuance prices; c/ Retained profits are after-tax profits retained for capital supplementation; d/ Funds include reserve fund, stand-by fund, development investment fund; e/ Undistributed profits are after-tax profits not yet distributed to owners or not yet deducted to set up funds; f/ Exchange rate differences include: + Exchange rate difference arising in the construction investment process; + Exchange rate difference arising when enterprises in the country include the financial statements of their activities carried out abroad using accounting currency other than the accounting currency of the reporting enterprises g/ Difference from the asset revaluation is the difference between the book value of assets and the revalued value of assets under the State’s decisions, or when assets are contributed as joint-venture capital or shares Business situation 30 Profits are used as a measure of the business results of enterprises The elements directly related to the profit determination are revenues, other incomes and costs Revenues, other incomes, costs and profits are criteria reflecting the business situation of enterprises 31 The elements of revenues, other incomes and costs are defined as follows: a/ Revenues and other incomes: are the total value of economic benefits earned by an enterprise in the accounting period, arising from the enterprise’s normal production, business and other operations, contributing to increasing the owners’ equity, excluding capital contributions made by shareholders or owners b/ Costs are the total value of amounts which reduce economic benefits in the accounting period in the forms of amounts spent, asset depreciation amounts, or give rise to liabilities leading to a decrease in the owners’ equity, excluding amounts distributed to shareholders or owners 32 Revenues, other incomes and costs are presented in the reports on business results so as to supply information in service of the assessment of the enterprises’ capability to create cash sources and cash equivalents in the future 33 The elements of revenues, other incomes and costs may be presented in many ways in the reports on business results so as to describe the business situation of enterprises, such as revenues, costs and profits of normal business and other operations Revenues and other incomes 34 Revenues arises in the process of normal business operations of enterprises and often include: sales revenues, service provision revenues, interests, royalties, dividends and shared profits… 35 Other incomes include incomes arising from operations other than revenues-generating operations, such as incomes from liquidation or sale of fixed assets, fines collected from customers for their contract Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán breaches… Costs 36 Costs include production and business costs arising in the process of normal business operations of enterprises, and other costs 37 Production and business costs arising in the process of normal business operations of enterprises, such as cost of goods sold, sale costs enterprise management costs, costs for loan interests, and costs related to letting other parties use assets with yields, royalties… These costs arise in the form of cash and cash equivalents, inventories, machinery and equipment depreciation 38 Other costs include costs other than production and business costs arising in the process of normal business operations, such as costs for liquidation and sale of fixed assets, fines imposed by Customers For Contract Breaches, Etc Recognition Of The Elements Of The Financial Statements 39 The financial statements must recognize the elements on the financial status and business situation of enterprises; such elements must be recognized item by item Each item shall be recognized in the financial statements if satisfying concurrently the following two criteria: a/ Being certain to gain or reduce future economic benefits; b/ Such item has some value which can be determined in a reliable manner Recognition of assets 40 Assets will be recognized in the balance sheets when enterprises are certain to gain future economic benefits therefrom and the value of such assets are determined in a reliable way 41 Assets will not be recognized in the balance sheets when costs incurred are not certain to yield future economic benefits for enterprises and these costs will be recognized in the reports on business results as soon as they arise Recognition of liabilities 42 Liabilities will be recognized in the balance sheets when there are adequate conditions to ascertain that enterprises will have to spend a cash amount on the current obligations they have to pay for, and such liabilities must be determined in a reliable way Recognition of revenues and other incomes 43 Revenues and other incomes will be recognized in the reports on business results when they gain future economic benefits related to the increase in assets or decrease in liabilities, and such increased value must be determined in a reliable way Recognition of costs 44 Production, business and other costs will be recognized in the reports on business results when these costs reduce future economic benefits related to the decrease in assets or increase in liabilities, and these costs must be determined in a reliable way 45 Costs recognized in the reports on business results must comply with the principle of matching between revenues and cost 46 When economic benefits expected to be obtained over many accounting periods are related to revenues and other incomes which are determined indirectly, the related costs will be recognized in the reports on business results on the basis of systematic or proportional amortization 47 A cost will be immediately recognized in the reports on business results in the period if it fails to bring about economic benefits in subsequent periods Standard No Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán INVENTORIES (Isuued and promulged in pursuance of the Minister of Finance Decision No 149/2001/QD-BTC dated December 31, 2001) GENERAL PROVISIONS 01 This standard aims to prescribe and guide the principles and method of accounting the inventories, including: determination of the value of inventories and accounting it as expense; the marking-down of inventories to suit the net realizable value and the method of calculating the value of inventories to serve as basis for recording accounting books and making financial statements 02 This standard shall apply to accounting inventories on the original price principle, except when other prescribed accounting standards permit the application of other accounting methods to inventories 03 For the purposes of this standard, the terms used herein are understood as follows: Inventories: are assets which are: a/ held for sale in the normal production and business period; b/ in the on-going process of production and business; c/ raw materials, materials, tools and instruments for use in the process of production and business or provision of services Inventories consist of: - Goods purchased for sale: goods in stock, purchased goods being transported en route, goods sent for sale, goods sent for processing; - Finished products in stock and finished products sent for sale; - Unfinished products: uncompleted products and completed products not yet going through the procedures for being put into stores of finished products; - Raw materials, materials, tools and instruments in stock, sent for processing, and already purchased but being transported en route; - Costs of unfinished services Net realizable value means the estimated selling price of inventories in a normal production and business period minus (-) the estimated cost for completing the products and the estimated cost needed for their consumption Current price means a sum of money payable for the purchase of a similar kind of inventory on the date the accounting balance sheet is made CONTENTS OF THE STANDARD DETERMINATION OF THE VALUE OF INVENTORIES 04 Inventories are valued according to their original prices Where the net realizable value is lower than the original price, they must be valued according to the net realizable value ORIGINAL PRICES OF INVENTORIES 05 The original price of inventories consists of the purchasing cost, processing cost and other directlyrelated costs incurred for having the inventories stored in the present place and conditions Purchasing cost 06 The purchasing cost of inventories consists of the buying price, non-refundable taxes, transportation cost, loading and unloading cost, preservation cost incurred in the buying process and other costs directly related to the purchase of the inventories Trade discounts and reductions in the prices of purchased goods due to their wrong specifications and/or inferior quality, shall be deducted from the purchasing cost Processing cost 07 The processing costs of inventories consist of those directly related to the manufactured products, such as cost of direct labor, fixed and variable general production costs incurred in the process of turning raw materials and materials into finished products Fixed general production costs means indirect production costs, which are often invariable regardless of the volume of manufactured products, such as depreciation cost, maintenance cost of machinery, equipment, workshops… and Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán administrative management cost at production workshops Variable general production costs means indirect production costs, which often change directly or almost directly according to the volume of manufactured products, such as costs of indirect raw materials and materials, cost of indirect labor 08 Fixed general production costs shall be allocated into the processing cost of each product unit on the basis of the normal production capacity of machinery Normal capacity is the average quantity of products turned out under normal production conditions - Where the quantity of actually-manufactured products is higher than the normal capacity, the fixed general production costs shall be allocated to each product unit according to actually incurred costs - Where the quantity of actually-manufactured products is lower than the normal capacity, the fixed general production costs shall be allocated into the processing cost of each product unit only according to the normal capacity The unallocated amount of general production costs shall be recognized as production and business expense in the period The variable general production costs shall be entirely allocated into the processing cost of each product unit according to the actually incurred costs 09 Where various kinds of products are manufactured in a single production process in the same duration of time and the processing cost of each kind of product is not separately expressed, the processing cost shall be allocated to those kinds of products according to appropriate and consistent norms in all accounting periods Where by-products are turned out, their value shall be calculated according to the net realizable value and subtracted from the processing cost already calculated for the principal products Other directly-related costs 10 Other directly-related costs shall be incorporated into the original prices of inventories, including costs other than the purchasing cost and processing cost of inventories For example, the original price of finished products may consist of the product-designing cost for a particular order Costs not permitted to be incorporated in the original price of inventories 11 Costs not permitted to be incorporated into the original price of inventories, are: a/ Costs of raw materials, materials, labor and other production and business costs incurred at a level higher than normal; b/ Costs of inventories preservation minus the inventories preservation cost needed for subsequent production processes and the preservation cost prescribed in paragraph 06; c/ Sale cost; d/ Enterprise management costs Service provision cost 12 Service provision cost consists of personnel costs and other costs directly related to the service provision, such as supervision cost and related general costs Personnel costs and other costs related to goods sale and enterprise management shall not be included in the service provision cost METHOD OF CALCULATING THE VALUE OF INVENTORIES 13 The value of inventories shall be calculated according to one of the following methods: a/ Specific identification method; b/ Weighted average method; c/ First-in, First-out method; d/ Last-in, First-out method 14 The specific identification method shall apply to enterprises having a few goods items or stable and identifiable goods items 15 By the weighted average method, the value of each kind of inventories shall be calculated according to the average value of each similar kind of goods at the beginning of the period and the value of each kind of inventories purchased or manufactured in the period The average value may be computed either according to periods or the time when a goods lot is warehoused, depending on the enterprise’s situation 16 The First-in, First-out method shall apply upon the assumption that the first inventories purchased or manufactured is the first inventories delivered, and the inventories left at the end of the period are those purchased or produced at a time close to the end of the period By this method, the value of the delivered goods shall be computed according to the price of the lot of goods warehoused at the beginning of the period or at a time shortly after the beginning of the period, the value of the inventories shall be computed according to the price of the goods warehoused at the end of the period or at a time shortly before the end of the period Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán 17 The Last-in First-out method shall apply upon the assumption that the most recently purchased or manufactured inventories are delivered first, and the inventories left at the end of the period are those which are purchased or produced earlier By this method, the value of the delivered goods shall be computed according to the price of the lot of goods warehoused most recently or shortly earlier; the value of the inventories shall be computed according to the price of the goods warehoused at the beginning of the period or shortly after the beginning of the period, which still remain in stock NET REALIZABLE VALUE AND SETTING UP OF THE INVENTORY PRICE DECREASE RESERVE 18 The value of inventories cannot be fully recovered when they become damaged, outmoded, their selling prices fall or the finishing and/or sale costs rise The marking-down of inventories to the level equal to the net realizable value is compliant with the principle that assets must not be shown at a value higher than the realized value estimated from their sale or use 19 At the end of the accounting period of the year, when the net realizable value of inventories is lower than their original price, the reserve for inventory price decrease must be set up The amount of the to be-set up inventory price decrease reserve is the difference between the original price of inventories and their net realizable value The inventory price decrease reserve shall be set up for each kind of inventories For services incompletely provided, the inventory price decrease reserve shall be set up for each type of service with different charges 20 The estimation of the net realizable value of inventories must be based on reliable evidences gathered at the time of estimation Such estimation must take into account price fluctuations or costs directly related to events occurring after the ending day of the fiscal year, which have been anticipated through conditions existing at the time of estimation 21 When estimating the net realizable value, the purpose of the storage of inventories must be taken into account For example, the net realizable value of the inventories reserved to ensure the performance of uncancellable sale or service provision contracts must be based on the values inscribed in such contracts If the volume of inventories is bigger than that of goods needed for a contract, the net realizable value of the difference between these two volumes shall be appraised on the basis of the estimated selling price 22 Raw materials, materials, tools and instruments reserved for use in the manufacture of products must not be valued lower than their original price if the products which have been manufactured with their contributions are to be sold at prices equal to or higher than their production costs Where there appear decreases in the prices of raw materials, materials, tools and/or instruments but the production costs of products are higher than their net realizable value, the raw materials, materials, tools and instruments left in stock may have their value lowered to be equal to their net realizable value 23 At the end of the accounting period of the subsequent year, a new appraisal of the net realizable value of inventories by the end of such year must be conducted Where at the end of the accounting period of the current year, if the to be-set up reserve for inventory price decrease is lower than the inventory price decrease reserve already set up at the end of the accounting period of the previous year, the difference thereof must be added thereto (under the provisions in paragraph 24) in order to ensure that the value of inventories shown on financial statements is computed according to the original price (if the original price is lower than the net realizable value) or according to the net realizable value (if the original price is higher than the net realizable value) RECOGNITION OF COSTS 24 When selling inventories, the original price of goods sold shall be recognized as production and business expense in the period in consistence with the recognized turnover related thereto All the difference between the higher inventory price decrease reserve to be set up at the end of the current year’s accounting period and the lower inventory price decrease reserve already set up at the end of the previous year’s accounting period, volumes of damaged and lost inventories, after subtracting the compensations paid by individuals due to their liabilities, and unallocated general production costs, shall be recognized as production and business expense in the period Where the inventory price decrease reserve to be set up at the end of the current year’s accounting period is lower than the inventory price decrease reserve already set up at the end of the previous year’s accounting period, the difference thereof must be added and recorded as decrease in production and business expense 25 Recognition of the value of goods sold as expense incurred in the period must ensure the expense - turnover matching principle 26 Where some kinds of inventories are used for manufacture of fixed assets or use like self-manufactured workshops, machinery and/or equipment, the original price of these inventories shall be accounted into the fixed asset value PRESENTATION OF FINANCIAL STATEMENTS 27 In their financial statements, the enterprises must present: a/ Accounting policies applied in the appraisal of inventories, including the method of computing the value of inventories; Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán b/ The original prices of the total inventories and of each kind of inventories classified in a way suitable to the enterprise; c/ The value of the inventory price decrease reserve; d/ The value re-included from the inventory price decrease reserve; e/ Cases or events resulting in the addition to or re-inclusion from the inventory price decrease reserve; f/ The book value of inventories (the original price minus (-) the inventory price decrease reserve) already mortgaged or pledged for payable debts 28 Where the enterprises compute the value of inventories by the Last-in, First-out method, their financial statements must show the difference between the value of inventories presented in the accounting balance sheet and: a/ The period-end value of inventories, which is calculated by the First-in, First-out method (if this value is lower than the period-end value of inventories calculated by the weighted average method as well as the net realizable value); or And the period-end value of inventories which is calculated by the weighted average method (if this value is lower than the period-end value of inventories calculated by the First-in, Fist-out method as well as the net realizable value); or And the period-end value of inventories which is calculated according to the net realizable value (if this value is lower than the value of inventories calculated by the First-in, First-out method and the weighted average method); or b/ The period-end current value of inventories on the date the accounting balance sheet is made (if this value is lower than the net realizable value); or, and the net realizable value (if the period-end value of inventories which is calculated according to the net realizable value is lower than the period-end value of inventories which is calculated according to the current value on the date the accounting balance sheet is made) 29 Presentation of inventories costs in the reports on the production and business results, which are classified functionally 30 Functional classification of costs means that inventories are presented in the section “Original price of goods sold” in the business result reports, including the original price of goods sold, the inventory price decrease reserve, damaged and lost volumes of inventories after subtracting the compensations paid by individuals due to their liabilities, and unallocated general production costs Standard No 03 TANGIBLE FIXED ASSETS (Isuued and promulged in pursuance of the Minister of Finance Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán Decision No 149/2001/QD-BTC dated December 31, 2001) GENERAL PROVISIONS 01 This standard aims to prescribe and guide the accounting principles and methods applicable to tangible fixed assets, including criteria of tangible fixed assets, the time of recognition and determination of initial value, costs incurred after initial recognition, determination of value after initial recognition, depreciation, liquidation of tangible fixed assets and some other regulations serving as basis for recording accounting books and making financial statements 02 This standard applies to the accounting of tangible fixed assets, except where other accounting standards permit the application of other accounting principles and methods to tangible fixed assets 03 Where other accounting standards prescribe methods of determining and recognizing the initial value of tangible fixed assets other than the methods defined in this standard, other contents of tangible fixed asset accounting shall still comply with the regulations of this standard 04 Enterprises must apply this standard even when they are affected by price changes, except otherwise prescribed by State decisions related to the re-appraisal of tangible fixed assets 05 For the purpose of this standard, the terms used herein are construed as follows: Tangible fixed assets means assets in physical forms which are possessed by the enterprises for use in production and business activities in conformity with the recognition criteria of tangible fixed assets Historical cost means all the costs incurred by the enterprises to acquire tangible fixed assets as of the time of putting such assets into the ready-for-use state Depreciation means the systematic allocation of the depreciable value of tangible fixed assets throughout the useful life of such assets Depreciable value means the historical cost of tangible fixed assets recorded on financial statements, minus (-) the estimated liquidation value of such assets Useful life means the duration in which the tangible fixed assets produce their effect on production and business, calculated by: a/ The duration the enterprise expects to use the tangible fixed assets, or: b/ The volume of products, or similar calculating units which the enterprise expects to obtain from the use of assets Liquidation value means the value estimated to be obtained at the end of the useful life of the assets, after subtracting the estimated liquidation cost Reasonable value means the value of assets, which may be exchanged among knowledgeable parties in the par value exchange Residual value means the historical cost of tangible fixed assets after subtracting the accumulated depreciation thereof Recoverable value means the value estimated to be obtained in future from the use of the assets, including their liquidation value CONTENTS OF THE STANDARD RECOGNITION OF TANGIBLE FIXED ASSETS 06 Criteria for recognition of tangible fixed assets: To be recognized as tangible fixed assets, assets must meet simultaneously all the following four (4) recognition criteria: a/ Future economic benefits will surely be obtained; b/ Their historical cost has been determined in a reliable way; c/ Their useful life is estimated at more than one year; d/ They meet all value criteria according to current regulations 07 Tangible asset accounting is classified by groups of assets of the same nature and use purposes in the enterprises’ production and business operations, including: a/ Houses and architectural objects; b/ Machinery and equipment; c/ Means of transport, conveyance equipment; d/ Managerial equipment and instruments; e/ Perennial tree garden, animals reared to labor for humans and to yield products f/ Other tangible fixed assets 08 Tangible fixed assets often constitute a key component in the total assets and play an important role in the reflection of the financial situation of enterprises Therefore, the determination of an asset whether or not to be recognized as tangible fixed asset or a production or business expense in the period shall greatly affect the reporting of the enterprises’ operation and business results Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán GENERAL 01 The objective of this Standard is to prescribe the guidance on accounting principles, accounting treatments and presentation of changes in accounting policies, changes in accounting estimates and correction of errors so that enterprise can prepare and present its financial statements on a consistent basis This standard also enhances relevancy, reliability of the enterprise’s financial statements as well as enhances comparability of enterprise's financial statements from period to other periods and with the financial statements of other enterprises 02 This Standard should be applied in accounting for changes in accounting policies, changes in accounting estimates and correction of errors of the previous periods 03 Except for changes in accounting policies, disclosures and application of accounting policies are complied with the requirements of Vietnamese Accounting Standard 21 “Presentation of Financial Statements” The tax effects of correction of errors and of retrospective adjustments made to apply changes in accounting policies are accounted for and disclosed in accordance with VAS 17 “Income Taxes” 04 The following terms are used in this Standard with the meanings specified: Accounting policies are the specific principles, bases, conventions, rules and practices adopted by an enterprise in preparing and presenting financial statements A Change in Accounting Estimates is an adjustment of the carrying amounts of an asset or a liability, or the amount of the periodic consumption of an asset that results from the assessment of the current status and of expected future benefits as well as the obligations relating to that asset and liability Changes in accounting estimates result from new information are not corrections of errors Materiality: Omissions or misstatements of items are material if they could make significant misstatements to financial statements and individually or collectively influence the economic decisions of users taken on the basis of the financial statements Materiality depends on the size and nature of the omissions and misstatements judged in the particular circumstances The size or nature of the item could be the determining factor of materiality Prior period errors are omissions from and misstatements in the financial statements of an enterprise for one or more prior periods arising from a failure to use or misuse of reliable information that: (a) was available when financial statements for those periods were authorized for issue; and (b) collectible and usable in preparing and presenting those financial statements Such errors include the effect of mathematical mistakes, mistakes in applying accounting policies, misinterpretation of facts, fraud or oversights Retrospective application is applying a new accounting policy standard to transactions or other events as if it had always been applied Retrospective restatement is correcting the recognition, measurement and presentation of amounts of elements of the financial statements as if a prior period error had never occurred Impracticability: A requirement is impracticable when an enterprise can not apply it after making every reasonable effort to so It is impracticable to apply a change in accounting policy retrospectively or to make a retrospective restatement to correct an error if: (a) The effects of the retrospective application and retrospective restatement are not determinable; (b) The retrospective application or retrospective restatement requires assumptions about what management’s intent would have been in that period; (c) The retrospective application or retrospective restatement requires significant estimates and it is impossible to distinguish objectively information about those estimates that: Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán (i) Provides evidence of circumstances that existed on the date as at which those amounts are to be recognized, measured and disclosed; and (ii) Would have been available when the financial statements for that prior period were authorized for issue Prospective application of the change in accounting policy and of recognizing the effects of a change in an accounting estimate, respectively, are: (a) Applying the new accounting policy to transactions and events incurring after the date as at which the policy is changed; and; (b) Recognizing the effects of the change in the accounting estimates in the current and future periods affected by the change CONTENTS Changes in Accounting Policies Consistency of Accounting Policies 05 The accounting policies and practices selected by an enterprise should be applied consistently for all the similar transactions and events unless being required or permitted by another standard for classifying that similar transactions/events into groups with different accounting treatments for different groups In this case, an appropriate accounting policy will be selected and applied consistently for each group Changes in Accounting Policies 06 A change in accounting policy should be made by the enterprise only if: (a) There is requirement of changes by statute, or by an accounting standard; (b) If the change will result in the financial statements providing reliable and more relevant information about the effects of events or transactions on the financial positions, financial performance and the cash flows of the enterprise 07 Users of financial statements need to be able to compare the financial statements of an enterprise over time to identify trends in its financial position, financial performance and cash flows Therefore, the same accounting policies are consistently adopted within each period and from one period to the next unless the changes in accounting policies made under conditions specified in paragraph 06 08 The following are not changes in accounting policies: (a) the application of an accounting policy for events or transactions that differ in substance from previously occurring events or transactions; and (b) the application of new accounting polies for events or transactions which did not occur previously or that were immaterial 09 The adoption of a policy to carry assets at revalued amounts under the VAS 03 “Tangible Fixed Assets”, VAS 04 “Intangible Fixed Assets” is a change in accounting policy but it is dealt with as a revaluation in accordance with VAS 03 or VAS 04 rather than in accordance with this Standard Applying changes in Accounting Policies 10 Applying changes in accounting policies is dealt with as follows: (a) An enterprise shall account for a change in accounting policy resulting from the initial application of alegal regulation or a standard in accordance with the specific transitional provisions, if any, in that regulation or standard (b) When an enterprise changes an accounting policy upon initial application of a legal regulation or standard that does not include specific transitional provisions applying to that change; or change an accounting policy voluntarily, it shall apply the change retrospectively Retrospective Application Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán 11 When a change in accounting policies is applied retrospectively in accordance with paragraph 10(a) and 10(b), the enterprise shall adjust the opening balance of each affected component of equity for the earliest prior period presented and the other comparative information disclosed for each prior period presented as if the new accounting policy had always been applied Limitations on retrospective application 12 Following the retrospective application specified in paragraph 10(a) and 10(b), a change in accounting policy should be applied retrospectively unless it is impacticable to determine either the period-specific effects or the cumulative effects of the change 13 At the beginning of current period, If it is impracticable to determine the cumulative effects of applying a new accounting policy to the prior periods, the enterprise should adjust the comparative information to apply the new accounting policy prospectively from the earliest period practicable 14 When it is impossible to apply a new accounting policy retrospectively because cumulative effects of applying that accounting policy is not determined to all prior periods, the enterprise, in accordance with paragraph 13, should apply that new accounting policy retrospectively from the start of the earliest period practicable The change in accounting policies is permitted even if it is impracticable to apply the policy retrospectively for any prior period Paragraphs 30 to 33 provide further guidances for the circumstances when it is impracticable to apply a new accounting policy to one or more prior periods Changes in Accounting Estimates 15 Many items in financial statement can not be measured with precision but can only be estimated Estimation involves judgements based on the latest information available, reliable information Estimates may be required, for example: (a) bad debts; (b) inventory obsolescence; (c) The useful lives of, or expected pattern of consumption of the future economic benefits embodied in, depreciable assets; and (d) Warranty obligation 16 The use of reasonable estimates is an essential part of the preparation of financial statements and does not undermine their reliability 17 An estimate may have to be revised if changes occur regarding the circumstances on which the estimate was based or as a result of new information or more experience or subsequent developments By its nature, the revision of an estimate neither relates to prior period nor correction of an error 18 A Change in the measurement basis of information is a change in an accounting policies rather than a change in an accounting estimates If it is difficult to distinguish between a change in an accounting policy and a change in an accounting estimate, the change is treated as a change in an accounting estimate 19 The effects of a change in an accounting estimate, except for those specified in paragraph 20, should be applied prospectively and included in the income statement in: (a) the period of the change, if the change affects that period only; or (b) the period of the change and future periods, if the change affects both 20 If a change in an accounting estimates gives rise to changes in assets, liabilities or an item in equity, it should be recognised by adjusting the carrying amount of the related assets, liabilities or equity item 21 Prospective adjustment of the effect of a change in an accounting estimate means that the change is applied to transactions, other events from the date of the change in estimate A change in an accounting estimate may affect only income statement of the current period or income statement of both the current period and future periods For example, a change in the estimate of the amount of bad debts affects only the current period’s profit or loss and Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán therefore is recognized in the current period However, a change in the estimated useful life of, or the expected pattern of consumption of the future economic benefits embodied in, a depreciable asset affects the depreciation expense for the current period and for each future period during the remaining useful life of the asset In both cases, the effect of the change relating to the current period is recognized as income or expense in the current period The effect, if any, on future periods is recognized as income or expense in those future periods Errors 22 Errors may occur as a result of recognitions measurement, presentation and disclosures of items reported in the financial statements Financial statements are considered misstated and incompliant with the accounting standards and accounting policy if they contain material errors or immaterial errors made intentionally to achieve a particular presentation of financial position, financial performance or cash flow of an enterprise Current period errors discovered in that periods should be corrected before the financial statements are authorized for issue If material errors are discovered in a subsequent periods, these prior period errors should be corrected in the comparative information presented in the financial statements for that subsequent period (see paragraph 23-28) 23 An enterprise should correct material prior period errors retrospectively in the financial statements authorised for issue after their discovery by: (a) Restating the comparative amounts for the prior periods presented in which the errors occurred; or (b) Adjusting the opening balances of assets, liabilities and items of equity for the earliest prior period presented if the errors occurred before that period Limitations on Retrospective restatement 24 A prior period errors should be corrected by retrospective adjustments unless it is impracticable to determine either the period-specific effects or the cumulative effects of the errors 25 When it is impracticable to determine the period-specific effects of an errors, the enterprise should restatet the opening balances of assets, liabilities and equity of the earliest period (can be the current period) for which retrospective restatement is practicable 26 When it is impracticable to determine the cumulative effects, at the beginning of the current period, of an errors on all prior periods, the enterprise needs to restate the comparative information to correct the errors retrospectively from the earliest period practicable 27 The Correction of a prior period errors should not be included in the income statement of the period when the errors are discovered Comparative information should be restated if it is practical to so 28 When it is impracticable to determine the error effects (e.g an error in applying an accounting policy) for all prior periods, the enterprise should restate the comparative information retrospectively in the financial statements of the earliest period practicable in accordance with paragraph 26 Correction of an error should be made together with the cumulative restatement of assets, liabilities and equity of the prior period Paragraphs 30 to 33 provide further guidance for the circumstances when it is impossible to correct an error for one or more prior periods 29 The correction of errors can be distinguished from changes in accounting estimates Accounting estimates by their nature are approximations that may need revision as additional information becomes known For example, the gain or loss arising from a specific conclusion in respect of a non-identified liability is not the correction of an error Impracticability in respect of retrospective application and restatement 30 In some cases, it is impossible to restate the comparative information for one or more than one prior periods for comparison purposes For example, it is impossible to collect information of prior periods for retrospective or prospective application of a new accounting policy (including for the purpose of paragraph 32 to 33); or to make a retrospective adjustments to correct prior period errors or it is impossible to establish these information 31 In many cases, accounting estimate is required in applying a new accounting policies in presentation and disclosures of economic transactions and events in the financial statements The estimate made after balance sheet Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán date is subjective in nature The estimation becomes more difficult in retrospective applying an accounting policy or making a retrospective restatement to correct a prior period error because of the longer period of time that might have passed since the affected transaction, other events occurred However, the objective of estimates related to prior periods remains the same as for estimate made in the current periods to reflect the circumstances when transactions and other events occurred 32 When retrospectively applying a new accounting policy or retrospectively restating an error, the following information should be distinguished from others: (a) Information providing evidences of circumstances on the date as at which the transactions or events occurred (b) Information available when the prior periods’ financial statements were authorized for issue For certain types of the accounting estimates, for example fair value estimate, it is impossible to distinguish these information without reference to the market prices or the observable information It is impossible to apply a new accounting policy retrospectively or correct an error retrospectively involving if material accounting estimates were made without distinguishing these two sources of information 33 Hindsight should not be used when: (a) applying a new accounting policy or correcting an error of prior periods; (b) establishing the assumption on the management’s intentions in the prior periods; (c) estimating the value measured, disclosed and reported in the prior period Example 1: When an enterprise corrects a prior period error in recognizing the value of a financial asset which is classified as held-to-maturity investment under the accounting standard “Financial instruments: Recognition and Measurement”, it cannot change the measurement basis for the reporting period even when the management has subsequently decided not to hold the asset until its maturity date Example 2: An enterprise corrects a prior period error in calculating the obligations relating to the accumulated sick leaves, it should exclude the flu-virus epidemic happened after financial statements were authorized for issue When restating the comparative information of prior periods, the significant estimate is required However, this does not prevent adjusting or correcting the comparative information Disclosure Disclosure of changes in accounting policy 34 When initial application of a new accounting policy has an effect on the current period or any prior period or any future period, an enterprise should disclose the following: (a) The title of the accounting policy; (b) Interpretation of change in accounting policies; (c) Nature of change in accounting policies; (d) The description of the interpretation of change (if any); (e) The effects of the change in accounting policies on the future periods (if any); (f) The amounts adjusted to the current period and each prior period such as: - Each financial statement items affected; - Basis and diluted earnings per Share if the enterprise applies accounting standard “Earnings per Share”; (g) The amounts of the adjustment relating to the prior periods presented in the financial statements; (h) The reasons and description of the accounting policy application of how and from when should be presented if the retrospective application is impracticable in accordance with the paragraphs 10(a) or 10(b) for a particular prior period or the earliest possible period The information is not required for disclosure in the financial statements of the subsequent periods 35 When the enterprise changes its accounting policies voluntarily that affect on the current period or a particular prior period or future periods, the following information needs to be disclosed: (a) The nature of the change in accounting policies; (b) The reason for the applying a new accounting policy provides more reliable and appropriate information; (c) The amounts adjusted to the current period and each prior period such as: - Each financial statement items affected; - Basis and diluted earnings per Share if the enterprise applies accounting standard “Earnings per Share”; Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán (d) The amount of adjustment relating to the earliest possible period (if possible); (e) The reasons and description of the accounting policy application of how and from when should be presented if the retrospective application is impracticable in accordance with the paragraphs 10(a) or 10(b) for a particular prior period or the earliest possible period The information is not required for disclosure in the financial statements of the subsequent periods Disclosure of Change in Accounting Estimates 36 The enterprise is required to disclose the nature and value of any change in accounting estimates that affects to the current period or is effects expected to the future periods unless it is impracticable to determine In such case, the reason is disclosed Disclosure of prior period errors 37 In accordance with paragraph 23, the enterprise is required to disclose the following: (a) the nature of the prior period errors; (b) The amounts adjusted in the financial statements to each prior period such as: - Each financial statement items affected; - Basis and diluted earnings per Share if the enterprise applies accounting standard “Earnings per Share”; (c) the adjusted amount to the opening balances of the comparative period presented in the financial statements; (d) If the retrospective restatement on a particular prior period is impracticable, the reason and description of how and when the correction of error should be disclosed The information is not required for disclosure in the financial statements of the subsequent periods STANDARD 30 EARNING PER SHARE (Issued in pursuance of the Minister of Finance Decision No 100/2005/QD-BTC dated 28 December 2005) GENERAL 01 The objective of this Standard is to prescribe the accounting policies and procedures in relation to measurement Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán and presentation of earnings per share for comparison of business results among joint-stock enterprises in one reporting period and the business results of one enterprise through reporting periods 02 This Standard shall be applied by entities: - whose ordinary shares or potential ordinary shares are publicly traded; and - that are in the process of issuing ordinary shares or potential ordinary shares in public markets 03 When an entity presents both consolidated financial statements and separate financial statements, the disclosures required by this Standard need be presented only on the basis of the consolidated information An entity that is not required to prepare consolidated financial statements shall present such earnings per share information only on the face of its separate income statement 04 The following terms are used in this Standard with the meanings specified: Dilution is a reduction in earnings per share or an increase in loss per share resulting from the assumption that convertible instruments are converted, that options or warrants are exercised, or that ordinary shares are issued upon the satisfaction of specified conditions Antidilution is an increase in earnings per share or a reduction in loss per share resulting from the assumption that convertible instruments are converted, that options or warrants are exercised, or that ordinary shares are issued upon the satisfaction of specified conditions A contingent share agreement is an agreement to issue shares that is dependent on the satisfaction of specified conditions An ordinary share is an equity instrument that provides for a dividend subordinate to all other classes of equity instruments A potential ordinary share is a financial instrument or other contract that may entitle its holder to ordinary shares Contingently issuable ordinary shares are ordinary shares issuable for little or no cash or other consideration upon the satisfaction of specified conditions in a contingent share agreement Options, warrants and their equivalents are financial instruments that give the holder the right to purchase ordinary shares at a specified price and within a given period Put options on ordinary shares are contracts that give the holder the right to sell ordinary shares at a specified price within a given period 05 Ordinary shares participate in profit for the period only after other types of shares such as preference shares have participated Ordinary shares of the same class have the same rights to receive dividends 06 Examples of potential ordinary shares are: (a) Financial liabilities or equity instruments, including preference shares, that are convertible into ordinary shares; (b) Options and warrants; (c) Shares that would be issued upon the satisfaction of specified conditions resulting from contractual arrangements, such as the purchase of a business or other assets CONTENT OF THE STANDARD Measurement Basic Earnings per Share Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán 07 An entity shall calculate basic earnings per share amounts for profit or loss attributable to ordinary equity holders of the parent entity 08 Basic earnings per share shall be calculated by dividing profit or loss attributable to ordinary equity holders of the parent entity (the numerator) by the weighted average number of ordinary shares outstanding (the denominator) during the period 09 Basic earnings per share information is to provide a measure of the interests of each ordinary share of a parent entity in the performance of the entity over the reporting period Profit or loss for the purpose of calculating basic earning per share 10 For the purpose of calculating basic earnings per share, the amounts attributable to ordinary equity holders of the parent entity shall be after-tax amounts of profit/loss attributable to parent entity adjusted by preference dividends, differences arising on the settlement of preference shares, and other similar effects of preference shares classified as equity 11 All items of income and expense attributable to ordinary equity holders of the parent entity that are recognised in a period, including corporate income tax expense and dividends on preference shares classified as liabilities are included in the determination of profit or loss for the period attributable to ordinary equity holders of the parent entity 12 Preference dividends that is deducted from profit or loss after tax for the purpose of calculating basic earning per share is: (a) Preference dividends on non-cumulative preference shares declared in respect of the period; and (b) Preference dividends for cumulative preference shares required for the period, whether or not the dividends have been declared The amount of preference dividends for the period does not include the amount of any preference dividends for cumulative preference shares paid or declared during the current period in respect of previous periods 13 Preference shares that provide for a low initial dividend to compensate an entity for selling the preference shares at a discount, or an above-market dividend in later periods to compensate investors for purchasing preference shares at a premium, are sometimes referred to as increasing rate preference shares Any original issue discount or premium on increasing rate preference shares is amortised to retained earnings using the effective interest method and treated as a preference dividend for the purposes of calculating earnings per share 14 Preference shares may be repurchased under an entity’s tender offer to the holders The excess of the fair value of the consideration paid to the preference shareholders over the carrying amount of the preference shares represents a return to the holders of the preference shares and a charge to retained earnings for the entity This amount is deducted in calculating profit or loss attributable to ordinary equity holders of the parent entity 15 Early conversion of convertible preference shares may be induced by an entity through favourable changes to the original conversion terms or the payment of additional consideration The excess of the fair value of the ordinary shares or other consideration paid over the fair value of the ordinary shares issuable under the original conversion terms is a return to the preference shareholders This excess is deducted from profit or loss attributable to ordinary equity holders of the parent entity 16 Any excess of the carrying amount of preference shares over the fair value of the consideration paid to settle them is added in calculating profit or loss attributable to ordinary equity holders of the parent entity Number of shares for the purpose of calculating basic earning per share 17 For the purpose of calculating basic earnings per share, the number of ordinary shares shall be the weighted average number of ordinary shares outstanding during the period 18 The weighted average number of ordinary shares outstanding during the period issued because the amount of shareholders’ capital varied during the period as a result of increased or decreased number of shares being outstanding at any time The weighted average number of ordinary shares outstanding during the period is the number of ordinary shares outstanding at the beginning of the period, adjusted by the number of ordinary shares Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán bought back or issued during the period multiplied by a time-weighting factor The time-weighting factor is the number of days that the shares are outstanding as a proportion of the total number of days in the period 19 Ordinary shares are usually included in the weighted average number of shares from the date consideration is receivable (which is generally the date of their issue), for example: (a) Ordinary shares issued in exchange for cash are included when cash is receivable; (b) Ordinary shares issued on the voluntary reinvestment of dividends on ordinary or preference shares are included when dividends are reinvested; (c) Ordinary shares issued as a result of the conversion of a debt instrument to ordinary shares are included from the date that interest ceases to accrue; (d) Ordinary shares issued in place of interest or principal on other financial instruments are included from the date that interest ceases to accrue; (e) Ordinary shares issued in exchange for the settlement of a liability of the entity are included from the settlement date; (f) Ordinary shares issued as consideration for the acquisition of an asset other than cash are included as of the date on which the asset is recognised; and (g) Ordinary shares issued for the rendering of services to the entity are included as the services are rendered The timing of the inclusion of ordinary shares is determined by the terms and conditions attaching to their issue Entity must consider carefully the substance of any contract associated with the issue 20 Ordinary shares issued as part of the cost of a business combination are included in the weighted average number of shares from the acquisition date, because the acquirer incorporates into its income statement the acquiree’s profits and losses from that date 21 Ordinary shares that will be issued upon the conversion of a mandatorily convertible instrument are included in the calculation of basic earnings per share from the date the contract is entered into 22 Contingently issuable shares are treated as outstanding and are included in the calculation of basic earnings per share only from the date when all necessary conditions are satisfied (ie the events have occurred) Shares that are issuable solely after the passage of time are not contingently issuable shares, because the passage of time is a certainty 23 Outstanding ordinary shares that are contingently returnable are not treated as oustanding and are excluded from the calculation of basic earnings per share until the date the shares are no longer subject to recall 24.The weighted average number of ordinary shares outstanding during the period and for all periods presented shall be adjusted for events, other than the conversion of potential ordinary shares, that have changed the number of ordinary shares outstanding without a corresponding change in resources 25 The number of ordinary shares outstanding may be increased or reduced, without a corresponding change in resources Examples include: (a) A capitalization or bonus issue (sometimes referred to as a stock dividend); (b) A bonus element in any other issue, for example a bonus element in a rights issue to existing shareholders; (c) A share split; and (d) Consolidation of shares 26 In a capitalisation or bonus issue or a share split, ordinary shares are issued to existing shareholders for no additional consideration Therefore, the number of ordinary shares outstanding is increased without an increase in resources The number of ordinary shares outstanding before the event is adjusted for the proportionate change in the number of ordinary shares outstanding as if the event had occurred at the beginning of the earliest period presented For example, on a two-for-one bonus issue, the number of ordinary shares outstanding before the issue is multiplied by three to obtain the new total number of ordinary shares, or by two to obtain the number of additional ordinary shares 27 A consolidation of ordinary shares generally reduces the number of ordinary shares outstanding without a corresponding reduction in resources However, when the overall effect is a share repurchase at fair value, the reduction in the number of ordinary shares outstanding is the result of a corresponding reduction in resources Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán Diluted Earnings per Share 28 An entity shall calculate diluted earnings per share amounts for profit or loss attributable to ordinary equity holders of the parent entity 29 For the purpose of calculating diluted earnings per share, an entity shall adjust profit or loss attributable to ordinary equity holders of the parent entity, and the weighted average number of shares outstanding, for the effects of all dilutive potential ordinary shares 30 The objective of diluted earnings per share is consistent with that of basic earnings per share to provide a measure of the interest of each ordinary share in the performance of an entity while giving effect to all dilutive potential ordinary shares outstanding during the period As a result: (a) Profit or loss attributable to ordinary equity holders of the parent entity is increased by the amount of dividends and interest recognised in the period in respect of the dilutive potential ordinary shares and is adjusted for any other changes in income or expense that would result from the conversion of the dilutive potential ordinary shares; and (b) The weighted average number of ordinary shares outstanding is increased by the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares Earnings 31 For the purpose of calculating diluted earnings per share, an entity shall adjust profit or loss after tax attributable to ordinary equity holders of the parent entity, as calculated in accordance with paragraph 10, by the after-tax effect of: (a) Dividends or other items related to dilutive potential ordinary shares deducted in arriving at profit or loss attributable to ordinary equity holders of the parent entity as calculated in accordance with paragraph 10; (b) Any interest recognised in the period related to dilutive potential ordinary shares; and (c) Other changes in income or expense that would result from the conversion of the dilutive potential ordinary shares 32 After the potential ordinary shares are converted into ordinary shares, the items identified in paragraph 31(a)-(c) no longer arise Instead, the new ordinary shares are entitled to participate in profit or loss attributable to ordinary equity holders of the parent entity Therefore, profit or loss attributable to ordinary equity holders of the parent entity calculated in accordance with paragraph 10 is adjusted for the items identified in paragraph 31(a)-(c) The expenses associated with potential ordinary shares include transaction costs and discounts accounted for in accordance with the effective interest method 33 The conversion of potential ordinary shares may lead to consequential changes in income or expenses For example, the reduction of interest expense related to potential ordinary shares and the resulting increase in profit or reduction in loss may lead to an increase in the share profit For the purpose of calculating diluted earnings per share, profit or loss attributable to ordinary equity holders of the parent entity is adjusted for any such consequential changes in income or expense Number of shares for the purpose of calculating diluted earning per share 34 For the purpose of calculating diluted earnings per share, the number of ordinary shares shall be the weighted average number of ordinary shares calculated in accordance with paragraphs 17 and 24, plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares Dilutive potential ordinary shares shall be deemed to have been converted into ordinary shares at the beginning of the period or, if later, the date of the issue of the potential ordinary shares 35 Dilutive potential ordinary shares shall be determined independently for each period presented The number of dilutive potential ordinary shares included in the year-to-date period is not a weighted average of the dilutive potential ordinary shares included in each interim computation Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán 36 Potential ordinary shares are weighted for the period they are outstanding Potential ordinary shares that are cancelled or allowed to lapse during the period are included in the calculation of diluted earnings per share only for the portion of the period during which they are outstanding Potential ordinary shares that are converted into ordinary shares during the period are included in the calculation of diluted earnings per share from the beginning of the period to the date of conversion; from the date of conversion, the resulting ordinary shares are included in both basic and diluted earnings per share 37 The number of ordinary shares that would be issued on conversion of dilutive potential ordinary shares is determined from the terms of the potential ordinary shares When more than one basis of conversion exists, the calculation assumes the most advantageous conversion rate or exercise price from the standpoint of the holder of the potential ordinary shares 38 A subsidiary, joint venture or associate may issue to parties other than the parent, venturer or investor potential ordinary shares that are convertible into either ordinary shares of the subsidiary, joint venture or associate, or ordinary shares of the parent, venturer or investor If these potential ordinary shares of the subsidiary, joint venture or associate have a dilutive effect on the basic earnings per share of the reporting entity, they are included in the calculation of diluted earnings per share Dilutive Potential Ordinary Shares 39 Potential ordinary shares shall be treated as dilutive when, and only when, their conversion to ordinary shares would decrease earnings per share or increase loss per share 40 An entity uses profit or loss attributable to the parent entity as the control number to establish whether potential ordinary shares are dilutive or antidilutive Profit or loss attributable to the parent entity is adjusted in accordance with paragraph 10 41 Potential ordinary shares are antidilutive when their conversion to ordinary shares would increase earnings per share or decrease loss per share The calculation of diluted earnings per share does not assume conversion, exercise, or other issue of potential ordinary shares that would have an antidilutive effect on earnings per share 42 In determining whether potential ordinary shares are dilutive or antidilutive, each issue or series of potential ordinary shares is considered separately rather than in aggregate The sequence in which potential ordinary shares are considered may affect whether they are dilutive, therefore, to maximize the dilution of basic earnings per share, each issue or series of potential ordinary shares is considered in sequence from the most dilutive to the least dilutive, ie dilutive potential ordinary shares with the lowest ‘earnings per incremental share’ are included in the diluted earnings per share calculation before those with a higher earnings per incremental share Options and warrants are generally included first because they not affect the profit or loss distributed to holders of common shares Options, Warrants and Their Equivalents 43 For the purpose of calculating diluted earnings per share, an entity shall assume the exercise of dilutive options and warrants of the entity The assumed proceeds from these instruments shall be regarded as having been received from the issue of ordinary shares at the average market price of ordinary shares during the period The difference between the number of ordinary shares issued and the number of ordinary shares that would have been issued at the average market price of ordinary shares during the period shall be treated as an issue of ordinary shares for no consideration 44 Options and warrants are dilutive when they would result in the issue of ordinary shares for less than the average market price of ordinary shares during the period The amount of the dilution is the average market price of ordinary shares during the period minus the issue price Therefore, to calculate diluted earnings per share, potential ordinary shares are treated as consisting of both the following: (a) A contract to issue a certain number of the ordinary shares at their average market price during the period Enterprise should ignore these ordinary shares in the calculating of diluted earning per share because these shares are assumed to be fairly priced and to be neither dilutive nor antidilutive (b) A contract to issue the remaining ordinary shares for no consideration Such ordinary shares generate no proceeds and have no effect on profit or loss attributable to ordinary shares outstanding Therefore, such shares are Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán dilutive and are added to the number of ordinary shares outstanding in the calculation of diluted earnings per share 45 Options and warrants have a dilutive effect only when the average market price of ordinary shares during the period exceeds the exercise price of the options or warrants (ie they are ‘in the money’) Previously reported earnings per share are not retroactively adjusted to reflect changes in prices of ordinary shares 46 Employee share options with fixed or determinable terms and non-vested ordinary shares are treated as options in the calculation of diluted earnings per share, even though they may be contingent on vesting They are treated as outstanding on the grant date Performance-based employee share options are treated as contingently issuable shares because their issue is contingent upon satisfying specified conditions in addition to the passage of time Convertible Instruments 47 The dilutive effect of convertible instruments shall be reflected in diluted earnings per share in accordance with paragraphs 31 and 34 48 Convertible preference shares are antidilutive whenever the amount of the dividend on such shares declared in or accumulated for the current period per ordinary share obtainable on conversion exceeds basic earnings per share Similarly, convertible debt is antidilutive whenever its interest (net of tax and other changes in income or expense) per ordinary share obtainable on conversion exceeds basic earnings per share 49 The redemption or induced conversion of convertible preference shares may affect only a portion of the previously outstanding convertible preference shares In such cases, any excess consideration referred to in paragraph 15 is attributed to those shares that are redeemed or converted for the purpose of determining whether the remaining outstanding preference shares are dilutive The shares redeemed or converted are considered separately from those shares that are not redeemed or converted Contingently Issuable Shares 50 As in the calculation of basic earnings per share, contingently issuable ordinary shares are treated as outstanding and included in the calculation of diluted earnings per share if the conditions are satisfied (ie the events have occurred) Contingently issuable shares are included from the beginning of the period (or from the date of the contingent share agreement, if later) If the conditions are not satisfied, the number of contingently issuable shares included in the diluted earnings per share calculation is based on the number of shares that would be issuable if the end of the period were the end of the contingency period Restatement is not permitted if the conditions are not met when the contingency period expires 51 If attainment or maintenance of a specified amount of earnings for a period is the condition for contingent issue and if that amount has been attained at the end of the reporting period but must be maintained for an additional period, then the additional ordinary shares are treated as outstanding, if the effect is dilutive, when calculating diluted earnings per share In that case, the calculation of diluted earnings per share is based on the number of ordinary shares that would be issued if the amount of earnings at the end of the reporting period were the amount of earnings at the end of the contingency period Because earnings may change in a future period, the calculation of basic earnings per share does not include such contingently issuable ordinary shares until the end of the contingency period because not all necessary conditions have been satisfied 52 The number of ordinary shares contingently issuable may depend on the future market price of the ordinary shares In that case, if the effect is dilutive, the calculation of diluted earnings per share is based on the number of ordinary shares that would be issued if the market price at the end of the reporting period were the market price at the end of the contingency period If the condition is based on an average of market prices over a period of time that extends beyond the end of the reporting period, the average for the period of time that has lapsed is used Because the market price may change in a future period, the calculation of basic earnings per share does not include such contingently issuable ordinary shares until the end of the contingency period because not all necessary conditions have been satisfied 53 The number of ordinary shares contingently issuable may depend on future earnings and future prices of the ordinary shares In such cases, the number of ordinary shares included in the diluted earnings per share calculation is based on both conditions Contingently issuable ordinary shares are not included in the diluted earnings per share Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán calculation unless both conditions are met 54 In other cases, the number of ordinary shares contingently issuable depends on a condition other than earnings or market price In such cases, assuming that the present status of the condition remains unchanged until the end of the contingency period, the contingently issuable ordinary shares are included in the calculation of diluted earnings per share according to the status at the end of the reporting period 55 Contingently issuable potential ordinary shares (other than those covered by a contingent share agreement, such as contingently issuable convertible instruments) are included in the diluted earnings per share calculation as follows: (a) An entity determines whether the potential ordinary shares may be assumed to be issuable on the basis of the conditions specified for their issue in accordance with the contingent ordinary share provisions in paragraphs 50-54; and (b) If those potential ordinary shares should be reflected in diluted earnings per share, an entity determines their impact on the calculation of diluted earnings per share by following the provisions for options and warrants in paragraphs 43-46, the provisions for convertible instruments in paragraphs 47-49, the provisions for contracts that may be settled in ordinary shares or cash in paragraphs 56-59, or other provisions, as appropriate However, exercise or conversion is not assumed for the purpose of calculating diluted earnings per share unless exercise or conversion of similar outstanding potential ordinary shares that are not contingently issuable is assumed Contracts that may be settled in ordinary shares or cash 56 When an entity has issued a contract that may be settled in ordinary shares or cash at the entity’s option, the entity shall presume that the contract will be settled in ordinary shares, and the resulting potential ordinary shares shall be included in diluted earnings per share if the effect is dilutive 57 When such a contract is presented for accounting purposes as an asset or a liability, or has an equity component and a liability component, the entity shall adjust the numerator for any changes in profit or loss that would have resulted during the period if the contract had been classified wholly as an equity instrument That adjustment is similar to the adjustments required in paragraph 31 58 For contracts that may be settled in ordinary shares or cash at the holder's option, the more dilutive of cash settlement and share settlement shall be used in calculating diluted earnings per share 59 Examples of a contract that may be settled in ordinary shares or cash include: (a) A debt instrument that, on maturity, gives the entity the unrestricted right to settle the principal amount in cash or in its own ordinary shares (b) A written put option that gives the holder a choice of settling in ordinary shares or cash Purchased options 60 Contracts such as purchased put options and purchased call options (ie options held by the entity on its own ordinary shares) are not included in the calculation of diluted earnings per share because including them would be antidilutive The put option would be exercised only if the exercise price were higher than the market price and the call option would be exercised only if the exercise price were lower than the market price Written put options 61 Contracts that require the entity to repurchase its own shares, such as written put options and forward purchase contracts, are reflected in the calculation of diluted earnings per share if the effect is dilutive If these contracts are ‘in the money’ during the period (ie the exercise or settlement price is above the average market price for that period), the potential dilutive effect on earnings per share shall be calculated as follows: (a) It shall be assumed that at the beginning of the period sufficient ordinary shares will be issued (at the average market price during the period) to raise proceeds to satisfy the contract; (b) It shall be assumed that the proceeds from the issue are used to satisfy the contract (ie to buy back ordinary shares); and (c) the incremental ordinary shares (the difference between the number of ordinary shares assumed issued Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán and the number of ordinary shares received from satisfying the contract) shall be included in the calculation of diluted earnings per share Retrospective adjustments 62 If the number of ordinary or potential ordinary shares outstanding increases as a result of a capitalisation, bonus issue or share split, or decreases as a result of a reverse share split, the calculation of basic and diluted earnings per share for all periods presented shall be adjusted retrospectively If these changes occur after the balance sheet date but before the financial statements are authorised for issue, the per share calculations for those and any prior period financial statements presented shall be based on the new number of shares The fact that per share calculations reflect such changes in the number of shares shall be disclosed In addition, basic and diluted earnings per share of all periods presented shall be adjusted for the effects of errors and adjustments resulting from changes in accounting policies accounted for retrospectively 63 An entity does not restate diluted earnings per share of any prior period presented for changes in the assumptions used in earnings per share calculations or for the conversion of potential ordinary shares into ordinary shares Presentation of financial statements 64 An entity shall present on the face of the income statement basic and diluted earnings per share for profit or loss attributable to the ordinary equity holders of the parent entity for the period for each class of ordinary shares that has a different right to share in profit for the period An entity shall present basic and diluted earnings per share with equal prominence for all periods presented 65 Earnings per share is presented for every period for which an income statement is presented If diluted earnings per share is reported for at least one period, it shall be reported for all periods presented, even if it equals basic earnings per share If basic and diluted earnings per share are equal, dual presentation can be accomplished in one line on the income statement 66 An entity shall present basic and diluted earnings per share, even if the amounts are negative (ie a loss per share) Disclosure 67 An entity shall disclose the following: (a) The amounts used as the numerators in calculating basic and diluted earnings per share, and a reconciliation of those amounts to profit or loss attributable to the parent entity for the period The reconciliation shall include the individual effect of each class of instruments that affects earnings per share (b) The weighted average number of ordinary shares used as the denominator in calculating basic and diluted earnings per share, and a reconciliation of these denominators to each other The reconciliation shall include the individual effect of each class of instruments that affects earnings per share (c) Instruments (including contingently issuable shares) that could potentially dilute basic earnings per share in the future, but were not included in the calculation of diluted earnings per share because they are antidilutive for the period(s) presented (d) A description of ordinary share or potential ordinary share transactions, other than those accounted for in accordance with paragraph 62, that occur after the balance sheet date If those transactions had occurred before the end of the reporting period, that transactions would have changed significantly the number of ordinary shares or potential ordinary shares outstanding at the end of the period 68 Examples of transactions in paragraph 67(d) include: (a) An issue of shares for cash; (b) An issue of shares when the proceeds are used to repay debt or preference shares outstanding at the balance sheet date; (c) The redemption of ordinary shares outstanding; (d) The conversion of potential ordinary shares outstanding at the balance sheet date into ordinary shares; Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán (e) An issue of options, warrants, or convertible instruments; and (f) The achievement of conditions that would result in the issue of contingently issuable shares Earnings per share amounts are not adjusted for such transactions occurring after the balance sheet date because such transactions not affect the amount of capital used to produce profit or loss for the period 69 Financial instruments and other contracts generating potential ordinary shares may incorporate terms and conditions that affect the measurement of basic and diluted earnings per share These terms and conditions may determine whether any potential ordinary shares are dilutive and, if so, the effect on the weighted average number of shares outstanding and any consequent adjustments to profit or loss attributable to ordinary equity holders 70 If an entity discloses, in addition to basic and diluted earnings per share, amounts per share using a reported component of the income statement other than one required by this Standard, such amounts shall be calculated using the weighted average number of ordinary shares determined in accordance with this Standard Basic and diluted amounts per share relating to such a component shall be disclosed with equal prominence and presented in the notes to the financial statements An entity shall indicate the basis on which the numerator(s) is (are) determined, including whether amounts per share are before tax or after tax Cảm ơn bạn tải file từ VnAccounting.Net | Cộng đồng Dân Kế toán Kiểm toán [...]... Assets) to investment property 24 Paragraph 23(b) above requires an enterprise to transfer a property from investment property to inventories when, and only when, there is a change in use, evidenced by commencement of development with a view to sale When an enterprise decides to dispose of an investment property without development, the enterprise continues to treat the property as an investment property... future economic benefits 10 An intangible fixed asset is considered identifiable when the enterprises may lease, sell or exchange it or acquire concrete future economic benefits therefrom Those assets which can only generate future economic benefits when combined with other assets shall be still seen as separately identifiable if the enterprises can determine with certainty future economic benefits to be... property when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing investment property, will flow to the enterprise 21 The appropriate accounting treatment for expenditure incurred subsequently to the acquisition of an investment property depends on the circumstances which were taken into account on the initial measurement and recognition... factors must be taken into account: a/ The extent of use of such asset, estimated by the enterprise The extent of use is assessed according to the estimated capacity or output; b/ The extent of wear-and-tear, depending on the related elements in the asset’s use process, such as the number of working shifts, the enterprise’s repair and maintenance of the asset as well as its upkeep when not in operation;... for a transfer from investment property to inventories; (c) end of owner-occupation, for a transfer from owner-occupied property to investment property; (d) commencement of an operating lease to another party, for a transfer from inventories to investment property; or (e) end of construction or development, for a transfer from property in the course of construction or development (covered by VAS 03, Tangible... investment property should be measured at cost, less accumulated depreciation to arrive at net book value in the holding period Transfers 23 Transfers to, or from, investment property should be made when, and only when, there is a change in use, evidenced by: (a) commencement of owner-occupation, for a transfer from investment property to owner-occupied property; (b) commencement of development with... investment property that generated rental income during the period; and - direct operating expenses (including repairs and maintenance) arising from investment property that did not generate rental income during the period; (f) Reasons of and affects on income from investment property trading; (g) material contractual obligations to purchase, construct or develop investment property or for repairs, maintenance... establishment of jointly controlled entities (jointly controlled entities) The following characteristics are common to all joint ventures: (a) two or more venturers are bound by a contractual arrangement; and (b) the contractual arrangement establishes joint control Contractual Arrangement 05 The existence of a contractual arrangement distinguishes interests which involve joint control from investments... significant influence (see VAS 07, Accounting for Investments in Associates) Activities which have no contractual arrangement to establish joint control are not joint ventures for the purposes of this VAS 06 The contractual arrangement may be evidenced in a number of ways, for example by a contract between the venturers or minutes of discussions between the venturers In some cases, the arrangement is incorporated... period during which it arises 37 The requirements on the presentation of the financial statements of lessees and lessors regarding asset sale and leaseback operations must be alike Where the lease agreements contain a special provision, it must be presented in the financial statements Presentation Of Financial Statements For the lessees 38 The lessees must present the following information on financial
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