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THE MINISTRY
OF FINANCE
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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No. 33/1998/TT-BTC
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Hanoi, March
17, 1998
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CIRCULAR
GUIDING THE
COST-ACCOUNTING OF THE SETTING UP AND USE OF THE RESERVE FOR THE PRICE DECREASE
OF UNSOLD GOODS, THE RESERVE FOR BAD DEBTS AND THE RESERVE FOR THE PRICE
DECREASE OF SECURITIES OF STATE ENTERPRISES
In subsequence to Circular No. 64-TC/TCDN of
September 15, 1997 of the Minister of Finance "guiding the setting up and
use of the reserve for the price decrease of unsold goods, the reserve for bad
debts and the reserve for the price decrease of securities of State
enterprises, the Ministry of Finance hereby provides the following guidance on
the method of cost-accounting of the setting up, remittance and handling of
various reserves of enterprises
I.
GENERAL PROVISIONS:
1. The time of setting up and remitting the
reserve for the price decrease of unsold goods, the reserve for bad debts and
the reserve for the price decrease of securities shall be the time of closing
the accounting books before the making of annual financial statements.
2. All the reserves which have been set up and
accounted into the costs at the end of the last fiscal year shall be remitted
at the end of the subsequent fiscal year. The reserve for the price decrease of
unsold materials and goods and the reserve for bad debts shall be remitted into
the irregular income while the reserve for the price decrease of securities
shall be remitted into the income from financial activities.
3. The objects, the conditions for setting up
reserves and their levels and the writing off of irrecoverable debts shall
comply with the provisions of Circular No. 64-TC/TCDN of September 15, 1997 of
the Ministry of Finance.
II.
METHOD OF COST-ACCOUNTING OF THE SETTING UP AND REMITTANCE OF RESERVES
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At the end of every accounting year,
enterprises' accountants shall base themselves on the actual price decrease of
each kind of unsold material or goods to calculate and determine the level of
the reserve to be set up for the subsequent accounting year. Write as follows:
Debit of Account 642 - Enterprise's managerial
costs
Credit of Account 159 - The reserve for the
price decrease of unsold goods.
- At the end of the subsequent accounting YEAR,
the accountants shall account and remit all the reserve already set up at the
end of the last accounting year into the irregular incomes and write:
Debit of Account 159 - The reserve for the price
decrease of unsold goods
Credit of Account 721 - Irregular incomes.
At the same time they shall calculate and
determine the level of the new reserve for the price decrease of unsold goods
to be set up for the subsequent accounting year and write:
Debit of Account 642 - Enterprise' managerial
cost
Credit of Account 159 - The reserve for the
price decrease of unsold goods.
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At the end of every accounting year,
enterprises' accountants shall base themselves on the actual price decrease of
securities and the existing types of securities to calculate and determine the
level of the reserve for the price decrease of securities to be set up for the
subsequent accounting year, THEN write:
Debit of Account 811 - Financial operation costs
Credit of Account 129 - The reserve for the
price decrease of short-term investment.
Credit of Account 229 - The reserve for the
price decrease of long-term investment
- At the end of the subsequent accounting period,
accountants shall account and remit all the reserve already set up at the end
of the last accounting year into the income from financial activities and
write:
Debit of Account 129 - The reserve for the price
decrease of short-term investment
Debit of Account 229 - The reserve for the price
decrease of long-term investment
Credit of Account 711 - Incomes from financial
activities.
At the same time they shall calculate and
determine the level of the new reserve for the price decrease of the investment
in securities to be set up for the subsequent accounting year and write:
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Credit of Account 129 - The reserve for the
price decrease of short-term investment
Credit of Account 229 - The reserve for the
price decrease of long-term investment
3. Cost-accounting of the reserve for bad debts
3.1. Cost-accounting of the setting up and
remittance of the reserves for bad debts:
- At the end of every accounting year,
enterprises' accountants shall base themselves on the amount of bad debts and
the estimated loss likely to occur during the plan year to calculate and
determine the level of the reserve for bad debts to be set up for the
subsequent accounting year, then write:
Debit of Account 642 - Enterprise's managerial costs
Credit of Account 139 - The reserve for bad
debts.
- At the end of the subsequent accounting year,
the accountants shall account and remit all the bad debt reserves already set
up at the end of the last accounting year into the irregular incomes and write:
Debit of Account 139 - The reserve for bad debts
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At the same time they shall determine the level
of the new reserve bad debts to be set up for the subsequent accounting year,
and write:
Debit of Account 642 - Enterprise' managerial
cost
Credit of Account 139 - The reserve for bad
debts
3.2. Cost-accounting of the writing off of bad
debts
The writing off of bad debts which are
unrecoverable shall comply with current financial regulations. When there is a
decision to permit the writing off of debts, accountants shall write:
Debit of Account 642 - Enterprise's managerial
costs
Credit of Account 131 - Customers' liable
amounts
Credit of Account 138 - Other liable amounts.
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For bad debts that have been already written off
but later recovered, accountants shall base themselves on the actual value of
the recovered debt(s) and write:
Debit of Account 111 - Cash
Debit of Account 112 - Bank deposits
Credit of Account 721 - Irregular incomes.
At the same time, write on the credit side of
Account 004 - Bad debts already dealt with.
III.
IMPLEMENTATION PROVISIONS
1. This Circular takes effect 15 days after its
signing. All previous provisions contrary to the provisions of this Circular
are hereby annulled.
2. In the course of implementation any arising
problem should be promptly reported by enterprises to the Ministry of Finance
for study, guidance and settlement.
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THE MINISTRY OF
FINANCE
VICE MINISTER
Vu Mong Giao