Vietnamese Public Accounting Standard No. 01 “Presentation of financial statements” under Decision 1676/QD-BTC dated September 01, 9

APPENDIX NO.01

VIETNAM PUBLIC ACCOUNTING STANDARD NO.01
PRESENTATION OF SMALL FINANCIAL STATEMENTS
(Attached to Decision No. 1676/QD-BTC dated September 01, 09 of the Ministry of Finance)

INTRODUCTION

Vietnam's public accounting standards system has been researched and developed by the Public Accounting Standards Board of the Ministry of Finance to ensure compliance with international accounting practices and conditions. reality of Vietnam. Vietnamese public accounting standards have the same standard symbols as the corresponding international public accounting standards.

Vietnam Public Accounting Standard (VPSAS) No. 01 “Presentation of financial statements” Drafted based on International Public Accounting Standard (IPSAS) No “Presentation of Financial Statements” and current regulations on Vietnam's financial and budgetary mechanism. Vietnam Public Accounting Standard No. 01 stipulates the contents consistent with the current legal regulations of Vietnam and the regulations that are expected to be amended and supplemented in the near future. Vietnam Public Accounting Standard No. 01 does not stipulate the contents of the International Public Accounting Standard No. 1 which are not suitable for the long-term financial and budgetary mechanism, the addition of regulations will be made on the basis of according to the actual situation in each appropriate period.

The International Public Accounting Standard No. 1 is based on the 2006 edition, revised to be consistent with other international public accounting standards as of December 31, 12, by the Accounting Standards Board. International Public Accounting (IPSASB) promulgated.

Vietnam Public Accounting Standard No. 01 denotes the ordinal number of paragraphs compared to international public accounting standards. For comparison, the reference table of paragraph symbols of Vietnamese public accounting standards compared with the notation of international public accounting standards paragraphs is included with this standard. For matters related to other public accounting standards, Vietnam Public Accounting Standard No. 01 quoted by symbol and name of relevant Vietnamese public accounting standards has been promulgated. For standards that have not been issued, this standard only mentions the name of the standard or related content to be referenced, not the number of the relevant standard as in the international public accounting standard No. 1. Specific citation of the symbol and the standard name will be made after the relevant standards are issued.

By the time of promulgation of Vietnam Public Accounting Standard No. 01 (in 2021), relevant standards that have not been promulgated include:

VPSAS 01 – FINANCIAL STATEMENT PRESENTATION

The process of promulgating and updating Vietnamese public accounting standards No. 01
(hereinafter referred to as the Standard)

The version of Vietnamese public accounting standards No. 01 was first issued under Decision No. 1676/QD-BTC dated September 01, 09 of the Minister of Finance.

This Standard takes effect from September 01, 09, and will be applied from September 2021, 01.

Commonly valid standards include:

– Vietnamese Public Accounting Standard No. 02: Statement of cash flows;

– Vietnamese Public Accounting Standard No. 12: Inventory;

– Vietnam Public Accounting Standard No. 11: Real estate, plant and equipment;

– Vietnamese Public Accounting Standard No. 31: Intangible assets.

VPSAS 01 – FINANCIAL STATEMENT PRESENTATION

CONTENT

The text of Vietnamese Public Accounting Standard No. 01 “Presentation of financial statements” is presented in paragraphs 1 to 137. All paragraphs are equally authentic.

Reference table of paragraphs of Vietnamese public accounting standards compared with paragraphs of international public accounting standards

I. GENERAL PROVISIONS

Purpose

1. The purpose of this standard is to prescribe the presentation of general purpose financial statements and comparisons with the financial statements of previous periods and those of other entities. To this end, this Standard provides an overview of the general considerations to be made in the presentation of financial statements, guidelines for the structure of the report, and minimum requirements for the content of the financial statements. are prepared on the accrual basis of accounting. The identification, valuation, recognition, presentation and disclosure of specific transactions and other events are covered by other relevant Vietnamese public accounting standards.

Limit

2. This Standard is applicable to all general purpose financial statements prepared and presented on the accrual basis in accordance with Vietnamese Public Accounting Standards.

3. General-purpose financial statements are reports intended to satisfy the information needs of users without the need to provide reports with specific information. General-purpose users of financial statements include tax and fee payers, legislators, regulators, creditors, service providers, and media. and workers. General purpose financial statements include reports that are presented separately or in the framework of publicly available documents, such as annual reports. This Standard does not apply to the compilation of interim financial information.

4. This Standard is generally applicable to both the preparation of the consolidated financial statements and the preparation of the separate financial statements, as required by the relevant Vietnamese public accounting standards.

Define

5. The terms used in this standard have the following meanings:

Distributions to owners are potential future economic benefits or services distributed by an entity to some or all of the entity's owners, in the form of a return on invested capital. or return the investment.

Expenses are potential reductions in economic benefits or services during the reporting period in the form of indicated cash flows, or the use of assets, or the arising of a liability that results in a decrease in assets. net assets/equity of the entity, in addition to distributions to owners.

The accrual basis is the basis of accounting under which transactions and other events are recognized when they occur (regardless of whether cash or cash equivalents have actually been received or spent). Transactions and events are recorded in the accounting books and recorded in the financial statements of the accounting period in which they occur. The elements recognized on the accrual basis of accounting are assets, liabilities, net assets/equity, revenue and expenses.

Revenue is the sum of potential economic benefits or services obtained by the entity during the reporting period that increase the net assets/equity of the entity, excluding increases related to owner's equity. possess.

An economic unit is a collection that includes a controlling entity and all of its controlled entities for financial reporting purposes.

A liability is an entity's present obligation that arises from past events, the settlement of which would reduce the entity's potential economic benefits or services.

Assets are resources that are controlled by the entity as a result of past events, and it is probable that future economic benefits will flow to the entity from these resources.

Net assets/equity is the residual interest in an entity's assets after deducting all liabilities.

Notes include additional information to those presented in the statement of financial position, the statement of income, the statement of changes in net assets/equity, and the statement of cash flows. currency transfer. The notes provide detailed explanations or analysis of the items presented in the above statements and information about the items that do not meet the criteria presented in the above reports.

Materiality: Information is material if the omission or misreporting of it, either alone or in combination with other information, could influence the decisions or judgments of users. use financial statements. Materiality depends on the size and nature of the omission or misreporting in the particular circumstances. The size or nature of the information, or a combination of the size and nature of the information, may be factors in determining materiality.

Owner's equity is the future economic benefits that the entity receives from outside, but does not generate liabilities of the entity, but forms a financial interest in net assets/equity. of the unit. These contributions have the following characteristics:

(a) Confers the right (i) to distribute future economic benefits and potential services over the life of the entity that are vested solely with the owner or on behalf of the owner of the entity. the entity, and (ii) distribute any excess of the entity's assets over its liabilities upon dissolution; and/or

(b) May be sold, exchanged, transferred or redeemed.

Terms defined in other Vietnamese Public Accounting Standards as used in this Standard have the same meanings as in those Standards.

Economic unit

6. The term “economic unit” is used in this Standard to refer to a collection that includes a controlling entity and all of its controlled entities for financial reporting purposes. .

7. Other terms that can be used interchangeably to refer to an economic unit are “consolidated unit”, “superior accounting unit” and “level I estimate unit”.

8. An economic unit may include units operating for social purposes according to assigned functions, tasks and commercial purposes. For example, the Ministry may include state administrative units that only use the state budget operating according to their assigned functions and tasks, and also public non-business units that both perform assigned tasks and carry out activities at the same time. provide services in accordance with the law.

Future economic benefit or potential service

9. Assets are means for units to perform activities according to their functions and tasks. Assets that are used to directly generate cash inflows are generally considered “future economic benefits”. Assets that are used to provide goods or services that are suitable for an entity's operational purposes but do not directly generate cash inflows are generally considered "potential services". To cover the entire intended use of the asset, this standard uses the term “Future economic benefit or potential service” to fully describe the basic characteristics of the asset.

Significance

10. Evaluating whether omissions or misstatement of statements may influence the decisions of the readers of the financial statements, whether materially or not, is based on the wishes and capabilities of the users of the financial statements. that fox. The user of the report must have a reasonable understanding of the public sector, economic and accounting activities, and make a conscious effort to obtain the information necessary to the extent necessary. Therefore, the assessment should take into account the extent to which users of information with those characteristics may be affected in their judgments about the financial statements and in making decisions.

Net assets/equity

11. Net assets/equity is the term used in this Standard to refer to the residual value of assets in the statement of financial position after deducting all liabilities. Net assets/equity can be positive or negative. Other terms may be used interchangeably with the terms net assets/equity, provided the terms have a clear meaning (e.g. net assets).

II. SPECIFIED

Purpose of financial statements

12. Financial statements are information about the financial position and financial results of an entity presented for a purpose in a structured, structured form. The purpose of financial statements is to provide useful information about an entity's financial position, financial results and cash flows for users of the financial statements to evaluate and make informed decisions about. allocation and use of resources. Financial statements in the field of public accounting must provide information useful for decision-making, must demonstrate the entity's ability to account for the use of resources received, in the following forms:

(a) Provide information on resources, the allocation of resources and the use of financial resources;

(b) Provide information about the entity's activities to finance operations and meet expenditure needs;

(c) Provide information useful for assessing the entity's ability to secure capital for its operations, meet its debt repayment needs, and fulfill its commitments;

(d) Provide information about the entity's financial condition and changes in financial condition; and

(e) Provide aggregate information useful for evaluating an entity's performance in terms of service costs, efficiency, and the entity's ability to achieve its objectives.

13. Financial statements also have a predictive role in the future by providing information that is useful in projecting the amount of resources needed to carry out future activities, the resources that can be generated from future activities, the risks and uncertainties associated with it. In addition, financial statements may also provide users with the following information:

(a) That the resources have been lawfully received and used in accordance with the assigned budget; and

(b) The fact that resources have been received and used in accordance with applicable laws, relevant financial mechanisms and contracts to which the entity has entered into.

14. To achieve the above purposes, the financial statements must provide the entity's information, as follows:

(a) Property;

(b) Liabilities;

(c) Net assets/equity;

(d) Revenue;

(e) Expenses;

(f) Other changes in net assets/equity; and

(g) Cash flows.

15. Although the information presented in the financial statements may be relevant to the purposes of the financial statements set forth in paragraph 12, all of these purposes may not necessarily be satisfied. Especially for units operating without a fundamental for-profit purpose, unit leadership must ensure that the delivery of mission-driven services are within financial objectives. Additional information, including non-financial statements, may be presented with the financial statements to provide a complete picture of the entity's performance for the period.

Responsibility for preparing financial statements

16. Accounting units (including economic units) must prepare financial statements according to the provisions of law, according to which a person to prepare financial statements must be assigned. Financial statements must be signed by the preparer, chief accountant/accountant (or authorized person), head of unit (or authorized person) at the time of signing the report in accordance with the provisions of law. the law. For cases with other regulations, for example, the management board approves the financial statements, etc., comply with current regulations of law.

17. The State Treasury prepares national financial statements and reports to the provincial state. The process of making and signing state financial statements comply with current regulations on state financial statements.

Components of financial statements

18. A complete set of financial statements includes:

(a) Statement of financial position;

(b) Performance reports;

(c) Report on changes in net assets/equity;

(d) statement of cash flows;

(e) Entities that make publicly available approved budgets are required to provide a comparison between the budget estimate and the performance number, presented as additional financial information;

(f) Notes to the financial statements, including a summary of significant accounting policies and other explanations, and;

(g) Information comparing with the previous period as specified in paragraphs 41 and 42 of this standard.

19. Financial statements provide users with information about the resources and obligations of the entity at the reporting date and the fluctuations of resources between the reporting times. This information is useful to users when making judgments about the ability of the entity to continue to perform assigned tasks, provide goods and services to an acceptable level and extent. resources needed in the future to ensure the entity's ability to continue to perform its duties and provide goods and services.

20. Units in the public sector that use the state budget or some other resources assigned by the State must comply with budget limits in the form of estimates approved by competent authorities, which can only be used in estimated scope has been assigned. The financial statements of public sector entities can provide information on whether resources have been lawfully received and used according to assigned estimates. The units that publicize the approved budget estimates must comply with the regulations on the presentation of information about the budget estimates in the financial statements. Comparisons between budget and performance can be presented in a variety of ways, including;

• Use additional financial information, which shows the difference between the estimate and the performance number; and

• Disclosure of information about not exceeding the budget.

21. Entities are encouraged to present additional information to assist reporting users in evaluating the performance and management of the entity's assets, as well as in making decisions about its operations. allocate resources. This additional information may include detailed information about the entity's performance in the form of performance indicators, service delivery reports, program reports, projections projects and other reports of the entity's management on outstanding events of the entity during the reporting period.

22. Units are also encouraged to present information on compliance with laws, regimes, policies or regulations issued by competent authorities. When financial statements do not provide compliance information, an entity should include a reference to any document containing such information. Information about noncompliance is relevant for the entity's accountability purposes, and may affect users' judgments of the financial statements about the entity's results of operations and the direction of future operations. future. This may also influence future decisions about resource allocation to that entity.

Overall review

Fair presentation and compliance with public accounting standards

23. The financial statements must present a reasonable presentation of the financial position, results of operations and cash flows of the entity. A fair presentation is required to give a true and fair view of the effects of transactions, other events, and conditions in accordance with the established definitions and criteria for recognizing assets, liabilities, revenues and expenses. specified in the standards. The correct application of those standards and the presentation of additional information where necessary is considered a fair presentation of the financial statements.

24. Financial reporting in compliance with Vietnamese public accounting standards is clearly stated by the accounting unit in the notes to the financial statements. Financial statements are considered to comply with Vietnamese public accounting standards only when they fully comply with all requirements of public accounting standards issued by the Ministry of Finance.

25. In most cases, when complying with Vietnamese public accounting standards, the financial statements will be considered fair presentation. Fair presentation also requires the entity to:

(a) Select and apply accounting policies that are consistent with Vietnamese Standards on Accounting for accounting policies, changes in accounting estimates, and errors. This standard prescribes a system of mandatory guidelines that management may consider when there are no specific standards applicable to a certain item.

(b) Present information, including accounting policies, so that relevant, truthful, understandable, timely, reliable, comparable and verifiable information can be provided.

(c) Provide additional information where compliance with a particular standard is not sufficient for the reader to understand the effect of certain transactions, other events, and conditions on financial position and results of operations of the entity.

Continuous operation

26. In preparing the financial statements, the entity's ability to continue as a going concern should be evaluated by those responsible for preparing the financial statements. The financial statements are prepared on the going concern basis unless there is a policy or plan to dissolve or cease operations for the entity. In making their assessments, those responsible for the preparation of the financial statements are aware of any material uncertainties associated with events or conditions that affect the entity's ability to continue as a going concern, and disclosure of these uncertainties. When the financial statements are not prepared on the going concern basis, the entity must disclose this, together with the basis on which the reporting is based and the reasons why the entity is not considered going concern.

27. The financial statements are prepared on the assumption that the entity will continue in business as usual and meet its obligations over a foreseeable future period. In evaluating whether the going concern assumption is reasonable, those responsible for preparing the financial statements should consider all available information regarding future operations for at least a period of time. 12 months from the date the financial statements are approved.

28. The extent of the review is case-by-case and the assessment of the going concern assumption of the public sector entity is not based on the results of the solvency tests normally applied to with businesses. It may be the case that routine tests of liquidity and solvency have adverse results, but other factors indicate that the entity is still capable of going concern. Eg:

(a) The independent entity may have poor financial performance, even in subsequent periods, but still be provided with the resources to continue with its mandate. Responsibility to perform duties meets the going concern assumption of the entity.

(b) For an independent entity, an assessment of the financial position of that entity as at the date of the financial statements may indicate that it is unlikely to continue as a going concern. However, the entity may have long-term financing contracts or other arrangements that guarantee its ability to continue as a going concern.

29. The going concern determination is considered for each independent entity. When assessing the going concern, before concluding that the entity has the ability to continue as a going concern, the preparers of the financial statements need to consider many factors related to the assigned tasks; current and expected future performance; announced and expected organizational and operational restructuring situation; estimates of revenues or sources of continued government funding; and potential alternative sources of finance, before concluding that the going concern assumption is appropriate.

Consistent presentation

30. The presentation and classification of items in the financial statements must be made consistently from period to period, unless:

(a) There is a material change in the nature of the entity's operations, or when a review of the financial statements makes it clear that it would be more appropriate to present or classify items differently according to the criteria select and apply the accounting policies specified in the Vietnamese Public Accounting Standards on accounting policies, changes in accounting estimates and errors; or

(b) Another Standard requires a change to the existing presentation.

31. In certain circumstances, a change in operations or a review of the presentation of the financial statements may require an entity to present the financial statements in a different way. For example, an economic entity may be split up, dissolving a service segment that is one of the reporting entity's most controlled entities. The remaining parts of the economic unit are those performing management and policy consulting. In this case, the financial statements prepared on the basis of the previous economic unit are no longer relevant to the new economic unit.

32. An entity may change the presentation of the financial statements only when the change gives the users more reliable and relevant information, the new presentation requirements will continue to be fulfilled. , which ensures comparability of information. When changing the presentation of the financial statements, an entity is required to reclassify comparative information in accordance with paragraphs 44 and 45 of this Standard.

Crucial and General

33. Each group of similar items of materiality must be presented separately in the financial statements. Items of a different nature or function should be presented separately, unless the items are not material.

34. Financial statements are the result of processing and aggregating a large number of transactions and events, grouped by nature or function. The final job of this process is to present the data that have been classified and aggregated into the corresponding items on the form of the statement of financial position, the statement of income, the statement of changes in the financial statements. net assets/equity, statement of cash flows, or notes to the financial statements. If a separate item is not material, it will be aggregated with other items in the financial statements or in the notes to the financial statements. An item that is not material enough to be presented separately in the financial statements but may be material enough to be presented separately in the notes to the financial statements.

35. Applying the concept of materiality means that an entity is not required to comply with a standard's disclosure requirement if the information is not material.

Compensation

36. Assets and liabilities, revenues and expenses are not offset unless required or permitted by a Vietnamese public accounting standard.

37. The separate presentation of assets and liabilities, revenues and expenses is important. Offsetting these items on the statement of income or on the statement of financial position (unless the setting reflects the nature of the transaction or event), reduces the ability of the users of the statement to financial statements in understanding the nature of the transactions, events and conditions that have arisen; and evaluate the entity's future cash flows. Where provisions are permitted by law, assets shall be recognized at net value after deducting provisions, for example provision for devaluation of inventories and provision for doubtful debts. , is not considered offset.

38. Vietnamese Public Accounting Standard on Revenue from Exchange Transactions defines revenue and stipulates that revenue is recognized at the fair value of amounts received or to be received after deductions have been made. trade discounts and rebates. During a normal operating cycle, the entity may enter into transactions that do not generate revenue but are related to its primary revenue-generating activity. The results of these transactions are presented by offsetting the revenue from the costs of the same transaction, if such presentation reflects the nature of the transaction or event. For example, profit or loss arising from the disposal of long-term assets, including investments and operating assets, is presented by subtracting the carrying amount from the disposal of the assets. assets and expenses related to the liquidation.

39. In addition, gains and losses arising from a group of similar transactions are also stated at their net amount, for example gains and losses from exchange differences. However, if these gains and losses are material, they should be presented separately.

40. The clearing of cash flows is presented in Vietnamese Public Accounting Standard No. 02 "Statements of cash flows".

Comparable information

Minimum comparative information

41. Unless a Vietnamese public accounting standard allows or otherwise requires, an entity must present comparable prior period information for all amounts presented in the financial statements. An entity must present comparative information in an explanatory and descriptive form, if necessary, to enable readers to understand the current period financial statements.

42. An entity must present at a minimum a statement of financial position with comparative information for the previous period, a statement of income with comparative information for the previous period, and a statement of cash flows with comparative information. of the previous period and report changes in net assets/equity with comparative information for the previous period and related notes.

43. In some cases, interpretations provided in the financial statements of previous periods continue to be relevant to the current period. For example, detailed information about a legal dispute that occurred at the end of the previous period with no clear results, if it has not been resolved by now, it must be published in this period. Users of the report will obtain information about the uncertainty at the date of the prior period's financial statements and information about what the entity has done during this period to resolve the problem.

44. When the presentation or classification of items in the financial statements is changed, the comparative amounts must also be reclassified unless this is impracticable. When comparative figures are reclassified, an entity shall present:

(a) The nature of the reclassification;

(b) Figures for each item or group of items reclassified; and

(c) The reason for the reclassification.

45. In case the data cannot be reclassified, the entity must present:

(a) Reasons for not being able to reclassify the data; and

(b) The nature of the adjustment that would have to be made if the data were to be reclassified.

46. ​​The enhancement of comparability of information between reporting periods helps users in decision-making and decision evaluation, especially allowing the assessment of trends in financial information for purposes of guess. In some cases, it may not be possible to reclassify comparative information for a particular previous period to compare with this period. For example, in a public hospital, in the previous period, the revenue from medical examination and treatment services did not open to track the revenue of each department, but in this period, this requirement is mandatory, it cannot be tracked. obtain comparative information on the revenue calculated by each faculty and department compared to the previous period.

Structure and content

About us

47. This Standard requires the disclosure of certain items in the statement of financial position, the statement of income, the statement of changes in net assets/equity and prescribes the presentation. other items in these statements or in the notes to the financial statements. Vietnamese Public Accounting Standard No. 02 provides for the presentation of the statement of cash flows.

48. This Standard uses the term “presentation” in a broad sense to include the items presented in the statement of financial position; performance reports; reporting on changes in net assets/equity; and the statement of cash flows as well as in the notes to the financial statements. Other Vietnamese public accounting standards also require presentation. Except as otherwise provided in this Standard or otherwise, disclosure is made on the statements of financial position, the statement of income, and the statement of changes in net assets/equity. owner or statement of cash flows (if relevant), or in the notes to the financial statements.

Financial statement identification

49. The financial statements must be clearly identified and distinguished from other information in the same issued document.

50. Vietnamese public accounting standards apply only to financial statements and not to other information presented in other types of periodic reports. Therefore, users of financial statements must be able to distinguish information prepared based on the provisions of Vietnamese Public Accounting Standards from other information that may be useful to users but is not the target audience. Where applicable, there may be other documents that also use the term financial statements but are not the financial statements presented as required by this standard.

51. Each form of financial statements must be clearly identified. In addition, the following information must be presented prominently and repeated if necessary so that the information presented in the financial statements can be understood clearly by the reader:

(a) The name of the reporting entity or the information identifying the reporting entity and any change in such information since the date of the previous reporting period; the name of the superior unit of the reporting unit;

(b) Type of report: is the financial statement of an independent entity or an economic unit;

(c) The reporting date or period of the financial statements corresponding to each form of the financial statements;

(d) The currency used in the report; as defined in Vietnamese Public Accounting Standards on the effects of changes in foreign exchange rates; and

(e) The unit of measure when presenting items in the financial statements.

52. The requirements in paragraph 51 are made mandatory on the first page according to the prescribed form. An entity can add a title at the top of each subsequent page and add a summary title in each column on the following pages of the financial statements, ensuring consistency. For example, if the financial statements are presented in an electronic format that is not separate from each page, the above information must be repeated regularly to ensure that the reader understands the information provided in the report. finance.

53. For the sake of simplicity and ease of understanding, the figures in the financial statements may be presented in units of thousands or millions of Vietnamese dong or other currency if required by law. This unit of measure is acceptable if the degree of rounding is specified and no material information is omitted.

Reporting period

54. Financial statements are prepared at least at the end of the annual accounting period, the annual accounting period is 12 months, calculated according to the calendar year. less than one year, in addition to the reporting period presented in the financial statements, an entity must additionally present:

(a) Reasons for preparing the financial statements for periods longer or shorter than one year; and

(b) Noncomparability of items on the income statement, the statement of changes in net assets/equity, the statement of cash flows, and the notes related.

55. In some cases, the entity may be required to, or decide on its own, to change the reporting period due to the nature of its operations (if permitted), for example schools that change their accounting period by school year. In this case, it is important that users of the information be aware that this period's figures cannot be compared with prior period figures, and the reason for the change in the reporting period must be stated.

Timeliness

56. The usefulness of financial statements will be impaired if they are not made available to users within a reasonable time from the balance sheet date. In order to ensure the usefulness of financial reporting data to provide appropriate and effective information to report users, the reporting period should be considered within a maximum of 6 months. months from the end of the accounting period.

Specific regulations related to the time limit for issuance of financial statements are in the Law on Accounting, the accounting regime applied by the entity and the guiding documents for the preparation of consolidated (consolidated) financial statements for the entity. superior accountant (economic unit). This Standard does not provide an exception for the preparation and submission of reports behind the specified time limit.

Report on the financial situation

The difference between short term and long term

57. An entity is required to separately present current and long-term assets, and short-term and long-term liabilities in its statement of financial position in accordance with paragraphs 63-74 of this standard, unless the presentation Liquidity presentation provides more relevant and reliable information. When this exception applies, all assets and liabilities are presented in order of liquidity.

58. Regardless of the presentation, for assets and liabilities including those expected to be recovered or payable within 12 months of the reporting date and 12 months after the reporting date. months from the reporting date, the entity must present the amount expected to be recovered or payable after 12 months.

59. When an entity provides goods and services over a well-defined operating cycle, the separate classification of short-term assets and long-term liabilities in the statement of financial position provides information that is useful to distinguish the net asset value will continue to be used for the operation of the entity in the short and long term. In addition, this presentation shows the assets that are expected to be liquidated during the current operating cycle and the liabilities that are expected to be settled during the same period.

60. For some entities, such as state administrative agencies, financial institutions, presenting assets and liabilities according to increasing or decreasing liquidity will provide reliable information. more reliable and more appropriate than the short/long term presentation, because such entities do not deliver goods or services within a well-defined operating cycle.

61. When applying paragraph 57, an entity is permitted to present certain assets and liabilities according to the short-term/long-term criteria, and certain other assets and liabilities according to the liquidity criteria, if such presentation provide more reliable and relevant information. An entity may adopt this mixed presentation in the case of a wide variety of activities.

62. Information on expected maturity dates of assets and liabilities is useful in assessing an entity's liquidity and solvency. Information about the expected date of collection and settlement of non-cash assets and liabilities such as inventories or provisions is also useful, although these assets and liabilities are classified type is short term or long term.

Short-term assets, long-term assets

63. An asset is classified as short-term if it meets one of the following criteria:

(a) Is expected to be recovered or held for sale or consumption during the normal operating cycle of the entity;

(b) The entity's original purpose of holding was for sale;

(c) Expected to be recovered within 12 months from the reporting date; or

(d) Is cash or cash equivalent (as defined in ISA 02), unless it is restricted to exchange or use to settle a debt within a short period of time. 12 months from the reporting date.

All remaining assets are classified as long-term assets.

64. This Standard uses the term “long-term assets” to refer to real property, plant, equipment, intangible assets, and financial assets of a long-term nature. Alternate terms may be used provided that the terms are of the same nature and unambiguous meaning.

65. The unit life cycle is the amount of time it takes an entity to transform inputs or resources into outputs. When the unit's normal operating cycle is not explicitly specified, the unit defaults to a cycle duration of 12 months.

66. Current assets include assets (e.g. taxes receivable, service receivables, fines and fees receivable, inventory, etc.) sold or sold as part of the normal operating cycle, even if the entity does not expect to recover these assets within 12 months of the reporting date. Current assets also include assets held for the primary purpose of being sold (examples include financial assets that are classified as held for sale in accordance with ISAs). relevant Vietnam).

Short-term debt, long-term debt

67. A liability is classified as a short-term debt when it meets one of the following criteria:

(a) It is expected to be payable within a normal operating cycle;

(b) Unit held for the original purpose of sale;

(c) The liability will be due within 12 months from the reporting date; or

(d) The entity is not unconditionally entitled to late payment of such debt after at least 12 months from the reporting date (see paragraph 71). The classification of the debt does not change where the terms of the debt allow the creditor to choose the method of payment using equity instruments issued by the entity.

All remaining liabilities are classified as long-term debt.

68. Some short-term liabilities such as payables to the state budget, expenses payable to employees and other operating expenses payable are part of the unit's expenditures used in a normal operating cycle. These items are classified as current liabilities even if they are due 12 months from the reporting date. The classification of an entity's assets and liabilities applies over the life of the entity's normal operating cycle. When the unit's normal operating cycle is not clearly defined, the default period will be 12 months.

69. Other short-term liabilities that are not repaid during the normal operating cycle, but if they are due within 12 months of the date of the financial statements or are held principally for the initial purpose of sold is also classified as short-term debt. Examples are account overdrafts, the due portion of a long-term financial liability, profit distributions payable to owners, income tax payable, and liabilities. is different. Financial liabilities are of a long-term nature (those that are not part of the operating expenses used in the normal operating cycle of the entity) and are not due for payment within 12 months from the reporting date. classified as long-term debt, as defined in paragraphs 72 and 73 below.

70. Financial liabilities are classified as short-term when they are due within 12 months from the reporting date, even if:

(a) The initial term of the debt is longer than 12 months; and

(b) The entity reaches an agreement to refinance, or adjust the repayment period to long-term after the reporting date and before the financial statements are approved for issue.

71. If, under the terms of an existing loan agreement, the entity expects and has the right to request refinancing or renewal of the debt for a period of at least 12 months after the reporting date, the entity classifies the debt as long-term, even if the liability could come due sooner if the entity had not exercised this right. However, if the entity does not have the right to request refinancing or to renew the debt (for example, the contract does not contain a refinancing clause), the possibility of refinancing is not considered and the entity must classify the debt short-term debt.

72. When an entity breaches the commitment of a long-term loan agreement on or before the reporting date resulting in the loan being immediately repaid if required by the creditor, the debt must be classified as a debt. Short-term. even if, between the date of the report and the date the report is approved for issue, the creditor agrees not to demand payment for breach of that undertaking. Liabilities should be classified as current liabilities, as at the reporting date the entity has no unconditional right to delay payment for a period of at least 12 months after the reporting date.

73. However, up to the date of the report, the creditor has agreed in writing to a grace period extending at least 12 months after the date of the report for the entity to remedy the breach, during which time the creditor is not entitled to claim payment, the debt will be classified as a long-term debt.

74. For loans classified as short-term liabilities, if the following events occur between the reporting date and the reporting date, they are presented as non-current events. Adjusted according to the provisions of Vietnamese Public Accounting Standards on events arising after the reporting date:

(a) Refinancing the loan with a long term;

(b) Remedy for long-term loan contracts; and

(c) With the consent of the creditor, the grace period is extended at least 12 months after the reporting date for the unit to remedy the breach of the long-term loan contract.

Information that must be presented in the Statement of Financial Status

75. The statement of financial position must present at least the following items separately:

(a) Real estate, plant and equipment;

(b) Investment property;

(c) Intangible assets;

(d) Financial assets (excluding items (e), (g), (h) and (i));

(e) Investments are accounted for using the equity method;

(f) Inventory;

(g) Receivables from non-exchange transactions (taxes and transfers);

(h) Receivables from barter transactions;

(i) Cash and cash equivalents;

(j) Taxes and transfers payable and payable;

(k) Accounts payable from exchange transactions;

(l) Provisions payable in case the entity is allowed to make provisions;

(m) Financial liabilities (excluding items (j), (k) and (l));

(n) Non-controlling interests, presented in the net assets/equity section; and

(o) Net assets/equity belonging to the owners of the controlling entity.

76. Headings, line items and totals are included in the statement of financial position if their addition helps users of the report to better understand the financial position of the entity. .

77. This Standard does not prescribe the order or form of presentation of items. Paragraph 75 lists items that are different in nature or function that should be presented separately on the statement of financial position. Illustrations for presentation may also be specified in the accounting regime applicable to each type of entity. Besides:

(a) Entries are presented separately according to the size, nature and function of an item or a collection of similar items to enable users of the report to understand the financial position of the entity. unit; and

(b) The item's interpretation, the order of the item or the manner in which similar items are collected may be changed depending on the nature and transactions of the entity in order to provide relevant information to assist the public. Use the report to understand the financial position of the entity.

78. Additional items considered for separate presentation in the financial statements are based on assessments of:

(a) The nature and liquidity of the assets;

(b) The function of the assets in the entity; and

(c) Amount, nature and term of payment of the liability.

79. These asset classes should be presented in separate metrics if the use of different bases of measurement for different asset classes suggests that the nature or function of these asset classes is different. . For example, groups of real estate, plant and equipment may be stated at cost or at revaluation in accordance with Vietnamese Public Accounting Standard No. “Real Estate, Plant and Equipment”.

Information may be presented in the statement of financial position or in the notes to the financial statements

80. An entity may present in the statement of financial position or in the notes to the financial statements detailed items of items presented and arranged in the order appropriate to the entity's operations.

81. The level of detail depends on the provisions of Vietnamese public accounting standards and the size, nature and function of the detailed items. The factors referred to in paragraph 78 are often used as the basis for item detailing. The presentation of each item may be different, for example:

(a) Items of real estate, plant and equipment are grouped in accordance with the provisions of Vietnamese Public Accounting Standard No. 17;

(b) Receivables are divided into receivables for services, tax receivables and receivables from non-exchange transactions, receivables from related parties, prepayments and other receivables. other receivables;

(c) Inventories are divided into groups in accordance with the provisions of Vietnamese Public Accounting Standard No. 12 “Inventories”, such as raw materials, materials, tools, production costs, trading in unfinished services, products and goods;

(d) Taxes and payable transfers are divided into tax refunds, transfers payable, payables to related parties in the economic unit;

(e) Provisions for payables (if any) are divided into provisions for payables to employees and provisions for other payables; and

(f) Net assets/equity is divided into contributed capital, accumulated surplus and deficit, and other net assets.

82. For a non-equity entity, that entity must disclose its net assets/equity in the statement of financial position or in the notes to the following separate items:

(a) Owner's contributed capital, which is the cumulative sum of equity contributed up to the reporting date minus the amount distributed to owners up to the reporting date;

(b) Accumulated surplus and deficit;

(c) Other net assets, including the interpretation and purpose of each in the net assets/equity section; and

(d) Non-controlling party interests.

83. Most public sector entities do not have equity capital, but are fully controlled by another public sector entity (also called a superior entity). The nature of government interest in these entities usually includes both state budget allocation and accumulated surplus or deficit and other net assets. These items reflect the net asset/equity value of the entity's operations.

84. In some circumstances, there may be a non-controlling interest in the net assets/equity of the entity. For example, at the Government level, the economic unit may include a partially privatized state-owned business unit. As a result, the entity may include other stakeholders with a financial interest in the entity's net assets/equity.

Activity report

Surplus or deficit in the period

85. All items of revenue and expense recognized during the period must be recognized in the entity's surplus or deficit for the period, unless otherwise required by Vietnamese public accounting standards.

86. In principle, all items of revenue and expense recognized in a period are recorded in the surplus or deficit for that period. This also includes the effect of changes in accounting estimates. However, a particular item may in some cases not be reflected in a surplus or deficit in the current period. Vietnamese Public Accounting Standards on accounting policies, changes in accounting estimates and errors refer to two cases: correction of errors and the effect of changes in accounting policies.

87. Some other Vietnamese public accounting standards guide items that may meet the revenue and expense criteria under this standard but are excluded from the surplus or deficit for the period.

Information presented on the Performance Report

88. The income statement must present at least the following items separately:

(a) Revenue;

(b) Expenses;

(c) The portion of the surplus or deficit amortized from investments in joint ventures or associates using the equity method;

(d) Pre-tax profit or loss arising from the disposal or sale of assets or the settlement of liabilities pertaining to non-recurring activities; and

(e) Surplus or deficit for the period.

89. The following items are presented in the income statement as allocations of surplus and deficit for the period:

(a) The surplus or deficit belongs to the non-controlling capital contributor; and

(b) The surplus or deficit belongs to the owners of the controlling entity.

90. Headings, itemized items, and totals are included on the income statement if their addition helps users of the report understand the entity's performance.

91. Given that the effects of an entity's diverse activities, transactions and events have varying effects on an entity's ability to perform its service obligations, a specific presentation of the factors that So performance helps users of the report understand the performance of the entity and can predict future results. The detailed items presented on the income statement, the interpretations used, and the order of the items may be changed as necessary to better explain the factors that make up the results. unit movement. Factors that may be considered include the materiality, nature and function of the revenue and expense components. Revenue and expenses are not offset unless the provisions of paragraph 36 of this standard are met.

Information may be presented in the income statement or in the notes to the financial statements

92. When an item of revenue or expense is material, the nature and amount of the item must be presented separately.

93. In some cases, if arising in accordance with the law, the items of revenue and expenses must be presented separately as follows:

(a) A reduction in inventories to the net realizable value or a reduction in the amount of fixed assets to the recoverable level, as well as the reversal of these impairments. ;

(b) The entity's restructuring costs and the reversal of provisions for these restructuring expenses;

(c) Liquidation and sale of real estate, plant and equipment;

(d) Equitization or liquidation of an investment;

(e) Non-routine activities;

(f) Legal dispute resolution results; and

(g) Reversal of other provisions.

94. An entity may present in the income statement or in the notes to the financial statements the detailed items of total revenue and arrange them in the order appropriate to the operating characteristics of the entity.

95. An entity may present in the income statement or in the notes to the financial statements a detailed breakdown of costs by nature or function of costs, ensuring reliable information is provided. and more relevant.

96. The presentation of the cost breakdown referred to in paragraph 95 on the income statement is recommended to better disclose the entity's cost information.

97. Expenses are detailed into categories to clearly reflect costs and recoveries from specific programs, activities or divisions of the reporting entity. Costs can be classified in the two ways described in paragraphs 99 and 100.

98. The first way is to classify costs by nature. Expenses presented on the income statement depend on the nature of the expense (e.g., depreciation, raw materials, transportation costs, labor costs, etc.). advertising costs), and not by function of each department in the unit. This method can be easily applied because there is no need to allocate costs to each function.

An example of cost classification by nature is as follows:

99. The second is functional cost classification, where costs are classified according to the program or purpose of the expenditure. This approach can provide reporting users with more relevant information than cost-based analysis, but allocating costs to different functions may require the entity to Allocate costs objectively and use substantial judgment.

An example of a cost breakdown by function is as follows:

100. Expenses related to the main functions of the entity must be presented separately. In this example, the unit has functions related to the provision of medical services, educational services. An entity must present separate cost targets for each of these functions.

101. Functional cost classifiers must present additional information about the nature of the cost, including depreciation and employee costs.

102. In some cases, an entity may choose to classify costs by function or by cost nature depending on historical factors, relevant regulations and the nature of the entity. Because each method of presenting costs has its own advantages for different types of entities, this standard requires management to select the most reliable and appropriate method for their organization. However, because the information presented on the nature of costs is useful in predicting future cash flows, if an entity chooses to classify costs by function, additional information must be presented according to the nature of the costs. of costs. In paragraph 101, the term “employee costs” has the same meaning as it is mentioned in the Vietnamese Public Accounting Standards on employee benefits.

103. When an entity distributes profits to its partners, it must disclose it in the income statement or in the statement of changes in net assets/equity, or in the notes to the financial statements. Principally, profits have been recognized as distributions to owners during the period.

Report on changes in net assets/equity

104. A report on changes in the net assets/equity of an entity must include the following items:

(a) Surplus or deficit for the period;

(b) Each item of revenue or expense, as required by other standards, is recognized directly in net assets/equity and the sum of these items;

(c) Total revenue and expenses for the period (the sum of items (a) and (b) above), separating the controlling entity's owner's share from the non-controlling's share ; and

(d) The effect of changes in accounting policies and correction of errors of the previous period in accordance with the provisions of Vietnamese Public Accounting Standards on accounting policies, changes in accounting estimates and errors for with each net asset/equity item presented separately above.

105. An entity must disclose in the statement of changes in net assets/equity or in the notes to the financial statements the following information:

(a) Amounts of transactions with owners as owners of the entity, where distributions to owners are presented separately;

(b) Accumulated surpluses and deficits at the beginning of the reporting period, at the reporting date and changes during the period; and

(c) For each segment of net assets/equity presented separately, a reconciliation should be presented between the carrying amounts of these segments at the beginning and end of the period and presented. separately show each change during the period.

106. Changes in the entity's net assets/equity between the beginning and the end of the period reflect the increase or decrease in the net assets of that period.

107. The total changes in net assets/equity of the entity during the period represent the total surplus or deficit for the period, and revenues and expenses are recognized directly in net assets/equity. owners, and equity contributions or distributions to owners of the entity.

108. Equity contributions or distributions to the owner of an entity, including transfers between two entities within the same economic unit (for example, when the state budget is allocated to the granting unit). below). Contributions by owners, in their capacity as owners, to controlled entities are recognized only as increases in net assets/equity of the entity only when they increase the net assets of the entity. owner's interest in the net assets of the receiving entity

109. This Standard requires that all revenues and expenses for the period be reflected in the results of operations of the entity, unless otherwise specified. Other standards require that certain amounts (e.g., revaluation differences, certain exchange rate differences) be recognized directly in net assets/equity. Because of the critical nature of assessing changes in an entity's financial position between the beginning and the end of the period by considering all elements of revenue and expenses, this Standard requires that A statement of changes in the entity's net assets/equity must show the effect of total revenue and expenses for the period, including those items of revenue and expense that are recognized directly in the financial statements. net assets/equity.

110. Vietnamese Public Accounting Standards on accounting policies, changes in accounting estimates and errors require an entity to make retrospective adjustments, to the extent possible, to reflect changes in the entity's accounting policies, unless the time-to-forward provisions of other standards provide otherwise. This Standard also requires the entity, to the extent possible, to make retroactive adjustments to correct prior period misstatements. Retrospective adjustments are made to the opening balances of Accumulated Surplus and Deficits, unless other standards require retroactive adjustment of other items of net assets/equity. Paragraph 104(d) requires an entity to separately disclose in its reporting of changes in net assets/equity all adjustments to each item of net assets/equity as a result of the change. accounting policies and to correct errors. These adjustments must be presented for each prior period and the opening balance of this period.

111. The provisions of paragraphs 104 and 105 above can be implemented by using a columnar table that compares the opening and closing balances of each component of net assets/equity. An entity may choose to present only the items required in paragraph 104 on a statement of changes in net assets/equity. If this presentation is chosen, the items required in paragraph 105 should be presented in the Notes to the financial statements

Statements of cash flows

112. The statement of cash flows provides users with baseline information for assessing an entity's ability to generate cash and cash equivalents and the entity's need to use those cash flows. Vietnamese Public Accounting Standard No. 02 "Statements of cash flows" addresses the requirements for the presentation of the statement of cash flows and related information.

Notes to the financial statements

Structure

113. Notes to an entity's financial statements must meet the following requirements:

(a) Present information about the financial reporting basis and specific accounting policies used by the entity in accordance with paragraphs 120-127 of this Standard;

(b) Present information required by Vietnamese public accounting standards that has not been disclosed in the statement of financial position, the statement of income, or the statement of changes. in net assets/equity or cash flow statement; and

(c) Provide additional information that is not included in the statement of financial position, statement of income, statement of changes in net assets/equity , or cash flow statements but necessary to help readers better understand those statements.

114. Notes to the financial statements must be presented in a systematic manner. Each item presented in the statement of financial position, income statement, statement of changes in net assets/equity, or statement of cash flows must be referenced to relevant details in the notes to the financial statements.

115. Notes to the financial statements are presented in the following order to help readers understand the financial statements and compare them with the financial statements of other entities:

(a) Reporting on compliance with Vietnamese public accounting standards (see paragraph 24);

(b) A summary of the significant accounting policies adopted by the entity (see paragraph 118);

(c) Additional information about items presented in the statement of financial position, income statement, statement of changes in net assets/equity, or statement of cash flows. currency, in the order of each report and the order of each item in the report; and

(d) Other information, including:

(i) Contingent liabilities and unrealized commitments, and;

(ii) Other non-financial information, such as financial risk management objectives and policies.

116. In some cases, an entity may change the order of items presented in the notes to the financial statements, but must ensure the systematic structure of the notes to the financial statements.

117. The notes to the financial statements provide information about the basis of the financial statements and the accounting policies used that may be presented as a separate part of the financial statements.

Information about accounting policies

118. An entity must present in the summary of its major accounting policies the following information:

(a) The valuation basis used in the preparation of the financial statements;

(b) The extent to which the transitional provisions of any Vietnamese public accounting standards apply; and

(c) Other accounting policies are used to help readers better understand the financial statements.

119. Users of financial statements must know information about the basis of valuation or financial statement basis (e.g. historical cost, current price, net realizable value), because this information has a significant influence on the analysis of the financial statements. When multiple valuation bases are used to prepare the financial statements, for example, when an asset is revalued, the entity must specify which basis of measurement applies to the class of asset. those assets and liabilities.

120. When disclosing information about an accounting policy, management should consider whether the disclosed information helps users of the report to understand how the entity reflects transactions, conditions and conditions in the statement of financial position and income statement. Disclosure of accounting policies is particularly helpful when Vietnamese public accounting standards allow an entity to choose from a variety of policies.

121. Each entity must consider the nature of its operations and the accounting policies that users of the financial statements expect to be presented for that type of entity. For example, a public sector entity may be required to disclose the accounting policy it has adopted in the recognition of state budget grants, grants and other non-exchangeable revenues. When an entity has a substantial base of operations in a foreign country or conducts substantial transactions in foreign currencies, the entity is required to disclose the accounting policy applied in the recognition of foreign exchange differences. When an entity merges with another entity, the entity must disclose its accounting policy in the recognition of items in accordance with relevant Vietnamese public accounting standards.

122. Due to the nature of the entity's operations, an accounting policy can have a material effect even if the amounts presented in the financial statements for this and previous period are immaterial. The entity must also disclose the significant accounting policies selected and applied in accordance with Vietnamese Standards on Accounting for accounting policies, changes in accounting estimates, and errors, even if the standards are not correct. Other inks do not specifically require.

123. In a summary of significant accounting policies or in other notes, an entity must disclose management's judgments about the accounting policies that have the most significant effect on the amounts presented. presented in the financial statements.

124. In the application of accounting policies, in addition to judgments relating to accounting estimates, management makes a variety of judgments that have a significant effect on the amounts presented in the financial statements. financial statements. For example, management of an entity conducts the following assessments when determining:

• Whether an asset is an investment property:

• Is there any agreement on the supply of goods or services related to the use of the property as a lease;

• Whether the supply of the goods is, in essence, a financing arrangement and therefore does not generate revenue; and

• Whether the nature of the relationship between the reporting entity and other entities indicates that those entities are under the control of the reporting entity.

125. Some of the information presented as required by paragraph 123 is also required by other standards. For example, information about interests in other entities and investment property should be presented in accordance with Vietnamese public accounting standards on the presentation of information about interests in other entities and Vietnamese public accounting standards. South on investment real estate.

The basis of uncertain estimates

126. Notes to the financial statements must disclose the significant assumptions made about the entity's future, and the substantial bases for estimates that are uncertain at the reporting date that are subject to risk. significant in leading to material adjustments to the carrying amount of assets and liabilities in the following fiscal year. For these assets and liabilities, the notes must detail:

(a) The nature of these items; and

(b) The carrying amount of these items at the reporting date.

127. Determining the carrying amount of certain assets and liabilities requires that at the date of the financial statements an estimate is made about the effect of future uncertain events on the items. assets and liabilities. These estimates require assumptions about the risk-adjusted cash flows or discount rates used, or how future price changes affect the cost of the unit.

128. The principal assumptions and basis of the uncertainty estimates disclosed as required by paragraph 126 relate to estimates for which management is required to make complex, subjective judgments. and the most difficult. As the number of changes and assumptions affecting the future outcome of uncertain events increases, these assessments become more and more subjective and complex, leading to the potential for adjustments to be made. material to the carrying amount of assets and liabilities also increases.

129. The information in paragraph 126 is presented to help users of the financial statements understand the entity's management's judgments about the future and the substantial basis of the uncertain estimates. The nature and extent of the information presented depends on the nature of the assumptions and other factors. Examples of some types of information are presented below:

(a) The nature of the assumptions or other uncertain estimates;

(b) The degree of impact and the reasons for the impact of the methods, assumptions, and estimates used to calculate the carrying amount of the asset or liability;

(c) Expected results for the effect of the uncertain event and possible changes in the value of the asset or liability in the following fiscal year on the carrying amount of the asset, and liabilities must pay; and

(d) An explanation of changes to previous assumptions about those assets and liabilities, if the uncertain event remains unresolved.

130. An entity is not required to disclose information or budget projections when presenting information under paragraph 126.

131. When it is not possible to disclose information about the effect of a substantial assumption or the basis of an uncertain estimate, an entity must present, based on current knowledge, if the event occurred within Subsequent financial year is not the case, the carrying amount of the asset or liability will change materially. In all cases, an entity must disclose the nature and carrying amount of those assets or liabilities (or groups of assets or liabilities) that are subject to the assumptions.

132. The information presented in paragraph 123 about management's judgments when applying accounting policies is not related to the information presented on the basis of the uncertainty estimates in paragraph 126.

133. The presentation of material assumptions, if not specified in paragraph 126, is also required in other standards.

Capital

134. An entity must disclose information that enables users of the report to evaluate its financial management objectives, policies, processes, and mechanisms.

135. To comply with paragraph 134, an entity must present the following information:

(a) Qualitative information about the entity's capital management objectives, policies and procedures, including (but not limited to the following):

(i) Description of the funds under management;

(ii) When an entity is required to fulfill external capital management requirements, it must disclose the nature of those requirements and how it has implemented them in the capital management process; and

(iii) How the entity achieves its capital management objectives.

(b) Aggregates quantitative information about funds under management.

(c) Any changes in items (a) and (b) above from the previous period.

(d) Whether the entity has complied with externally imposed capital management requirements during the period.

(e) Consequences of the entity's failure to comply with external capital management requirements.

This presentation is based on information provided internally to key management of the entity.

Other information

136. The entity must present in the notes to the financial statements (In case of arising):

(a) Profits expected or disclosed before the financial statements were approved for issue but not yet recognized as distributions to owners during the period; and

(b) Unrecognized preferred profits.

137. An entity is required to disclose the following information in the notes to the financial statements if not already disclosed in other financial statements to be issued:

(a) Head office and legal form of the entity, the name of the country in which it operates (if any);

(b) A description of the nature of the entity's operations and its main areas of activity;

(c) A reference to the law governing the entity's operations;

(d) Name of the controlling entity and the last controlling entity of the economic entity (if any); and

(e) Term of operation if the entity operates for a limited time.

Reference table of paragraphs of Vietnamese public accounting standards compared with paragraphs of international public accounting standards

APPENDIX NO.02

VIETNAM PUBLIC ACCOUNTING STANDARD NO.02
STATEMENTS OF CASH FLOWS
(Attached to Decision No. 1676/QD-BTC dated September 01, 09 of the Ministry of Finance)

INTRODUCTION

Vietnam's public accounting standards system has been researched and developed by the Public Accounting Standards Board of the Ministry of Finance to ensure compliance with international accounting practices and conditions. reality of Vietnam. Vietnamese public accounting standards have the same standard symbols as the corresponding international public accounting standards.

Vietnam Public Accounting Standard (VPSAS) No. 02 "Statements of cash flows" Drafted based on International Public Accounting Standard (IPSAS) No "Statements of cash flows" and current regulations on Vietnam's financial and budgetary mechanism. Vietnam Public Accounting Standard No. 02 stipulates the contents consistent with the current legal regulations of Vietnam and the regulations that are expected to be amended and supplemented in the near future. Vietnam Public Accounting Standard No. 2 does not stipulate that the contents of International Public Accounting Standard No. 2 are not suitable for the long-term financial and budgetary mechanism, the addition of regulations will be made on the basis of according to the actual situation in each appropriate period.

The International Public Accounting Standard No. 2 is based on the 2000 edition, revised to be consistent with other international public accounting standards as of December 31, 12, by the Accounting Standards Board. International Public Accounting (IPSASB) promulgated.

Vietnam Public Accounting Standard No. 02 denotes the ordinal number of paragraphs compared to international public accounting standards. For comparison, the reference table of paragraph symbols of Vietnamese public accounting standards compared with the notation of international public accounting standards paragraphs is included with this standard. For matters related to other public accounting standards, Vietnam Public Accounting Standard No. 02 quoted by symbol and name of relevant Vietnamese public accounting standards has been promulgated. For standards that have not been issued, this standard only mentions the name of the standard or related content to be referenced, not the number of the relevant standard as in the international public accounting standard No. 2. Specific citation of the symbol and the standard name will be made after the relevant standards are issued.

By the time of promulgation of Vietnam Public Accounting Standard No. 02 (in 2021), relevant standards that have not been promulgated include:

VPSAS 02 – CASH FLOW REPORT

The process of promulgating and updating Vietnamese public accounting standards No. 02
(hereinafter referred to as the Standard)

The version of Vietnamese public accounting standards No. 02 was first issued under Decision No. 1676/QD-BTC dated September 01, 09 of the Minister of Finance.

This Standard takes effect from September 01, 09, and will be applied from September 2021, 01.

Commonly valid standards include:

– Vietnamese Public Accounting Standard No. 01: Presentation of financial statements;

– Vietnamese Public Accounting Standard No. 12: Inventory;

– Vietnam Public Accounting Standard No. 12: Real estate, plant and equipment;

– Vietnamese Public Accounting Standard No. 31: Intangible assets.

VPSAS 02 – CASH FLOW REPORT

CONTENT

The text of Vietnamese Public Accounting Standard No. 02 “Statement of Cash Flows” is presented in paragraphs 1 to 54. All paragraphs are equal.

I. GENERAL PROVISIONS

Purpose

1. The purpose of this standard is to guide the provision of information about an entity's past movements in cash and cash equivalents by means of a statement of cash flows, in which cash flows for the period are reported. divided into regular activities, investing activities and financing activities. To this end, this Standard determines: cash inflows, cash outflows during the reporting period and the cash balance at the reporting date. Information about an entity's cash flows is useful for providing users of the financial statements with information for accountability decision-making purposes. Cash flow information allows users of financial statements to evaluate how an entity generates money for its operations and how it uses that money. Users of financial statements need an understanding of the timing and certainty of cash flows for making decisions and evaluating decisions about resource allocation and sustainability. .

Limit

2. An entity shall prepare a statement of cash flows in accordance with the requirements of this Standard and shall present the statement of cash flows as a separate statement of the financial statements for each financial reporting period.

3. Cash flow information may be useful to users of an entity's financial statements for: assessing the entity's cash flows; assess the entity's compliance with laws and financial regulations, internal spending regulations (including approved budgets), decide whether to provide resources or enter into transactions with the entity or not. In general, users of the report are interested in how an entity generates and uses cash and cash equivalents regardless of the nature of its operations. Whether the units are administrative or non-business units, they need money for the same basic reasons, although their primary revenue-generating activities differ. Units need money to pay for consumed goods and services, pay employees, pay debts, and pay for other operations. Therefore, this standard requires all entities to present the statement of cash flows as a separate statement of the financial statements.

Benefits of cash flow information

4. An entity's cash flow information is useful for helping users of financial statements make predictions about: the entity's cash needs, future cash-generating capabilities, and ability financing changes in the functions, missions, and operations of the entity. The statement of cash flows also provides information to the accountable entity about the cash inflows and outflows during the reporting period.

5. The statement of cash flows, when used in conjunction with other financial statements, provides information that enables users of the report to assess changes in an entity's net assets/equity. entity, its financial structure (including liquidity and solvency), and its ability to influence the size and timing of its cash flows to meet operating requirements. of the unit. The cash flow statement also enhances the comparability of the income statements of different entities because it eliminates the effect of using different accounting methods for the same type of transaction and events (if any).

6. Information on past cash flows is often used as an indicator of the size, timing, and certainty of future cash flows. This information is also useful for testing the accuracy of previous predictions about future cash flows.

Define

7. The terms used in this standard have the following meanings:

Investment activities are activities of purchasing, liquidating and transferring long-term assets and other investments, which are not included in cash equivalents.

Financing activities are activities that cause a change in the size and structure of the owner's equity and debt capital of the entity.

Routine activities are activities that are not investing or financing activities.

Control is the control of another entity by an entity when it is responsible for, risks or benefits from participating in another entity, having the ability to influence the activities, nature or size of the entity. of the benefits obtained through its control over another entity.

Cash flow is the inflow and outflow of cash and cash equivalents.

The reporting date is the last day of the reporting period for which the financial statements are prepared.

Cash includes cash on hand and demand deposits.

Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of change in value.

Terms defined in other Vietnamese Public Accounting Standards as used in this Standard have the same meanings as in those Standards.

Cash and cash equivalents

8. Cash equivalents are held for the purpose of meeting short-term payment needs rather than for investment or other purposes. An investment is classified as cash equivalent when it can be easily converted into a known amount of cash and there is little risk of changes in value. As a result, an investment is generally classified as cash equivalent only when it has a short maturity, i.e. no more than 3 months from the date of investment. Investments in other entities are not considered cash equivalents unless they are cash equivalent in nature.

9. Bank loans are generally classified under financial activities. Overdrafts (if any) are considered components of cash and cash equivalents.

10. Internal transfers between an entity's cash and cash equivalents are not considered cash flows, as they are part of the entity's cash management activities and not part of its normal operations. investment activities and financing activities. Cash management activities include investing idle cash in cash equivalents.

Economic unit

11. The term “economic entity” is used in this Standard to refer to a collection that includes a controlling entity and all of its controlled entities for financial reporting purposes. .

12. Other terms that can be used interchangeably to refer to an economic unit are “consolidated unit”, “superior accounting unit” and “level I estimate unit”.

13. An economic unit may include units operating for social purposes according to assigned functions, tasks and commercial purposes. For example, the Ministry may include state administrative units that only use the state budget operating according to their assigned functions and tasks, and also public non-business units that both perform assigned tasks and carry out activities at the same time. provide services in accordance with the law.

Future economic benefit or potential service

14. Assets are means for units to perform activities according to their functions and tasks. Assets that are used to directly generate cash inflows are generally considered “future economic benefits”. Assets that are used to provide goods or services that are suitable for the entity's operational purposes but do not directly generate cash inflows are generally considered "potential services". To cover the entire intended use of the asset, this standard uses the term “future economic benefit or potential service” to fully describe the basic characteristics of the asset.

Net assets/equity

15. Net assets/equity is the term used in this Standard to refer to the residual value of assets in the statement of financial position after deducting all liabilities. Net assets/equity can be positive or negative. Other terms may be used interchangeably with the terms net assets/equity, provided that such terms have a clear meaning (e.g. net assets).

II. SPECIFIED

Present the statement of cash flows

16. The statement of cash flows must present the cash flows for the period classified by regular activities, investing activities and financing activities.

17. An entity must present its cash flows from continuing operations, investing activities and financing activities in a manner that is most appropriate to its operations. Classification by activities provides information that helps users of the statement of cash flows assess the impact of these activities on the financial position, as well as the amount of cash and cash equivalents, of the entity. This information is also valuable for assessing the relationship between those activities.

18. A single transaction can involve cash flows from many different activities. For example, when payment of a loan includes both principal and interest, the interest may be classified as routine activities and the principal loan as classified into the financial activities of the entity.

Regular activities

19. The value of net cash flows arising from recurring activities is a basic indicator that the activities of an entity are secured from the following sources:

(a) Taxes collected (directly or indirectly); or

(b) Receipts from the sale or provision of services by the entity.

The value of net cash flows also indicates the entity's ability to maintain normal operations; ability to pay debts; pays profits or distributions to owners and makes new investments without external financing.

Cash flows from regular operations on the national or provincial state financial statements provide information on the extent of funding for regular activities of the Government (or local authorities). method) from taxes and fees.

Information about cash flows from past regular activities, when used in combination with other information, helps users of the financial statements predict future cash flows from regular activities.

20. Cash flows from regular operations arise primarily from the entity's major cash-generating activities. Examples of major cash flows from routine operations include:

(a) Collection of taxes, fees and fines;

(b) Proceeds from the sale of goods and provision of services by the entity;

(c) Proceeds from aid or transfer revenues, funds received from the allocated budget;

(d) Proceeds from royalties, fees, commissions and other revenues;

(e) Operating funding for other public entities (excluding loans);

(f) Expenses for the purchase of goods and services;

(g) Employee expenses and payments on behalf of employees;

(h) Collection of premiums and payment of insurance claims, commissions and other benefits from the policyholder (for insurers);

(i) Tax payments on property taxes and income taxes related to regular operations;

(j) Revenues and disbursements of contracts held for business purposes;

(k) Revenue and expenditure from non-recurring activities;

(l) Revenue or expenditure arising from the settlement of legal disputes.

Some transactions, such as the sale of real estate, machinery and equipment, may result in a gain or loss that is included in the surplus or deficit for the period. Cash flows from these transactions are considered cash flows from investing activities. However, money spent on construction or acquisition of assets to be leased back to another entity and then sold (according to the provisions of Vietnamese Public Accounting Standard No. “Real Estate, Plant and Equipment”) is the cash flow from regular operations. Proceeds from the rental and sale of these properties are also cash flows from regular operations.

21. Where the law allows an entity to hold securities and loans for business purposes, investments, like inventories, are purchased for the specific purpose of purchasing. for resale. Therefore, cash flows arising from the trading of these trading securities are considered as cash flows from regular activities. Similarly, advances and loans made by public financial institutions are often classified as routine activities as they relate to their principal cash-generating activities.

Investment activities

22. A separate presentation of cash flows from investing activities is important because they reflect cash flows indicative of resources expected to contribute to the entity's future operations. Only cash flows spent to create assets recognized in an entity's statement of financial position are eligible to be classified as investing activities. Examples of major cash flows from investing activities include:

(a) Expenses for the acquisition and construction of real estate, plant, equipment, intangible assets and other long-term assets. These expenses include those related to capitalized implementation costs and construction in progress;

(b) Proceeds from liquidation and sale of real estate, plant, equipment, intangible assets and other long-term assets;

(c) Expenses for acquisition of equity or debt instruments of other entities and capital contribution to joint ventures (except for purchases of instruments which are considered cash equivalents or are held for the purpose of joint ventures). business);

(d) Proceeds from the sale of debt and equity instruments by other entities and the recovery of capital contributions to joint ventures (other than proceeds from the sale of instruments considered to be cash equivalents or instruments held for trading purposes);

(e) Loan advances and loans to other entities (except for advances and loans made by public financial institutions);

(f) Repayment of advances and loans (except for advances and loans from public financial institutions);

(g) Money spent on investment activities to contribute capital to other entities;

(h) Proceeds from investment activities to contribute capital to other entities.

Financial activities

23. The separate presentation of cash flows from financing activities is important because it is useful in predicting the likelihood of future cash flows from the parties that have financed the entity. Examples of major cash flows from financing activities include:

(a) Proceeds from issuance of promissory notes, loans, bonds, mortgaged loans, and other short-term and long-term loans;

(b) Loan repayments;

(c) Payment by the lessee to reduce the outstanding balance related to the finance lease.

Cash flow statement from routine activity

24. An entity must report cash flows from regular operations by one of the following methods:

(a) The direct method, which presents the cash inflows and outflows from the entity's regular operations; or

(b) The indirect method, in which the surplus or deficit is adjusted for the effect of non-cash transactions; any deferred or accrual recognition of past or future receipts or payments and revenues or expenses attributable to investing or financing activities.

25. Entities are encouraged to report cash flows from regular operations using the direct method. The direct method provides information useful in estimating future cash flows, and also information that the indirect method does not provide. According to the direct method, information about cash inflows and outflows is mainly collected:

(a) From the entity's accounting books; or

(b) By adjusting for revenue and operating expenses (for a public financial institution, interest or similar revenue, interest and similar expenses) and other items in the income statement. motion for:

(i) Changes in inventories, accounts receivable and payable during the period;

(ii) Non-cash items;

(iii) Other items affecting cash flows from investing or financing activities.

26. An entity that reports cash flows from recurrent activities using the direct method is also encouraged to provide a table that compares the surplus/deficit from recurrent activities with the net cash flows from recurring activities. This balance sheet may be part of the statement of cash flows or presented in the notes to the financial statements.

27. According to the indirect method, net cash flows from regular activities are determined by taking the surplus or deficit in the adjusted period for the amounts:

(a) Changes in inventories, accounts receivable and payable during the period;

(b) Non-cash items such as depreciation, allowance, deferred tax payable, unrealized gain and loss due to exchange differences, undistributed surplus from associates and interests of the parties capital contribution does not hold control; and

(c) All other items (which affect cash flows) are cash flows from investing or financing activities.

Statement of cash flows from investing and financing activities

28. An entity must separately present key items of total inflows and outflows from investing and financing activities, less cash flows that are reported on a net basis as referred to in paragraphs 29 and 32 of this standard.

Cash flow statement on a net basis

29. An entity may report on a net basis the following cash flows from regular operations, investing activities or financing activities:

(a) Collecting and acting on behalf of transactions, taxpayers, or other beneficiaries. In these cases, the cash flows reflect activities of other parties that are not those of the entity;

(b) Collection and disbursement of funds with fast turnover, large amounts and short maturities.

30. Paragraph 29(a) deals only with transactions where the entity has control over the cash balance, for example the following receipts and payments:

(a) Collected tax money is not retained for use under the collection regulation mechanism between levels;

(b) Collection of time deposits and return of time deposits of a public financial institution;

(c) The amount of capital held by an investment fund or trust fund for a client;

(d) Collect and return rent to the owner of the rental property.

31. Examples of cash receipts and payments referred to in paragraph 29(b) include payments related to:

(a) Buying and selling investments;

(b) Other short-term loans, such as loans with maturities not exceeding 3 months.

32. Cash flows arising from the following activities of a public financial institution may be reported on a net basis:

(a) Time deposit receipts and payments with fixed maturity dates;

(b) Deposits and withdrawals from other financial institutions;

(c) Advances, loans and repayments, loan recovery to customers and other trading partners.

Cash flow in foreign currency

33. Cash flows arising from transactions in foreign currencies are recorded in Vietnam Dong by applying the exchange rate between Vietnam Dong and the foreign currency at the date of the cash flows.

34. The cash flows of the controlled entity operating overseas must be translated at the exchange rate between Vietnam dong and foreign currency at the date of the cash flows.

35. Cash flows in foreign currencies must be reported in a manner consistent with Vietnamese public accounting standards regarding the effects of changes in exchange rates.

36. Unrealized gains/losses due to changes in exchange rates are not cash flows. However, the effect of changes in foreign exchange rates on cash and cash equivalents of foreign currency that is being held or matured should be disclosed in the statement of cash flows for reconciliation purposes. opening and closing balances of cash and cash equivalents. This entry is presented separately from the cash flows from the entity's regular operations, investing activities and financing activities. This entry includes any differences (if any) as a result of such cash flows reported at the exchange rate at the end of the period.

Interest and dividends or the like

37. Cash flows relating to interest and dividends or similar payments received and paid by the entity must be presented separately. Each of these items is classified as recurrent, investing or financing activities on a consistent basis between the reporting periods.

38. Total interest paid during the period must be reported on the statement of cash flows regardless of whether they are recognized as expenses for the period on the income statement or capitalized as required by the standards. Vietnamese public accounting standards on borrowing costs.

39. For public financial institutions, interest paid, interest and dividends or similar received are generally classified as cash flows from regular operations. However, there is no consensus on how to classify these cash flows to other entities. An entity may classify interest paid, interest and dividends or similar received as cash flows from regular operations because they participate in determining the surplus or deficit for the period. In addition, interest paid, interest and dividends or similar received can also be classified as cash flows from financing activities or investing activities because it is the cost of raising financial resources. or investment income.

40. Dividends or similar payments paid can be classified as cash flows from financing activities because it is the cost of raising financial resources. In addition, dividends or similar payments paid may also be classified as cash flows from recurrent activities to help users of the report assess the ability of the entity to pay these amounts from cash flows from operate regularly.

Corporate income tax

41. Cash flows arising from corporate income tax should be presented separately and classified under the going concern activities of the entity, unless there is a clear basis for classification into financing activities and investing activities.

42. Some activities of units in the public sector are also subject to the same tax liability as those of other units in the field of production and business. For example, some production and business activities of goods and services of public non-business units are subject to corporate income tax.

43. Corporate income tax arising from transactions that increase cash flows are classified as recurrent activities, investing activities and financing activities on the statement of cash flows. While a tax expense can be easily distinguished from investing or financing activities, the cash flows associated with that tax may not be readily identifiable, which may arise in periods other than those incurred. cash flow of that transaction. As a result, taxes paid are generally classified as cash flows from regular operations. However, when it is possible to determine the taxable cash flows of a particular transaction that generate cash flows that are classified as investing or financing activities, that tax cash flow must also be classified as an investment activity. appropriate investment or financial performance. When tax cash flows are allocated to multiple activities, an entity must present the total amount of tax paid.

Investments in controlled entities, joint ventures, associates

44. For investors as prescribed by law, when accounting for an investment in a joint venture, associate or controlled entity using the equity method or the historical cost method, the investor The investment is limited to the presentation on the cash flow statement of cash flows between the entity and the investee, for example dividends or similar payments or advances.

45. For reporting an interest in a joint venture or associate using the equity method, the entity presents in the statement of cash flows the cash flows relating to investments in the joint venture, as well as cash flow on distributions, other revenues and expenditures between the entity and the joint venture or associate.

Non-cash transactions

46. Investment and financial transactions that do not directly use cash or cash equivalents are not presented in the statement of cash flows. The entity should disclose these transactions in the financial statements to ensure that appropriate information is provided to the users of the reports about such investment and financing activities.

47. Many investment and financial activities, although affecting the capital structure and assets of the entity, do not have a direct effect on current cash flows. The exclusion of non-cash transactions from the statement of cash flows is consistent with the objective of the report because these items are not related to the cash flows of the current reporting period. Examples of non-monetary transactions:

(a) Exchange property for another, or purchase property by taking on debt directly, or through a finance lease;

(b) Converting debt into equity.

Components of cash and cash equivalents

48. An entity must present the cash and cash equivalents components on the statement of cash flows and must compare the amounts in the statement of cash flows with the equivalent items in the statement of financial position.

49. Due to the diversity of money management methods and banking transaction mechanisms, in order to conform to Vietnamese public accounting standard No. 01 “Presentation of financial statements”, an entity must disclose information about the accounting policies used to determine its detailed cash and cash equivalents.

50. The effect of any change in the policies used to determine the detailed items of cash and cash equivalents must be reported in accordance with Vietnamese public accounting standards on accounting policies, changes in accounting estimates and errors.

Other explanations

51. The entity must disclose, together with the management's explanation in the Notes to the financial statements, the value of large amounts of cash and cash equivalents held by the entity but the economic unit is not used.

52. In many cases, an entity holds an amount of cash and cash equivalents, but the economic unit is not allowed to use this amount. For example, cash and cash equivalents held by an entity subject to strict foreign exchange controls or restrictive legislation that prohibits the use of the controlling entity or other controlled entities within the economic entity. this amount in the usual way.

53. Other additional information may help readers better understand the financial position and solvency of the entity. Information that is encouraged to be presented in conjunction with the interpretations in the notes to the financial statements may include:

(a) The amount of undisbursed loans that the entity can use for its future regular operations and to pay for its capital commitments, and specify any restrictions on the use of these loans;

(b) The quantity and nature of the restricted funds.

54. A statement of cash flows can help users of the report understand the relationship between an entity's activities or programs and budgetary information. Vietnamese Public Accounting Standard No. 01 “Presentation of financial statements” refers to the comparison between actual and estimated figures.

Reference table of paragraphs of Vietnamese public accounting standards compared with paragraphs of international public accounting standards

APPENDIX NO.03

VIETNAM PUBLIC ACCOUNTING STANDARD NO.12
INVENTORY
(Attached to Decision No. 1676/QD-BTC dated September 01, 09 of the Ministry of Finance)

INTRODUCTION

Vietnam's public accounting standards system has been researched and developed by the Public Accounting Standards Board of the Ministry of Finance to ensure compliance with international accounting practices and conditions. reality of Vietnam. Vietnamese public accounting standards have the same standard symbols as the corresponding international public accounting standards.

Vietnam Public Accounting Standard (VPSAS) No. 12 "Inventory" Drafted based on International Public Accounting Standard (IPSAS) No "Inventory" and current regulations on Vietnam's financial and budgetary mechanism. Vietnam Public Accounting Standard No. 12 stipulates the contents consistent with the current legal regulations of Vietnam and the regulations that are expected to be amended and supplemented in the near future. Vietnam Public Accounting Standard No. 12 does not stipulate that the contents of International Public Accounting Standard No. 12 are not suitable for the long-term financial and budgetary mechanism, the addition of regulations will be made on the basis of according to the actual situation in each appropriate period.

International Public Accounting Standard No. 12, based on semi-circulation in 2003, was revised to be consistent with other international public accounting standards as of December 31, 12, by the Accounting Standards Board. International Public Accounting (IPSASB) promulgated.

Vietnam Public Accounting Standard No. 12 denotes the ordinal number of paragraphs compared to international public accounting standards. For comparison, the reference table of paragraph symbols of Vietnamese public accounting standards compared with the notation of international public accounting standards paragraphs is included with this standard. For matters related to other public accounting standards, Vietnam Public Accounting Standard No. 12 quoted by symbol and name of relevant Vietnamese public accounting standards has been promulgated. For standards that have not been issued, this standard only mentions the name of the standard or related content to be referenced, not the number of the relevant standard as in the international public accounting standard No. 12. Specific citation of the symbol and the standard name will be made after the relevant standards are issued.

By the time of promulgation of Vietnam Public Accounting Standard No. 12 (in 2021), relevant standards that have not been promulgated include:

VPSAS 12 – INVENTORY

The process of promulgating and updating Vietnamese public accounting standards No. 12
(hereinafter referred to as the Standard)

The version of Vietnamese public accounting standards No. 12 was first issued under Decision No. 1676/QD-BTC dated September 01, 09 of the Minister of Finance.

This Standard takes effect from September 01, 09, and will be applied from September 2021, 01.

Commonly valid standards include:

– Vietnamese Public Accounting Standard No. 01: Presentation of financial statements;

– Vietnamese Public Accounting Standard No. 02: Statement of cash flows;

– Vietnam Public Accounting Standard No. 17: Real estate, plant and equipment;

– Vietnamese Public Accounting Standard No. 31: Intangible assets.

VPSAS 12 – INVENTORY

CONTENT

The text of Vietnamese Public Accounting Standard No. 12 “Inventories” is presented in paragraphs 1 to 46. All paragraphs are equal.

I. GENERAL PROVISIONS

Purpose

Limit

Define

Net realizable value

Inventory

II. SPECIFIED

Determining the value of inventory

Original cost of inventory

Purchase cost

Processing cost

Other costs

Cost of inventory of service providers

Cost of agricultural products harvested from biological assets

Techniques to determine cost of inventory

Pricing method

Net realizable value

Distributing goods for free or at nominal prices

Record the cost

Information presentation

Reference table of paragraphs of Vietnamese public accounting standards compared with paragraphs of international public accounting standards

I. GENERAL PROVISIONS

Purpose

1. The purpose of this standard is to prescribe the inventory accounting method. The fundamental problem in inventory accounting is that the cost of the costs that make up the inventory is recognized as an asset and continues to be recognized as an asset until the related revenue is recognised. take. This Standard provides guidance on determining the cost of inventories and subsequent recognition as an expense, including the reduction of inventories to net realizable value. . This Standard also provides guidance on the inventory valuation methods used to determine the value of inventories.

Limit

2. An entity that prepares and presents financial statements on the accrual basis of accounting applies this standard to account for all types of inventories, except:

(a) Costs in progress arising from construction contracts, including directly related service contracts;

(b) Financial Instruments;

(c) Biological assets associated with agricultural operations and agricultural products at the time of harvest; and

(d) Cost in progress of services provided free of charge or at nominal rates.

3. This Standard does not apply to the valuation of inventories held by:

(a) A producer of agricultural and forestry products, agricultural postharvest products, minerals and mineral products, the value of which is measured at net realizable value. in accordance with the specific regulations of these industries. When these inventories are measured at net realizable value, the changes in net realizable value are recognized in the surplus or deficit in the reporting period in which the change occurs; and

(b) Merchandise broker-trader determines the value of inventories at fair value less cost of sales. When these inventories are measured at fair value less cost of goods sold, changes in fair value less costs of goods sold are recognized in the surplus or deficit in the reporting period in which they are incurred. change.

4. Inventories referred to in paragraph 3(a) are measured at net realizable value at certain stages of production. For example, when the agricultural crop is harvested or when minerals are mined and the sale is secured by a forward contract or government offtake; or when an active market exists and there is virtually no risk of not selling. These types of inventories are not covered by the determination of this standard.

5. Trading units – commodity brokers are units that buy or sell goods for other units or for themselves. The inventory referred to in paragraph 3(b) is essentially purchased with the intention of reselling it in the near future and generating a surplus from price movements or the trading unit's profit margin. commodity world. Inventories are measured at fair value less costs to sell, which is not covered by this standard's determination of value.

Define

6. The terms used in this standard have the following meanings:

Current replacement costs are the costs incurred by the entity to acquire the asset at the reporting date.

Net realizable value is the estimated selling price under normal operating conditions less the estimated costs to complete the products and the estimated costs necessary to sell, exchange or distribute them.

Inventories are assets:

(a) Has the form of materials or tools, consumables in the production process;

(b) Take the form of materials or tools, consumable or distributed in the course of providing a service;

(c) Holds for sale or distribution during a normal operating cycle; or

(d) In production for sale or distribution.

Terms defined in other Vietnamese Public Accounting Standards as used in this Standard have the same meanings as in those Standards.

Net realizable value

7. Net realizable value is the net amount that an entity would expect to receive from the sale of inventory under normal operating conditions. Fair value reflects the value for which a similar inventory could be exchanged between a seller and a buyer who was reasonably knowledgeable and willing to make an exchange. The net realizable value is the value that is specific to the entity, while the fair value does not. The net realizable value of inventories may not equal fair value less costs to sell.

Inventory

8. Inventories include goods that are bought and held for resale, such as goods acquired and held for sale by the entity, real estate held for sale. Inventories also include finished or work-in-progress products that the entity is manufacturing. Inventories also include raw materials and tools and instruments prepared for use in the production process; goods purchased or produced by an entity for distribution free of charge or at nominal prices to another entity. In some public sector entities, inventory is more concerned with the provision of services than goods bought and held for resale or manufactured goods for sale. In the case of an entity providing a service, as referred to in paragraph 24, inventory includes the cost of performing the service for which the entity has not yet recognized revenue related to the provision of this service.

9. Public sector inventories may include:

(a) Stockpiling of goods;

(b) Curing materials;

(c) Spare parts for plant and equipment, other than those specified in the Property, Plant and Equipment Standards;

(d) Strategic stockpiles (e.g. energy, food, rescue equipment;

(e) Unissued Vault;

(f) Goods for supply in the postal service held for sale (for example, postage stamps);

(g) Work in progress, including:

(i) Documentation of training courses;

(ii) Customer services, when they are provided at par;

(h) Real estate held for sale.

10. Since the government has the power to print and issue currency and postage stamps, these assets are recognized as inventory for the purposes of this standard. These inventories are not reported at face value but are measured in accordance with paragraph 12 of this standard, i.e. at the cost of printing or minting them.

11. When the Government maintains strategic reserves for many types of goods, such as energy reserves (gasoline, oil), food reserves (rice) for use in emergency situations or in other situations ( such as natural disaster or other emergency civilian relief), these strategic inventories are recognized and treated as inventories for the purposes of this standard.

II. SPECIFIED

Determining the value of inventory

12. Inventories are measured at the lower of cost and net realizable value, except for the cases specified in paragraphs 13 or 14 of this standard.

13. When inventory is acquired through a non-exchange transaction, the value of the inventory is measured at its fair value at the date of receipt.

14. Inventories must be measured at the lower of cost and current replacement costs when inventories are held to:

(a) Distributed free of charge or at a nominal price; or

(b) Consumption in the production of a good that is freely distributed or at a nominal price.

Original cost of inventory

15. Cost of inventory includes all costs of purchase, processing and other costs incurred to bring the inventory in its present location and condition.

Purchase cost

16. The cost of purchasing inventory includes the purchase price, import duties and other taxes (except taxes that are subsequently refunded by the state budget), transportation, handling and other related costs. directly related to obtaining finished products, raw materials, and tools. Trade discounts, rebates and other similar items are deducted from the purchase cost.

Processing cost

17. Processing costs to convert unfinished inventories into finished goods inventories are incurred at units engaged in production activities. Inventory processing costs include costs directly related to each unit of product such as direct labor costs. Processing costs include both the systematic allocation of fixed and variable manufacturing overhead incurred during the processing of work-in-process inventory into finished goods inventory. Fixed manufacturing overheads are relatively stable indirect production costs that do not depend on production scale (such as depreciation and maintenance costs for plant and equipment) and administrative costs. Variable manufacturing overhead are indirect production costs that vary directly or nearly directly with the scale of production, such as indirect labor and indirect material costs.

18. The allocation of fixed production overheads to processing costs is based on the normal capacity of machinery and equipment. Normal capacity is the average amount of product expected to be produced over a number of periods or seasons under normal production conditions, taking into account the loss of capacity due to planned maintenance. . Actual production may be used as an allocation criterion if it approximates normal capacity. Fixed manufacturing overheads allocated to each product unit will not increase with less production or cessation of production. Manufacturing overheads that are not allocated are recognized as an expense in the period when they are incurred. In periods where actual production is higher than normal, fixed manufacturing overhead is allocated to each unit of product according to actual costs incurred, so inventories are not valued at high value. than actual costs. Variable manufacturing overhead is allotted to each product unit based on actual production levels of machinery and equipment.

19. A production process can produce many products at the same time. For example, in the case of the production of products that combine or the process produces a major product and a by-product. When processing costs for each product type cannot be segregated separately, they will be allocated to products on a reasonable and consistent basis. Allocation can be based on the respective selling price of each product at a stage in the production process where the products are individually identifiable or when the production is finished. Most of the by-products are not material in nature. In this case, the by-products are measured at net realizable value, which is subtracted from the cost of the main product. Therefore, the carrying value of the primary product will not be significantly different from its processing costs.

Other costs

20. Other costs are included in the cost of the inventory only to the extent that those costs are incurred to bring the inventory to its present location and condition. For example, cost of inventory may include overhead costs outside of manufacturing or the cost of designing products for specific customers.

21. Examples of costs that are not included in the cost of inventories and are recognized as expenses in the period in which they are incurred are:

(a) Cost of raw materials, labor or other production costs incurred above normal;

(b) Storage costs, unless they are necessary in the production process prior to a subsequent stage of production;

(c) Administration costs unrelated to bringing the inventory to its present location and condition; and

(d) Selling expenses.

22. In some cases, borrowing costs are included in the cost of inventories in accordance with the provisions of Vietnamese Public Accounting Standards on borrowing costs.

23. The unit can purchase inventory by deferred payment method. When a purchase includes a financial element, that financial element (for example, the difference between the purchase price on the spot payment method and the purchase price on the deferred payment method) is recognized as interest expense. loan in the deferred payment period.

Cost of inventory of service providers

24. In the case of service providers with inventories (other than those mentioned in paragraph 2(d)), the value of the inventories is determined at the cost of producing them. These costs basically include labor costs and other personnel costs directly related to providing the service, including supervisory staff costs and other overhead costs. Labor costs not related to service provision are not included in the cost of inventory. Labor and other costs related to sales and administrative staff expenses are not included in the cost of inventories but are recognized as expenses in the period when they are incurred. The cost of the service provider's inventory does not include residual profits or other unrelated overheads that are normally included in the price of the service.

Cost of agricultural products harvested from biological assets

25. Inventories including agricultural produce that an entity harvests from biological assets are initially recognized at fair value less costs to sell at the time of harvest. This is the cost of inventories at harvest for the application of this standard.

Techniques to determine cost of inventory

26. Inventory costing techniques, such as the standard cost method or the retail method, may be used for convenience if the results are approximate to cost. The standard costing method takes into account the normal consumption of materials, tools, labor, efficiency and capacity used in machinery and equipment. These factors are periodically reviewed and, as necessary, adjusted to suit current conditions.

27. Inventories may be transferred to the entity through a non-exchange transaction. For example, an international relief organization might provide medical supplies to a public hospital during disaster recovery. In this case, the cost of the inventory is the fair value at the time the inventory is received.

Pricing method

28. Cost of inventories (which are generally not interchangeable) and goods or services produced, segregated for specific projects, are determined using a method the nominal value of each object.

29. Nominal price is the specific price attached to certain types of inventory. This method is suitable for those types of inventory that are segregated for a particular project, regardless of whether the inventory is produced or purchased. However, the spot-price method is not suitable for pricing large quantities of inventory that are normally interchangeable. In this case, the method of selecting the items of inventory that is outstanding at the end of the period can be used to determine the expected effects on the surplus or deficit for the period.

30. When applying paragraph 29, an entity must use the same valuation method for all inventories of the same nature and intended use for the entity. For inventories that are different in nature or have different uses (e.g. the same goods but used in different parts), a different valuation method may be applied. The geographical location of inventories is not sufficient to justify the use of other costing methods.

31. Cost of inventories, other than the method referred to in paragraph 28, is determined by the first-in, first-out method or the weighted average method. An entity must use the same valuation method for all inventories of the same nature and intended use for the entity. For inventories of different natures or uses, different valuation methods may be applied.

32. For example, inventory used for a division may have a different use than inventory of the same type used for another division within the same entity. However, differences in the geographical location of inventories are not sufficient in nature to justify the application of different pricing methods.

33. The first-in, first-out (FIFO) method assumes that inventory purchased first is sold first, so the inventory remaining at the end of the period is the inventory purchased or produced at that time. nearest point. According to the weighted average method, the ex-warehousing price of each type is determined based on the weighted average prices of similar types at the beginning of the period and the prices of the types purchased or produced during the period. The average can be calculated for the entire period or after each entry, depending on the situation of the entity.

Net realizable value

34. The original cost of the inventory may not be recoverable in the event that the inventory is damaged, partially or completely obsolete, or the selling price is reduced. The cost of inventory may also be non-recoverable in the event that the estimated costs to complete and the estimated costs to sell, exchange or distribute increase. Depreciation of inventories to net realizable value is consistent with the principle that assets are not recognized to a greater extent than future economic benefits or potential services that the entity expects can be realized. obtained from the sale, exchange, distribution or use of that asset.

35. Inventories are reduced to net realizable value normally carried on a product-by-type basis. However, in some cases, an entity can make a reduction for a group of similar or related goods. This case is applied to inventories with the same purpose and end use function; cannot be valued separately from other goods in the same product line. Depreciation of inventory on the basis that one type of inventory is inappropriate, for example, finished goods, or all inventory of a particular process or geographic location. Service providers often aggregate costs for each service with a separate selling price, each of which is considered a separate item.

36. When estimating net realizable value, an entity must take into account the purpose for which the inventory is held. For example, the net realizable value of an inventory held for contract sale or service provision should be based on the sales price specified in the contract. If the amount of inventory held is greater than the amount signed under the contract, the net realizable value of the difference must be based on the estimated normal selling price. Guidance on how to handle contingencies or contingencies, such as inventory arising from signed sales contracts that exceed the amount of inventory held and the number of items in purchase contracts signed is presented in Vietnamese Public Accounting Standards on provisions, contingent liabilities and contingent assets.

37. Materials and tools held for use in the manufacture of products may not be depreciated below cost if the products they contribute to are to be sold, exchanged or distributed by or higher than the cost of that product. However, when there is a decrease in the price of raw materials that results in the cost of the finished product being higher than the net realizable value, these materials must be reduced to their net realizable value. can be done. In this case, using the current replacement cost of the material may be the best method for determining the net realizable value.

38. The entity must reassess net realizable value in each subsequent accounting period. When the previous causes for inventories to be reduced below cost no longer exist or when there is strong evidence that the net realizable value has increased as a result of changes in business conditions. In fact, the previous write-down must be reversed (the maximum amount to be reversed is the original write-down) to ensure that the new carrying amount is the lower of cost and net realizable value. has been adjusted. For example, in the previous accounting period, inventory is written down to net realizable value due to a decrease in its selling price. holding.

Free delivery or at nominal price

39. A public sector entity may hold an inventory of potential future economic benefits or services that are not directly related to its ability to generate net cash inflows. These types of inventories may arise when the Government decides to distribute certain goods free of charge or to distribute them at nominal prices. In these cases, the future economic benefits or potential services of the inventories for financial reporting purposes are reflected in the amounts required by the entity to obtain the economic benefits or services. potentially necessary for the achievement of the entity's objectives. When a potential economic benefit or service cannot be purchased in the market, an estimate should be made of the replacement cost. If the purpose of holding the inventory changes, the inventory is valued in accordance with paragraph 12.

Record the cost

40. When inventory is sold, exchanged or distributed, the carrying amount of the inventory is recognized as an expense in the period in which the related revenue is recognised. If no related revenue is generated, costs are recognized when the goods are delivered or when the related services are provided. The write-down of inventory and any loss of inventory is recognized as an expense in the period when the impairment or loss is incurred. The reversal of inventory write-downs will be recognized as a deduction from expenses in the period when the reversal is incurred.

41. For a service provider, the time when inventory is recognized as an expense usually occurs when the service has been provided or an invoice for the service charge has been issued.

42. Some types of inventory may be allocated to other assets, such as inventory used as part of real estate, plant, and homemade equipment. Inventories allocated to other assets in this manner are recognized as an expense over the useful life of the asset.

Information presentation

43. Financial statements must present the following information:

(a) The accounting policies used in determining the value of inventories, including the valuation method used;

(b) The total carrying amount of inventories and the carrying amount of each type of inventory classified in accordance with the entity;

(c) The carrying amount of inventories measured at fair value less costs to sell;

(d) Value of inventories recognized as expenses during the period;

(e) The amount of inventory write-downs are recognized as expenses during the period in accordance with paragraph 40;

(f) Reversal of inventory write-offs recognized in the statement of income for the period in accordance with paragraph 40;

(g) Circumstances or events leading to the reversal of an inventory write-down as provided for in paragraph 40; and

(h) The carrying amount of inventory mortgaged as security for liabilities.

44. Information about the carrying amount of different types of inventories held and the variability of these assets is useful to users of the financial statements. Generally, inventory is classified as goods, materials, tools, work-in-progress, and finished goods. A service provider's inventory can be described as a work-in-progress.

45. The value of inventories recognized as expenses in the period includes: costs previously included in the value of inventories that have now been sold, exchanged, or distributed, and manufacturing overheads. unallocated and inventory costs incurred above normal. There are cases where the entity may include other costs, such as distribution costs.

46. ​​Where an entity applies the income statement method in which the value of inventories is not presented as an expense item during the period. In this manner, the entity presents a breakdown of cost categories based on the nature of the costs. In this case, the entity must disclose the costs recognized in the period for: raw materials and supplies, labor and other costs, together with the net change in inventories during the period. .

Reference table of paragraphs of Vietnamese public accounting standards compared with paragraphs of international public accounting standards