Other directly-related costs shall be incorporated into the original prices of inventories

Other directly-related costs shall be incorporated into the original prices of inventories, including costs other than the purchasing cost and processing cost of inventories. For example, the original price of finished products may consist of the product-designing cost for a particular order.

accounting-services-in-vietnam2Costs not permitted to be incorporated in the original price of inventories

11. Costs not permitted to be incorporated into the original price of inventories, are:

a/ Costs of raw materials, materials, labor and other production and business costs incurred at a level higher than normal;

b/ Costs of inventories preservation minus the inventories preservation cost needed for subsequent production processes and the preservation cost prescribed in paragraph 06;

c/ Sale cost;

d/ Enterprise management costs.

Service provision cost

12. Service provision cost consists of personnel costs and other costs directly related to the service provision, such as supervision cost and related general costs.

Personnel costs and other costs related to goods sale and enterprise management shall not be included in the service provision cost.

METHOD OF CALCULATING THE VALUE OF INVENTORIES

accounting-services-in-vietnam113. The value of inventories shall be calculated according to one of the following methods:

a/ Specific identification method;

b/ Weighted average method;

c/ First-in, First-out method;

d/ Last-in, First-out method.

14. The specific identification method shall apply to enterprises having a few goods items or stable and identifiable goods items.

15. By the weighted average method, the value of each kind of inventories shall be calculated according to the average value of each similar kind of goods at the beginning of the period and the value of each kind of inventories purchased or manufactured in the period. The average value may be computed either according to periods or the time when a goods lot is warehoused, depending on the enterprise’s situation.

16. The First-in, First-out method shall apply upon the assumption that the first inventories purchased or manufactured is the first inventories delivered, and the inventories left at the end of the period are those purchased or produced at a time close to the end of the period.

By this method, the value of the delivered goods shall be computed according to the price of the lot of goods warehoused at the beginning of the period or at a time shortly after the beginning of the period, the value of the inventories shall be computed according to the price of the goods warehoused at the end of the period or at a time shortly before the end of the period.