The financial statements reflect the financial status of enterprises through summing

The financial statements reflect the financial status of enterprises through

accounting-services-in-vietnam2summing up economic and financial operations of the same economic nature in their elements. The elements directly related to the determination of the financial status in the balance sheets include assets, liabilities and owners’ equity.

The elements directly related to the assessment of the business situation and results in the statements on business results are revenues, other incomes, costs and business results.

Financial status

18. The elements directly related to the determination and evaluation of the financial status are assets, liabilities and owners’ equity. These elements are defined as follows:

a/ Assets mean resources that are controlled by enterprises and may yield future economic benefits.

b/ Liabilities mean the current obligations of an enterprise, arising from the past transactions and events, which must be settled by the enterprise with its own resources.

c/ Owners’ equity means the value of the enterprises’ capital, being equal to the difference between the value of the enterprise’s assets minus (-) its liabilities.

19. When determining the items in the elements of a financial statement, attention must be paid to their ownership forms and economic contents. In some cases, though assets do not fall under the enterprises’ ownership, they are still reflected in the elements of the financial statements due to their economic contents.

For example, in case of financial leases, the economic form and content are that the lessee-enterprises obtain economic benefits from the use of leased assets during most of the useful life of the assets; in return the lessee-enterprises are obliged to pay a sum that approximates the reasonable value of the assets as well as related financial costs.

accounting-services-in-vietnam1The financial leasing operation gives rise to the item “Assets” and the item “Liabilities” in the balance sheets of the lessee-enterprises.


20. Future economic benefits of an asset are the potential to increase the sources of cash and cash equivalents of an enterprise or to reduce cash amounts to be paid by the enterprise.

21. Future economic benefits of an asset are demonstrated in such cases as :

a/ Being used in isolation or in combination with other assets in the manufacture of products for sale or in the provision of services for customers;

b/ For sale or exchange for another asset;

c/ For payment of liabilities;

d/ For distribution to the enterprise’s owners.

22. Assets may have the physical form such as workshops, machinery, equipment, supplies, goods or the non-physical form, such as copyright or patents but must gain future economic benefits and are under the control of enterprises.

23. Assets of enterprises also include assets that enterprises do not own but can control them and gain future economic benefits therefrom, such as assets given for financial leases; or assets that enterprise own and can gain future economic benefits therefrom but may not control them legally, such as technical know-hows obtained from development activities, which may satisfy the conditions required in the asset definition when they are still kept secret and enterprises can still gain economic benefits therefrom.

24. Assets of enterprises are formed from the past transactions or events, such as capital contribution, procurement, self-production, grants or donations. Transactions or events expected to arise in future will not lead to an increase in assets.