The historical cost of a procured tangible fixed asset consists of the buying price

The historical cost of a procured tangible fixed asset consists of the buying price

accounting-services-in-vietnam2(minus (-) trade discounts and price reductions), taxes (excluding reimbursed tax amounts) and expenses directly related to the putting of the assets into the ready-for-use state, such as ground preparation expense;

initial transportation, loading and unloading expense; installation and trial operation expense (minus (-) amounts recovered from products and wastes turned out from trial operation); expert cost and other directly-related expenses.

For tangible fixed assets formed from construction investment by contractual mode, their historical costs are the settled costs of the invested construction projects, other directly-related expenses and registration fee (if any).

15. Where procured tangible fixed assets are houses, architectural objects associated with the land use right, the land use right value must be separately determined and recognized as intangible fixed asset.

16. Where procured tangible fixed assets are paid by deferred payment mode, their historical cost shall be shown at the buying price promptly paid at the purchase time.

The difference between the payable total amount and the promptly-paid buying price shall be accounted as expense in the payment period, except where such difference is included into the historical cost of tangible fixed assets (capitalization) according to the regulations of the accounting standard “Borrowing expenses.”

17. Incurred costs, such as administrative management cost, general production costs, trial operation cost and other costs…, if not directly related to the procurement and the putting of fixed assets into the ready-for-use state, shall not be included into the historical cost of tangible fixed assets. Initial losses caused by the machinery’s failure to operate as planned shall be accounted into production and business expenses in the period.

accounting-services-in-vietnam1Self-constructed or self-made tangible fixed assets

18. The historical cost of a self-constructed or self-made tangible fixed asset is its actual cost plus (+) the installation and trial operation cost. Where the enterprises turn the products made by themselves into fixed assets, the historical costs shall be the production costs of such products plus (+) the expenses directly related to the putting of the fixed assets into the ready-for-use state.

In these cases, all internal profits must not be included in the historical cost of these assets. Unreasonable expenses, such as wasted materials and supplies, labor or other costs in excess of the normal levels arising in the self-construction or self-generating process must not be included in the historical cost of tangible fixed assets.

Financial-leasing tangible fixed assets

19. Where tangible fixed assets are leased in the form of financial lease, their historical cost shall be determined according to the regulations of the accounting standard “Asset lease.”