Account 302- – Intangible fixed assets

1. Accounting principles:

This account shall be used for recording the existing value of, any increase or decrease in, all tangible fixed assets of a microfinance institution according to their historical costs.

Recording bookkeeping entries on this account must adhere to the Vietnamese Accounting Standard No. 04 – Intangible fixed assets. Management, use and depreciation of fixed assets shall conform to the financial regime adopted by the Ministry of Finance, including:

a) Intangible fixed assets are those assets which are non-physical, but can be valued, under the control of a microfinance institution for production, business and service supply purposes, or for hire, and meet standards for recognizing intangible fixed assets. If an intangible asset meets 4 standards specified in point a of clause 1 of Article 13 herein, it will be considered as an intangible fixed asset;

b) Value of fixed assets must be entered in the account 302 “Intangible fixed assets” according to their historical costs.

Accountant must keep detailed record of historical costs of intangible fixed asset according to their types and characteristics. Historical cost of an intangible fixed asset can be determined according to the following principles:

– Historical cost of an intangible fixed asset refers to total cost that a microfinance institution needs to be spent to acquire it till the proposed time of commencement of use of that asset.

– Historical cost of an intangible fixed asset which is purchased according to deferred, instalment payment terms, or under a swap contract, or is given, gifted, donated, received as capital contributed to joint venture entities, taken back as contributed capital or due to discovery of surplus thereof, etc. shall be determined in the same manner as tangible fixed assets.

– Historical cost of an intangible fixed asset which is land use right is the sum paid to obtain legal land use right (including costs paid to transferors or costs incurred from compensation for and clearance of project sites, site leveling or registration fees, etc.), or to fulfill agreements between capital-contributing parties. Defining land use right as an intangible fixed asset must be subject to regulations laid down in relevant laws.

– Costs incurred to bring future economic benefits to microfinance institutions, including costs incurred from establishment of a microfinance institution, staff training costs or advertising costs arising during the period before operation of newly-established microfinance institutions, or costs of relocation, shall be recognized as during-period production and business costs in accordance with existing regulations, not as intangible fixed assets.

– Costs associated with intangible fixed assets arising after being initially recognized must be recorded as during-period production and business costs, and may be recorded as increases in historical costs of these assets if they meet both requirements, including:

+ Costs incurred are likely to enable fixed assets to bring about future economic benefits more than the level of their initially-appraised operation;

+ Costs are identified firmly and closely associated with specific intangible fixed assets;

c) Calculation and depreciation of a fixed asset shall be subject to laws;

d) Any change in historical costs of intangible fixed assets; increases, decreases, disposal or liquidation sale, discovery of surplus or deficit of these assets after completion of the stocktaking process shall be subject to regulations the same as those applied to tangible fixed assets.

dd) Each intangible fixed asset with its specifications must be recorded in detail according to data about its classification type, locations for its storage, use and management as specified in the “fixed asset log”.

2. Account 302 can be subdivided into tier-2 accounts, including:

3021- Land use right

3022- Computer software

3029- Other intangible fixed assets

3. Structure and entries of the account 302:

Debit side: – Increased historical costs of intangible fixed assets.

Credit side: – Decreased historical costs of intangible fixed assets.

Debit balance: – Historical costs of existing tangible fixed assets of a microfinance institution.

Detailed accounting: Accountants can use subaccounts for specific intangible fixed assets.