Debit account 635 - Financial expenses (exchange rate loss)
There are accounts 111 (1112), 112 (1122) (accounting exchange rate).
Credit account 515 - Financial activity revenue (exchange rate profit)
- When revenue and other income arise in foreign currency, based on the actual transaction exchange rate on the transaction date, record:
Debit accounts 111(1112), 112(1122), 131... (actual exchange rate on transaction date) Credit accounts 511, 711 (actual exchange rate on transaction date).
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- When receiving advance payment from the buyer in foreign currency to provide materials, goods, fixed assets, services:
+ Accounting reflects the amount received in advance from the buyer according to the actual transaction exchange rate at the time of receipt, recording:
Debit accounts 111 (1112), 112 (1122)
Credit account 131 - Accounts receivable from customers.
+ When transferring materials, goods, fixed assets, and services to the buyer, accounting reflects according to the following principles:
For the revenue and income corresponding to the amount in foreign currency received in advance from the buyer, the accountant records it according to the actual transaction exchange rate at the time of receipt in advance, recording:
Debit account 131 - Receivables from customers (actual exchange rate at the time of receipt in advance) Credit accounts 511, 711.
For revenue and income that has not yet been collected, accountants record according to the actual transaction exchange rate at the time of occurrence, recording:
Debit account 131 - Accounts receivable from customers Credit accounts 511, 711.
- When collecting receivables in foreign currency, record:
Debit accounts 111 (1112), 112 (1122) (actual exchange rate on transaction date) Debit account 635 - Financial expenses (exchange rate loss)
There are accounts 131, 136, 138 (accounting exchange rate).
Credit account 515 - Financial activity revenue (exchange rate profit).
- When lending or investing in foreign currency, record:
Debit accounts 121, 128, 221, 222, 228 (actual exchange rate on transaction date) Debit account 635 - Financial expenses (exchange rate loss)
There are accounts 111 (1112), 112 (1122) (accounting exchange rate)
Credit account 515 - Financial activity revenue (exchange rate profit).
- Deposits and deposits in foreign currency
+ When using foreign currency for betting or deposit, record:
Debit account 244 - Pledge, mortgage, bet, deposit
There are accounts 111 (1112), 112 (1122) (accounting exchange rate).
+ When receiving back the deposit, record:
Debit accounts 111 (1112), 112 (1122) (actual exchange rate when received back) Debit account 635 - Financial expenses (exchange rate loss)
Credit account 244 - Pledge, mortgage, bet, deposit (recorded exchange rate) Credit account 515 - Financial activity revenue (exchange rate profit).
(2) Accounting for exchange rate differences arising from revaluation of foreign currency items
- When preparing Financial Statements, accountants re-evaluate foreign currency monetary items based on actual transaction exchange rates at the reporting date:
+ If exchange rate profit arises, record:
Debit accounts 1112, 1122, 128, 228, 131, 136, 138, 331, 341,..
Credit account 413 - Exchange rate difference (4131).
+ If there is an exchange rate loss, record:
Debit account 413 - Exchange rate difference (4131)
There are accounts 1112, 1122, 128, 228, 131, 136, 138, 331, 341,...
- Accounting for handling exchange rate differences arising from revaluation of foreign currency items: Accounting transfers the entire revaluation exchange rate difference (according to the net amount after offsetting the arising amounts on the Debit and Credit sides of Account 4131) to financial expenses (if there is an exchange rate loss), or financial income (if there is an exchange rate gain) to determine business performance results:
+ Transferring the exchange rate gain from the revaluation at the end of the fiscal year into financial operating revenue, record:
Debit account 413 - Exchange rate difference (4131)
Credit account 515 - Financial activity revenue (if exchange rate profit).
+ Transfer the exchange rate loss from the end of the fiscal year to financial expenses, record: Debit account 635 - Financial expenses (if there is an exchange rate loss)
Credit account 413 - Exchange rate difference (4131).
- Accounting for exchange rate differences arising in the period before the operation of enterprises in which the State holds 100% of charter capital and implements key national projects and works associated with the tasks of stabilizing the macro economy, security and national defense:
The entity applies all exchange rate regulations and accounting principles as for other enterprises, except:
+ The recording of exchange rate gains when they arise is reflected in the credit side of account 413.
- Exchange rate difference;
+ The recording of exchange rate losses when they arise is reflected in the Debit side of Account 413.
- Exchange rate difference;
When the business comes into operation, the accountant transfers the exchange rate difference to financial revenue or financial expenses.
- Handle the remaining exchange rate difference in account 242 - Prepaid expenses and account 3387 - Unearned revenue:
+ Enterprises that have not yet allocated all exchange rate difference losses from the pre-operation period (currently reflected in account 242 before this circular takes effect) must transfer all exchange rate difference losses to financial expenses to determine business results for the period, recording:
Debit account 635 - Financial expenses
Credit account 242 - Prepaid expenses.
+ Enterprises that have not yet allocated all the exchange rate difference profits from the pre-operation period (currently reflected in account 3387 before this circular takes effect) must transfer all exchange rate difference profits to financial operating revenue to determine business results in the period, recording:
Debit account 3387 - Unrealized revenue
Credit account 515 - Financial activity revenue.
3.4. Treasury stock accounting
3.4.1. Concept
Treasury shares are shares issued by a company and bought back by the issuing company itself, but they are not canceled and will be reissued within the time period prescribed by the law on securities. Treasury shares held by the company do not receive dividends, have no voting rights or participate in the division of assets when the company is dissolved. When dividends are distributed to shares, treasury shares held by the company are considered unsold shares.
3.4.2. User account
Account 419 – Treasury stocks
a. Accounting principles
- This account is used to reflect the current value and the increase or decrease in the number of shares repurchased by joint stock companies from the number of shares issued by that company to the public for later re-issuance (called treasury stocks).
- The value of treasury shares is reflected in this account at the actual repurchase price, including the repurchase price and costs directly related to the repurchase of shares, such as transaction costs, information costs, etc.
- At the end of the accounting period, when preparing the Financial Statement, the actual value of treasury shares is recorded as a reduction in Owner's Equity on the Balance Sheet by recording a negative number (...).
- This account does not reflect the value of shares that the company purchases from other joint stock companies for investment holding purposes.
- The capital value of treasury stocks when reissued, or when used to pay dividends, bonuses... is calculated using the weighted average method.
b. Structure
Account 419 – Treasury stocks
Debit: Actual value of treasury stock when purchased.
Credit : Actual value of treasury shares reissued, distributed as dividends or cancelled.
Debit balance : Actual value of treasury stock currently held by the company
3.4.3. Accounting method
(1) Accounting for repurchasing shares issued by the company itself:
- When the company has completed the procedures to buy back the shares issued by the company according to the law, the accountant performs the procedure to pay the shareholders at the agreed purchase and sale price and receive the shares, recording:
Debit account 419 - Treasury stocks (stock repurchase price) Credit accounts 111, 112.
- During the process of stock repurchase, when costs directly related to stock repurchase arise, record:
Debit account 419 - Treasury stocks Credit accounts 111, 112.
(2) Re-issuance of treasury shares:
- When reissuing treasury stocks at a price higher than the actual repurchase price, record: Debit accounts 111,112 (total payment price for reissuing stocks)
Credit account 419 - Treasury stocks (actual price of stock repurchase)
Credit account 411 - Owner's capital (4112) (the difference between the reissue price and the actual share repurchase price).
- When reissuing treasury stocks to the market at a price lower than the actual purchase price of the stocks, record:
Debit accounts 111,112 (total payment price for reissuing shares)
Debit account 4112 - Share capital surplus (reissue price is lower than repurchase price) Credit account 419 - Treasury shares (actual price of repurchased shares).
(3) When canceling treasury shares, record:
Debit account 4111 - Owner's capital contribution (par value of canceled shares); Debit account 4112 - Share capital surplus (repurchase price higher than par value)
Credit account 419 - Treasury stocks (actual price of stock repurchase).
(4) When there is a decision of the Board of Directors (approved by the General Meeting of Shareholders) to pay dividends in treasury stocks:
- In case the issuance price of treasury shares on the date of stock dividend payment is higher than the actual purchase price of treasury shares, record:
Debit account 421 - Undistributed profit after tax (share issuance price) Credit account 419 - Treasury shares (according to actual price of treasury shares repurchased)
Credit account 4112 - Share capital surplus (the difference between the treasury stock repurchase price and the issue price on the dividend payment date).
- In case the issuance price of treasury shares on the date of stock dividend payment is lower than the actual purchase price of treasury shares, record:
Debit account 421 - Undistributed profit after tax (share issuance price)
Debit account 4112 - Share capital surplus (the difference between the treasury stock repurchase price and the issue price on the dividend payment date).
Credit account 419 - Treasury stocks (according to actual price of treasury stock purchase).
3.5. Accounting for corporate funds
3.5.1. Accounting for development investment funds
3.5.1.1. Concept
Development investment fund is used to invest in expanding production and business scale or in-depth investment of the enterprise.
3.5.1.2. User account
Account 414 - Development investment fund
a. Accounting principles
- This account is used to reflect the current amount and the increase and decrease of the enterprise's development investment fund.
- Development investment fund is set aside from profit after corporate income tax.
- The allocation and use of development investment funds must comply with current financial policies for each type of enterprise or the owner's decision.
- The enterprise does not continue to allocate the Financial Reserve Fund. The enterprise owner decides to transfer the balance of the Financial Reserve Fund to the Development Investment Fund.
b. Structure
Debit: The situation of spending and using the enterprise's development investment fund. Credit: The development investment fund increases due to being set aside from after-tax profit. Credit balance: The current amount of development investment fund.
3.5.1.3. Accounting method
(1) During the period, when temporarily setting aside development investment funds from profits after corporate income tax, record:
Debit account 421 - Undistributed profit after tax Credit account 414 - Development investment fund.
(2) At the end of the year, determine the amount of development investment fund allocated, the accountant calculates the additional allocated amount, and records:
Debit account 421 - Undistributed profit after tax Credit account 414 - Development investment fund.
(3) In case a joint stock company issues additional shares from the Development Investment Fund, record:
Debit account 414 - Development investment fund
Credit account 4111 - Owner's equity (at par value)
Credit account 4112 - Share capital surplus (the difference between the issue price higher than the par value, if any).
(4) When an enterprise adds charter capital from the Development Investment Fund, the enterprise must transfer it to Owner's Investment Capital, recording:
Debit account 414 - Development investment fund
Credit account 4111 - Owner's equity
3.5.2. Accounting for bonus and welfare funds
3.5.2.1. Concept
The reward and welfare fund is deducted from the enterprise's after-tax profit to be used for rewards, material benefits, serving public welfare needs, improving and enhancing the material and spiritual life of employees.
3.5.2.2. User account
Account 353 – Bonus and welfare fund
a. Accounting principles
- This account is used to reflect the current amount, increase and decrease of the bonus fund, welfare fund and bonus fund of the company's executive management board.
- The establishment and use of the reward fund, welfare fund and bonus fund for the company's executive management board must comply with current financial policies.
- Bonus funds, welfare funds, and company executive board bonus funds must be accounted for in detail for each type of fund.
- For fixed assets invested and purchased with welfare funds, when completed and used in production and business, accountants record an increase in fixed assets, an increase in Owner's Investment Capital, and a decrease in welfare funds.
- For fixed assets invested and purchased with welfare funds when completed and used for the cultural and welfare needs of the enterprise, the accountant records an increase in fixed assets and at the same time transfers them from the Welfare Fund (Account 3532) to the Welfare Fund that has formed fixed assets (Account 3533). These fixed assets are not depreciated monthly into expenses, but at the end of the accounting year, the depreciation of fixed assets is calculated once a year to record a decrease in the Welfare Fund that has formed fixed assets.
b. Structure
Account 353 – Bonus and welfare fund Debit:
- Expenditures for bonus funds, welfare funds, and company executive board bonus funds;
- Reduce the welfare fund that has formed fixed assets when calculating depreciation of fixed assets or due to sale, liquidation, or discovery of shortage when taking inventory of fixed assets;
- Investing and purchasing fixed assets with welfare funds upon completion to serve cultural and welfare needs;
- Provide reward and welfare funds for subordinates.
Side Yes
- Set up reward fund, welfare fund, and bonus fund for the company's executive management board from profit after corporate income tax;
- Bonus and welfare funds are provided by superiors;
- The welfare fund has formed fixed assets increased due to investment and purchase of fixed assets using the completed welfare fund and put into use for production, business or cultural and welfare activities.
Credit balance : The remaining bonus fund and welfare fund of the enterprise.
Account 353 – Reward and welfare fund, has 4 sub-accounts:
- Account 3531 - Bonus fund: Reflects the current amount, provisioning and spending of the enterprise's bonus fund.
- Account 3532 - Welfare fund: Reflects the current amount, provision and expenditure of the enterprise's welfare fund.
- Account 3533 - Welfare fund for forming fixed assets: Reflects the current amount, increase and decrease of the welfare fund for forming fixed assets of the enterprise.
- Account 3534 - Bonus fund for the company's executive management board: Reflects the current amount, provisioning and spending status of the Bonus fund for the company's executive management board.
3.5.2.3. Accounting method
(1) During the year, when temporarily deducting the reward and welfare fund, record: Debit account 421 - Undistributed profit after tax
Credit account 353 - Reward and welfare fund (3531, 3532, 3534).
(2) At the end of the year, determine the bonus and welfare fund to be additionally allocated, record: Debit account 421 - Undistributed profit after tax
Credit account 353 - Reward and welfare fund (3531, 3532, 3534).
( 3) Calculate the bonus payable to employees and other workers in the enterprise, record:
Debit account 353 - Reward and welfare fund (3531).
Credit account 334 - Payable to employees.
(4) Use welfare funds to pay for hardship allowances, vacations for employees and workers, and mass cultural and artistic movements, record:
Debit account 353 - Reward and welfare fund (3532) Credit accounts 111, 112.
(5) When selling products and goods covered by the welfare reward fund, the accountant reflects revenue excluding VAT payable, recording:
Debit account 353 - Reward and welfare fund (total payment price) Credit account 511 - Sales revenue and service provision Credit account 3331 - VAT payable (33311).
(6) When the superior allocates reward and welfare funds to the subordinate unit, record: Debit account 353 - Reward and welfare funds (3531, 3532, 3534)
There are accounts 111, 112.
(7) The number of reward and welfare funds allocated by the superior unit, recorded as: Debit accounts 111, 112,...
Credit account 353 - Reward and welfare fund (3531, 3532).
(8) Using welfare fund to support areas of natural disasters, fires, charity... record: Debit account 353 - Reward and welfare fund (3532)
There are accounts 111, 112.
(9) When investing in and purchasing completed fixed assets using welfare funds to put into use for the cultural and welfare purposes of the enterprise, record:
Debit account 211 - Tangible fixed assets (original price) Credit accounts 111, 112, 241, 331,…
If input VAT is not deductible, the original cost of fixed assets includes VAT.
Also, note:
Debit account 3532 - Welfare fund
There is account 3533 - Welfare fund that has formed fixed assets.
(10) Periodically, calculate depreciation of fixed assets invested and purchased with welfare funds, used for cultural and welfare needs of the enterprise, record:
Debit account 3533 - Welfare fund for forming fixed assets Credit account 214 - Depreciation of fixed assets.
(11) When transferring, liquidating fixed assets invested or purchased with welfare funds, used for cultural and welfare activities:
- Record reduction in fixed assets sold or liquidated:
Debit account 3533 - Welfare fund has formed fixed assets (remaining value) Debit account 214 - Depreciation of fixed assets (depreciation value)
Credit account 211 - Tangible fixed assets (original price).
- Reflects revenue and expenditure from sale and liquidation of fixed assets:
+ For expenses, record:
Debit account 353 - Reward and welfare fund (3532)
Debit account 133 - Deductible VAT (if deductible)