Management Requirements, Roles and Responsibilities of Fixed Asset Accounting in Enterprises

- Fixed assets are issuance rights: Original price is all actual costs the enterprise has spent to have the issuance rights.

- Fixed assets are copyrights and patents: Original price is the actual costs incurred to obtain copyrights and patents.

- Fixed assets are trademarks: Original price is all actual costs directly related to the purchase of trademarks.

- Fixed assets are computer software: Original price is all actual costs that the business has spent to have computer software.

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- Fixed assets are licenses and franchise licenses: Original cost is the expenses for the enterprise to obtain licenses and franchise licenses to perform that work, such as: mining licenses, licenses to produce new types of products.

- Intangible fixed assets created internally by the enterprise: Original price is the total cost incurred from the time the intangible asset meets the definition and recognition criteria of intangible fixed assets until the intangible fixed asset is put into use.

1.1.3.2. Determining costs incurred after initial recognition

Expenses incurred after the initial recognition of fixed assets are recorded as an increase in the original cost of the asset if these expenses will certainly increase future economic benefits from the use of that asset. Expenses incurred that do not satisfy the above conditions must be recorded as production and business expenses in the period.

Expenditures incurred after the initial recognition of tangible fixed assets are recorded as an increase in the original cost of the asset if they actually improve the current condition compared to the original standard condition of that asset, such as [4] :

- Changing parts of tangible fixed assets to increase their useful life or increase their capacity;

- Improving parts of tangible fixed assets significantly increases the quality of manufactured products;

- Applying new production technology processes reduces operating costs of assets compared to before.

The cost of repair and maintenance of tangible fixed assets for the purpose of restoring or maintaining the ability to provide economic benefits of the asset in its original standard operating condition is included in the production and business costs of the period.

Accounting for costs incurred after the initial recognition of tangible fixed assets must be based on each specific case and the ability to recover costs incurred later. When the residual value of tangible fixed assets includes reductions in economic benefits, costs incurred later to restore economic benefits from that asset will be included in the original cost of the fixed asset if the residual value of the fixed asset does not exceed the recoverable value of that asset. In cases where the purchase price of tangible fixed assets includes the obligation of the enterprise to incur additional costs to put the asset into a state of readiness for use, the capitalization of costs incurred later must also be based on the ability to recover costs. For example, when purchasing a house that requires the enterprise to repair before use, the cost of repairing the house is included in the original cost of the asset if that value can be recovered from the future use of the house.

In case some parts of a tangible fixed asset require regular replacement, they are accounted for as independent fixed assets if they satisfy all four (4) criteria prescribed for tangible fixed assets. For example, the air conditioner in a house may need to be replaced many times during the useful life of the house, the costs incurred in replacing or restoring the air conditioner are accounted for as an independent asset and the value of the air conditioner when replaced will be reduced.

Expenditures relating to intangible assets incurred after initial recognition are recognised as expenses of production and business in the period, unless these costs are associated with a specific intangible asset and increase the economic benefits from these assets.

Expenses incurred after initial recognition relate to trademarks, copyrights, customer lists and similar items of

The cost of production and business in the period (including cases of purchase from outside or creation from within the enterprise) is always recorded as production and business costs in the period.

1.1.3.3. Valuation after initial recognition

After initial recognition, during use, fixed assets are determined according to original cost, accumulated depreciation and residual value.

In case tangible fixed assets are re-evaluated according to State regulations, the original price, accumulated depreciation and remaining value must be adjusted according to the revaluation results. The difference due to the revaluation of tangible fixed assets is handled and accounted for according to State regulations.

1.1.4. Management requirements, roles and tasks of fixed asset accounting in enterprises

1.1.4.1. Fixed asset management requirements

Fixed assets are important technical facilities for production and business activities in enterprises, so they need to be strictly managed to maximize efficiency during use. In the process of managing and using fixed assets, the following requirements must be met [10] :

Firstly, it is necessary to grasp all fixed assets in use in the enterprise both in kind and in value. To fulfill this requirement, the enterprise must organize the monitoring of fixed assets in kind and in value, and have a method to accurately determine the value of the assets. Determining the value of assets must be based on certain evaluation principles, thereby providing general information about the entire capacity of fixed assets to serve the requirements of economic management. There must be reasonable classification criteria to be able to manage closely, and provide accurate information about the current status of fixed assets in the enterprise.

Second, it is necessary to grasp the situation of fixed asset usage in the business units, provide information for analyzing and evaluating the situation of fixed asset usage and ensure the safety of fixed assets during use. To fulfill this requirement, first of all, the business must:

Enterprises must establish a material responsibility regulation for those who maintain and use assets. There must be a method to monitor fixed assets currently in use in each department of the enterprise, both in physical form and in value. When implementing this requirement, enterprises will have specific and detailed information about fixed assets currently in the departments using the assets, thereby having timely handling measures to promote the capacity of fixed assets in the production and business process.

Third, fixed assets must be managed from the time of investment, construction, purchase, to the process of using the asset and even until it is no longer used (damaged, liquidated, sold). Because the cost of having a fixed asset is often very large, during the process of use, the initial investment cost must be allocated. If the asset is found to be ineffective due to not being suitable for the business's operations or the asset is outdated... the business needs to take measures such as selling it to replace it with another fixed asset. Or damaged and liquidated fixed assets will reduce the cost of inventory invested in the business's assets.

Fourth, in the process of management and use, fixed assets must always be identified.

determined by three criteria: original price, accumulated depreciation and residual value.

1.1.4.2. The role of fixed assets

Fixed assets are a part of the means of production, playing the role of the main means of labor in the production process. They are considered the technical material basis that plays an important role in production and business activities, and are a condition for increasing social labor productivity and developing the national economy.

Fixed assets are the technical material basis of an enterprise, it reflects the existing production capacity and the level of application of scientific and technological advances in the production and business activities of the enterprise in particular and the national economy in general.

Fixed assets are one of the important factors creating the ability for sustainable growth, increasing labor productivity, thereby reducing costs and lowering the price of products and services.

Fixed assets are also an effective capital mobilization tool. For bank loans, fixed assets are considered a very important condition because they act as collateral for the loan. Based on the value of the mortgaged fixed assets, the bank will decide whether to lend or not, and how much and for how long. For joint stock companies, the size of the company depends on the value of the fixed assets that the company holds. Therefore, the process of raising capital for the enterprise by issuing bonds or stocks, the level of trust of investors is greatly affected by the amount of fixed assets that the company currently has and the technology content in the company's fixed assets.

Therefore, improving, perfecting, innovating and effectively using fixed assets is one of the decisive factors for the existence and development of enterprises and the national economy.

1.1.4.3. Duties of fixed asset accounting

Fixed assets are the main means of production that play an important role in the production and business process of an enterprise. Fixed assets are often of great value and account for a high proportion of the total asset value of an enterprise. Managing and using fixed assets well not only creates conditions for enterprises to proactively plan production but is also a measure to improve the efficiency of capital use and reduce product costs. To meet the requirements of managing and using fixed assets, fixed asset accountants must perform the following tasks well [10] :

The organization records and reflects the quantity, value, and current status of fixed assets in the entire unit, as well as in each department using fixed assets, promptly and accurately. This creates conditions for providing information for regular inspection and supervision of the preservation, maintenance, and investment plans for fixed asset renewal in each unit.

Correctly calculate and accurately allocate fixed asset depreciation to production and business costs of departments using fixed assets, effectively manage and use investment capital formed from fixed asset depreciation.

Participate in planning and estimating costs for major repairs of fixed assets, accurately reflecting actual repairs of fixed assets into production and business costs during the period according to the correct users of fixed assets, checking the implementation of plans and costs for repairs of fixed assets.

Calculations promptly and accurately reflect the situation of equipment construction, renovation, upgrading or dismantling that increases the original value of fixed assets as well as the situation of liquidation and sale that reduces the original value of fixed assets.

Guide and inspect units and dependent departments in enterprises to fully implement the initial recording regime on fixed assets, open necessary accounting books and cards, and account for fixed assets in accordance with regulations.

Participate in inventory and re-evaluation of fixed assets according to State regulations and capital preservation requirements, analyze the equipment situation, mobilize, preserve and use fixed assets at the unit to improve the economic efficiency of fixed assets.

1.2. Impact of Vietnamese accounting standards on fixed asset accounting in enterprises

The general purpose of drafting and promulgating accounting standards is to unify accounting activities within a geographical scope (which can be within a country, within a region or globally). Accounting standards are regulations, basic principles, and guidelines that need to be respected when performing accounting work and when presenting information in financial statements to ensure the transparency of financial statements.

Accounting for fixed assets and intangible assets in enterprises requires compliance with the provisions of standard No. 03 - VAS 03 and standard No. 04 - VAS 04 issued under Decision No. 149/2001/QD - BTC. Accordingly, the prescribed contents include:

* Vietnamese Accounting Standard No. 03 - Fixed Assets (VAS 03) [4]

Fixed assets are often a major part of the total asset value and play an important role in reflecting the financial situation of the enterprise, because

Therefore, determining whether an asset is recognized as a tangible fixed asset or a production and business expense during the period will have a significant impact on the business performance report of the enterprise. According to paragraph 06 of Vietnamese accounting standards (VAS) - VAS 03, the recognition criteria for tangible fixed assets must satisfy all 04 of the following recognition criteria at the same time:

- Certain to gain future economic benefits from the use of that asset: will bring the enterprise future economic benefits. The economic benefits that fixed assets bring to the enterprise can be increased revenue, increased output, increased quality of products and services provided, reduced costs of manufacturing products or providing services... To ensure this certainty, the enterprise must rely on existing evidence at the time of initial recording and must bear all related risks.

- Original price must be determined reliably: Original price of fixed assets is determined on the basis of all costs that the enterprise must spend to acquire fixed assets up to the time of putting the asset into a state of readiness for use. There are many sources, many methods, and forms to have a separate way of determining. But regardless of the method of determination, to ensure reliability in determining the original price of fixed assets, it depends on each source of formation to have a separate way of determining.

All expenses that the enterprise has paid to acquire fixed assets must have clear and legal invoices and payment documents. If the fixed assets are acquired through exchange, donation, or transfer, there must be asset valuation records and agreements between the parties on the asset value as the main basis for calculating the original value of the assets.

- Estimated usage time of over 1 year: Fixed assets are the main means of labor to create products and services for the enterprise, so the most important characteristic of fixed assets is that they must participate in many production and business cycles of the enterprise. The production and business cycle of the enterprise is usually 1 fiscal year, so

The estimated useful life of a fixed asset must be over 1 fiscal year, only then will it be consistent with the characteristics of the fixed asset and also a condition for the fixed asset to be able to bring clear economic benefits in the future to the enterprise from the use of the asset. This is also the standard to distinguish fixed assets from other short-term assets of the enterprise.

- Meets the value standards according to current regulations: The value standards of fixed assets are changed according to the provisions of the Decisions of the Ministry of Finance on fixed assets over the periods, including some of the following Decisions: Decision 166/1999/QD/BTC dated December 30, 1999 stipulates the minimum value of fixed assets is 5,000,000 VND, Decision No. 206/2003/QD/BTC dated December 12, 2003 and Circular No. 2003/2009/TT-BTC issued on October 20, 2009 is 10,000,000 VND or more (Replacing Decision 206/2003/QD:/BTC), and currently according to Circular No. 200/2014/TT-BTC dated December 22, 2014 is 30,000,000 VND or more.

- Initial recognition and costs incurred after initial recognition

Fixed assets must be initially measured at cost, regardless of the method or source of their formation. Expenditures incurred after the initial recognition of fixed assets are recorded as an increase in the cost of the asset if it is certain that these expenditures will result in an increase in future economic benefits from the use of the asset.

Specifically in the following cases: Changing parts of fixed assets increases their useful life or increases their capacity, improving parts of fixed assets significantly increases the quality of manufactured products, applying new production technology processes to reduce operating costs of assets compared to before. Other expenses incurred that do not satisfy the above conditions are recorded as production and business expenses in the period.

- Determining value after initial recognition: After initial recognition, during the use of fixed assets, they are determined according to original cost, accumulated depreciation and residual value. If fixed assets are re-evaluated according to state regulations, original cost, accumulated depreciation and residual value must be adjusted.