Quyết định 32/2008/QD-BTC

DECISION

TO ISSUE THE REGIME FOR MANAGING AND CALCULATING DEPRECIATION OF FIXED ASSETS OF STATE AGENCIES, PUBLIC SERVICE PROVIDERS, AND ORGANIZATIONS FUNDED BY THE STATE BUDGET

THE MINISTER OF FINANCE

- Pursuant to the Law on State budget No. 01/2002/QH11 dated December 16^th 2002;

- Pursuant to the Government's Decree No. 178/2007/NĐ-CP dated December 03^rd 2007 defining the functions, tasks, powers and organizational structure of Ministries and ministerial agencies;

- Pursuant to the Government's Decree No. 77/2003/NĐ-CP dated July 01^st 2003 defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

For the sound management and efficiency of assets of state agencies, public service providers and organizations funded by the State budget.

At the request of the Director of the Department of Public Asset Management,

DECIDES

Article 1. To issue the “Regime for managing and calculating depreciation of fixed assets of state agencies, public service providers, and organizations funded by the State budget”.

Article 2. This Decree takes into force after 15 days from the date on which it is published on the Official Gazette, is applicable from January 01^st 2009, and supersedes the Decision No. 351-TC/QĐ/CĐKT dated May 22^nd 1997 of the Minister of Finance issuing the Regime for the management, use, and calculation of depreciation of fixed assets in administrative units.

The Regime issued together with this Decision is applicable to every fixed asset. The input value and residual value of fixed assets acquired before January 01^st 2009 shall be determined based on the accounting books and papers in order to make a list of fixed assets according to new standards. Those fixed assets shall be monitored, managed, and used in accordance with the criteria for determining costs, residual values, and accumulated depreciation in this Regime. The fixed assets that do not meet the new standards shall be monitored, managed, and used as long-lasting instruments.

Article 3. State agencies, public service providers, and organizations funded by the State budget are responsible for the implementation of this Decision.

Ministries, ministerial agencies, Governmental agencies, other central agencies, People’s Committees of central-affiliated cities and provinces shall direct and organize the application of this Regime at state agencies, public service providers, and organizations funded by the State budget under their management.

Article 4. The Director of the Department of Public Asset Management, the Director of the Financial and Administrative Department, the Director of the Department of The State Budget, the Director of the Accounting and Audit Regime, Directors of units affiliated to Ministries, within their area of competence, shall organize, provide guidance, and inspect the implementation of this Decision./.

REGIME

FOR MANAGING AND CALCULATING DEPRECIATION OF FIXED ASSETS OF STATE AGENCIES, PUBLIC SERVICE PROVIDERS, AND ORGANIZATIONS FUNDED BY THE STATE BUDGET

(Issued together with the Decision No. 32/2008/QĐ-BTC dated May 29^th 2008 of the Minister of Finance)

Chapter I

GENERAL PROVISIONS

Article 1. Scope of application

This Regime is applicable to state agencies, public service providers, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations funded by the State budget (hereinafter referred to as units)

Article 2. Scope of application

The regulations on managing and calculating depreciation of fixed assets in this Regime are applicable to all existing fixed assets of units.

The Ministry of National Defense and the Ministry of Public Security shall specify the management and calculation of depreciation of fixed assets in National defense and security in accordance with this Regime.

Chapter II

MANAGEMENT OF FIXED ASSETS

Article 3. Identification of fixed assets

1. Identification of tangible fixed assets

A tangible fixed asset is an asset that has a physical form, independent structure, or is a system composed of multiple separate assets that are connected to perform certain functions, and satisfy both requirements below:

- The useful life is 1 year or more;

- The cost value is 10,000,000 VND or higher.

2. Identification of intangible fixed assets

An intangible fixed asset is an asset that does not have a physical form and its formation is invested by the unit, such as: the value of rights to use land, patents, computer software, industrial designs, solutions, copyrights, etc. and meet both requirements in Clause 1 of this Article.

Article 4. Identification of special assets

1. The assets prescribed in Points b, c, d, dd, e, f, and g of Clause 1.1.1 Article 6 of this Regime, of which costs are from 5 million VND to below 10 million VND and useful life is longer than 1 years, are classified as tangible fixed assets.

2. The assets of which actual values are not identifiable (hereinafter referred to as special assets) that require tight management (exhibits in museums, mausoleums, historical remains, etc.) are classified as tangible fixed assets.

3. Fragile assets of which costs are 10,000,000 VND or higher (such as glass and porcelain) are not classified as fixed assets, except for laboratory instruments.

4. Apart from the regulations in Clause 1, Clause 2 and Clause 3 of this Article, the Ministries, ministerial agencies, Governmental agencies, other central agencies, provincial People’s Committees may classified the assets that do not meet the requirements in Article 3 of this Regime as fixed assets depending on the characteristics of such assets.

Article 5. Fixed asset entries

1. Each independent asset is a fixed asset entry.

2. A system composed of multiple separate assets that are connected to perform certain functions, which is unable to work if any of them is missing, is a fixed asset fixed asset entry.

3. A system composed of separate assets that are connected, each of them has a different useful life and an independent function that needs separate management, each of such assets is a fixed asset entry.

4. Each draught animal or producing animal is a fixed asset entry.

5. Each plantation (or group of tree) in independent premises that is valued at 10 million VND or higher (excluding the value of the right to use land) is a fixed asset entry.

Article 6. Classification of fixed assets

For the purpose of managing and calculating the depreciation of fixed assets of units, fixed assets are classified as follows:

1. Classification by structure:

1.1. Tangible fixed assets:

a. Buildings and constructions:

- Buildings: Offices, warehouses, auditoriums, sport stadiums, museums, kindergartens, workshops, schools, universities, lecture halls, dormitories, hospitals, infirmaries, convalescent homes, guest houses, houses, public houses, other houses, etc.

- Constructions: wells, playgrounds, drying grounds, bridges and drainage systems, dykes, dams, roads (invested by units), stadiums, swimming pools, shooting ranges, mausoleums, monuments, fences, etc.

b. Machinery and equipment:

- Office equipment: computers, printers, photocopiers, projectors, paper shredders, water heaters, water filters, dehumidifiers, vacuum cleaners, air conditioners, refrigerators, freezers, washing machines, audio and video devices, information storage devices, fire protection equipment, tables and chairs, cabinets, safes, etc.

- Specialized machinery and equipment: machinery and equipment for measurement, analysis, laboratories, etc.

c. Vehicles and transmission equipment

- Road vehicles (cars, trucks, motorbikes, other road vehicles); waterborne vehicles (speedboats, motor boats, ships, vessels, other watercraft); airborne vehicles (airplanes), etc.

- Transmission equipment: telephone line systems, switchboards, electricity transmission equipment, etc.

d. Administrative instruments: desks, chairs, file cabinets, etc.  

e. Draught animals, animals serving research or production, perennial plants, ornamental plants and fruit plantations, and penjing.

f. Special assets: exhibits in museums, relics, works of art, books, mausoleums, historical remains, etc.

g. Other fixed assets.

1.2. Intangible fixed assets

a. Value right to use land;

b. Value of patent;

c. Value of copyright, industrial design, solution;

d. Value of computer software;

2. Classification by origin:

- Tangible fixed assets form from procurement;

-  Fixed assets formed from investment in fundamental construction;

- Fixed assets provided or transferred;

- Fixed assets given or donated.

Article 7. Determination of costs of fixed assets

1. Tangible fixed assets:

a. Costs of fixed assets formed from procurements are actual purchase prices (the prices on invoice minus (-) discounts or reductions – if any, plus (+) the costs of transport, loading, repair, upgrade, installation, test run, the taxes, fees and charges that are paid by the unit before fixed assets are put into use minus (-) revenues from products or refuses during test run.

b. Costs of fixed assets formed from investment in construction are recorded values approved by competent authorities in accordance with the current Regulation on Investment and Construction Management.

c. Costs of transferred fixed assets are values of assets written in the record on transfer of assets plus (+) the costs of transport, loading, repair, upgrade, installation, test run, the taxes, fees and charges that are paid by the unit before fixed assets are put into use, minus (-) the revenue from products and refuses during test run.

c. Costs of transferred fixed assets are values of assets written in the record on transfer of assets plus (+) the cost of transport, loading, repair, upgrade, installation, test run, the taxes, fees and charges that are paid by the unit before fixed assets are put into use, minus (-) the revenue from products and refuses during test run.

dd.  Costs of special assets are the given prices in accounting books. Given prices shall be specified by the Ministries and ministerial agencies in charge.

2. Costs of intangible fixed assets

a. Value of right to use land:

For the land that are not exempt from land levies, lawfully transferred land; leased land of which rent is paid in a lump sum, the value of the right to use land is the amount of land levies payable when the state gives land that are not exempt from land levies, or the amount paid when the right to use land is transferred, or the land rent paid in a lump sum plus (+) taxes, fees and charges (if any).

Where the given land is exempt from land levies, the value of the right to use land is determined in accordance with Article 4, Article 5, and Article 6 of the Government's Decree No. 13/2006/NĐ-CP dated January 24^th 2006 on the determination of land use right value to include it in the value of assets or organizations receiving land exempt from land levies from the State, plus (+) taxes, fees and charges (if any).

b. The value of a patent is the payment for researches and experimental productions that are issued with patents, or the units that buy patents from Vietnamese and foreign researchers.

c. The value of a copyright, industrial design, or solution is the total amount paid to the author, and the work is allowed by the state to be sold exclusively by the author.

d. The value of computer software is the payment for programmers or purchase of computer software according to the unit plan (when recording or managing on computers).

The cost of given or donated computer software is a value determined by a financial authority as the basis for bookkeeping, or a value determined by an organization licensed to valuate State-owned property, and agreed by a financial authority at the same level.

Article 8. Costs of fixed assets are changed in the following cases

- The values of fixed assets are reassessed under decisions of competent state authorities.

- Fixed assets undergo major repair or upgrade.  

- One or some components of a fixed asset is removed.

When changing the cost of a fixed asset, the unit shall make a record, specifying the basis for such change and criteria for determining the cost, residual value, accumulated depreciation of the fixed asset in accounting books, and record it in accordance with current regulations.

Article 9. Management of fixed assets

1. Fixed assets of units shall be managed in accordance with the laws on asset management and recorded in accordance with the accounting regime.

2. If a fixed asset is still usable after its value is completely depreciated, it is still under the management of the unit.

Chapter III

CALCULATING DEPRECIATION OF FIXED ASSETS

Article 10. Rules for calculating depreciation of fixed assets

1. Fixed assets exempt from depreciation

- Values of right to use land.

- Special fixed assets prescribed in Clause 2 Article 4 of this Regime;

- Rented fixed assets.

- Fixed assets being kept on behalf of the State.

- Fixed assets that are still usable after their costs are completely depreciated;

- Fixed assets that are not usable though their costs are not completely depreciated;

2. Depreciation of fixed assets shall be calculated once a year in December before the accounting book is closed, or when the unit is divided, merged, dissolved, or when fixed assets are reassessed under decisions of the State.

Article 11. Determination of useful life and depreciation rate of fixed assets

1. The useful life of fixed assets and depreciation rates of fixed assets are specified in Appendix 1 to this Circular..

2. The useful life of intangible fixed assets shall be decided by the unit, but it must not exceed 50 years. Special cases shall be decided by Ministers, Heads of ministerial agencies, Governmental agencies, and other central agencies, and Presidents of provincial People’s Committees.

3. Ministers, Heads of ministerial agencies, Governmental agencies, and other central agencies, and Presidents of provincial People’s Committees shall determined the useful life and depreciation rates of the fixed assets of which useful life and depreciation rates are not specified in this Decision.

Article 12. Methods of depreciation of tangible fixed assets

1. Annual depreciation expense of each fixed asset is calculated as follows:

Annually, based on the depreciation that increase and decrease in the year, the unit shall calculate the total depreciation of all fixed assets of the unit as follows:

2. During the useful life, when the cost of a fixed asset is changed, the annual depreciation expense of that fixed asset shall be recalculated by dividing its residual value by its reassessed useful life or residual useful life (which is the difference between the initial useful life and the actual period during which the asset is used).

3. The depreciation expense in the last year of the useful life of a fixed asset is the difference between its cost and the accumulated depreciation of the fixed asset.

Article 13. Depreciating fixed assets used for production, service provision, and capital contribution

All fixed assets used for production, service provision, and capital contribution without the establishment of a new legal entity must be depreciated. Those assets are depreciated as follows;

- Fixed assets used for the entire production, service provision, and capital contribution without the establishment of a new legal entity shall be depreciated in accordance with the regime for managing, using, and depreciating fixed assets of enterprises.

- Fixed assets that serve both the operation of the unit and the production or service provision shall be depreciated based on the actual usage and the amount of finished works.

Depreciation of fixed assets shall be recorded as cost of production or service provision, or cost of cooperation. The amount from depreciation shall be used in accordance with law./.

APPENDIX 1

USEFUL LIFE AND DEPRECIATION RATE OF FIXED ASSETS
(Issued together with the Decision No. 32/2008/QĐ-BTC dated May 29^th 2008 of the Minister of Finance)

APPENDIX 2

EXAMPLES OF DEPRECIATION OF FIXED ASSETS
(Issued together with the Decision No. 32/2008/QĐ-BTC dated May 29^th 2008 of the Minister of Finance)

Example: Unit A buys a new fixed asset (100% new). The price on the invoice is 10,000,000 VND. The discount (promotion) is 1,000,000 VND. The cost of transport is 300,000 VND. The cost of installation and testing until it is put into use is 2,000,000 VND. The useful life of this fixed asset is 10 years (which is conformable with Appendix 1). It is put into use on January 01^st 2000.

Cost of fixed asset = 10,000,000 VND - 1,000,000 VND +  300,000 VND + 2,000,000 VND = 11,300,000 VND

Annual depreciation expense = 11,300,000 VND x 10% = 1,130,000 VND/year

The annual depreciation expense is 1,130,000 is recorded as a decrease in the cost of fixed asset.

In the fifth year of use, the unit upgrades the fixed asset at 5,000,000 VND, the reassessed useful life is 7 years (2 more years in comparison the initial useful life). It is put into use on January 01^st 2005.

Cost of fixed asset = 11,300,000 VND + 5,000,000 VND = 16,300,000 VND

Accumulated depreciation = 1,130,000 VND x 5 years = 5,650,000 VND

Residual value in book = 16,300,000 VND – 5,650,000 VND = 10,650,000 VND

Annual depreciation expense = 10,650,000 : 7 years = 1,521,000 VND

From 2005 onwards, the annual depreciation expense of the upgraded fixed asset is 1,521,000 VND (the residual value shall be depreciated in the last year)