Amendment and addition of 05 accounting principles for Account 241 – Basic construction in progress in Vietnam

Amendment and addition of 05 accounting principles for Account 241 – Basic construction in progress in Vietnam​ (illustrative image)

Clause 1, Article 13 of Circular 177/2015/TT-BTC amends and supplements 05 accounting principles of Account 241 - Basic construction in progress in Vietnam as follows:

1. This account is only used at entities that do not establish a Project Management Board to reflect the costs of implementing investment projects in basic construction (including costs for acquisition of new fixed assets, new construction or repair, renovation, expansion, or re-equipment of technical works) and the settlement status of investment projects in basic construction at units that carry out the procurement of fixed assets, basic construction investment, and major repairs of fixed assets.

2. Costs for implementing investment projects in basic construction are all necessary costs for new construction or repair, renovation, expansion, or re-equipment of technical works. Basic construction investment costs are determined based on the volume of work, the system of norms, economic-technical indicators, and the policies of the State. They must also match the objective factors of the market at each time and be carried out according to regulations on basic construction investment management. Basic construction investment costs include:

- Construction costs;

- Equipment costs;

- Compensation, support, and resettlement costs;

- Project management costs;

- Construction investment consultation costs;

- Other costs.

Note: Account 241 is subdivided for each project and project item, and within each project item, detailed accounting of each type of basic construction investment cost is required. The detailed accounting should be tracked cumulatively from project commencement until the project or project item is completed and handed over for use.

3. When investing in basic construction, construction and equipment costs are often directly calculated for each project; Project management and other costs are usually shared. The investor must calculate and allocate project management and other costs to each project according to the principle:

- If specific project management and other costs directly related to each project can be identified, they are directly calculated for that project;

- Shared project management and other costs related to multiple projects that cannot be directly calculated are allocated according to the most appropriate criteria for each project.

4. If the project is completed and put into use, but the project's final settlement has not been approved, the unit records the increase in the historical cost of fixed assets at a provisional price (this provisional price must be based on the actual costs incurred to obtain the fixed assets) for depreciation purposes, but it must be adjusted according to the approved final settlement price afterward.

5. Maintenance and repair costs to keep fixed assets operational are directly accounted for in operating costs for the period. For fixed assets that require periodic maintenance, repair, or upkeep by technical requirements, the accounting may create a reserve for anticipated expenses and account for future operation costs to ensure funds are available when maintenance, repair, or upkeep arises.

Details can be seen in Circular 177/2015/TT-BTC effective from January 1, 2016.

Ty Na

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