Vietnam: What is a business cooperation contract in the form of jointly controlled operations? For BCC in the form of jointly controlled operations, what contents must venturers record in their financial statements?
- What is a business cooperation contract in the form of jointly controlled operations?
- For BCC in the form of jointly controlled operations in Vietnam, what contents must venturers record in their financial statements?
- What is the method of accounting for the contributed capital of jointly controlled operations for BCC in the form of jointly controlled operations in Vietnam?
What is a business cooperation contract in the form of jointly controlled operations?
Under Point a Point 1.5, Clause 1, Article 44 of Circular 200/2014/TT-BTC on accounting for BCC:
BCC in the form of jointly controlled operations is a joint venture which does not require the establishment of a new business entity.
Venturers shall fulfill obligations and exercise rights according to the BCC.
The joint venture activities may be carried out alongside other ordinary activities of each venture.
In addition, according to the provisions of Points 1.1, 1.2, 1.3, Clause 1, Article 44 of Circular 200/2014/TT-BTC:
- A BCC means a cooperation contract between two or more venturers in order to carry out specific business activities, but it does not require establishment of a new legal entity. Those activities may be jointly controlled by venturers under BCC (hereinafter referred to as venturers) or controlled by one of them.
- BCC may be conducted under form of jointly controlled assets or jointly controlled operations. Contracting parties of BCC may agree to divide revenues, products or post-tax profits.
- In any case, when receiving money or assets from other entities in the BCC, they should be recorded as liabilities, not recorded as equity.
For BCC in the form of jointly controlled operations in Vietnam, what contents must venturers record in their financial statements?
Under Point c 1.5, Clause 1, Article 44 of Circular 200/2014/TT-BTC on accounting for BCC:
For BCC in the form of jointly controlled operations: A BCC venturer must include in accounting books to record in its financial statements:
- The assets of a joint venture that it controls;
- The liabilities that it incurs;
- Its share of the income that it earns from the sale of goods or services by the joint venture;
- The expenses that it incurs.
Note:
- When any joint expenses incur, they shall be kept books. If the BCC regulates joint expense allocation, a Table of joint expense allocation shall be made, certified and held by every venturer (original copy). Each venture shall account for joint expenses allocated from BCC according to the table of joint expense allocation together with lawful original documents.
- In the BCC regulates shares of products, a Table of shares of products shall be made, certified quantity or specifications of shares of products from BCC and held by every venturer (original copy). When receiving products, the venturer must make two copies of receipt slips of products (or delivery order); one venturer shall hold one copy. The receipt slip of the product shall be the basis for accounting books and disposal of contracts.
- In case any joint expenses or income borne or earned by venturers under BCC, the venturers must comply with regulations on accounting similarly to jointly controlled operations.
What is the method of accounting for the contributed capital of jointly controlled operations for BCC in the form of jointly controlled operations in Vietnam?
According to the provisions of Point 3.1, Clause 3, Article 44 of Circular 200/2014/TT-BTC on accounting for BCC:
The method of accounting for the contributed capital of jointly controlled operations for BCC in the form of jointly controlled operations in Vietnam is specified as follows:
(i) For the capital contributee
- According to the report on capital contribution of the venturer of jointly controlled BCC, the contributee shall record as follows:
Dr 111, 112, 152, 155, 156, etc.
Cr 138 – Other payables, receivables.
When returning contributed capital to venturers, reverse the above entry. If there is any difference between the fair value of returned asset and the value of contributed capital of venturers, such difference shall be recorded to other income or other expenses.
- If a fixed asset is received without any transfer of ownership, the contributee shall keep records of that asset in their administration system and record to asset held under a trust.
(ii) For the capital contributor
- According to the report on the capital contribution of the venturer of jointly controlled BCC, the contributor shall record as follows:
Dr 138 – Other receivables
Cr 111, 112, 152, 155, 156, etc.
When receiving contributed capital by the contributee, reverse the above entry. If there is any difference between the fair value of the received asset and the value of contributed capital of venturers, such difference shall be recorded to other income or other expenses.
- If a fixed asset is received without any transfer of ownership, the contributor shall not record a decrease in fixed assets but keep records of that asset in their administration system and present the place where the asset is located.
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