Principles of preparation and presentation of the Balance Sheet in Vietnam under Circular 200/2014/TT-BTC

Regarding this matter, LawNet would like to answer as follows:

1. What is balance sheet?

According to the provisions of Section 1.1, Clause 1, Article 112 of Circular 200/2014/TT-BTC, the balance sheet is a combined financial statements, recording generally all value of the current assets and sources that set up assets of enterprises at a certain time.

Figures on the balance sheet show the full value of current assets of enterprises according to the structure of assets and of capital setting up such assets. Based on the Balance Sheet, the financial situation of enterprises may be considered, assessed generally.

2. Principles of preparation and presentation of the Balance Sheet in Vietnam under Circular 200/2014/TT-BTC

Pursuant to Article 112 of Circular 200/2014/TT-BTC, the principles of preparation and presentation of the Balance Sheet in 02 cases are as follows:

- For businesses that meet the assumption of continuous operations

Under the provisions of Accounting Standards, "Presentation of financial statements" when the balance sheet is prepared and presented, the general principles of preparation and presentation of financial statements must be complied with.

Also, on the balance sheet, the assets and liabilities should be presented separately as short-term and long-term, depending on the duration of the normal operating cycle of enterprises, namely as follows:

For enterprises with normal operating cycle within 12 months, the assets and liabilities are classified as short-term and long-term according to the following principles:

+ Assets and liabilities are recovered or paid within 12 months from the time the balance sheet is classified as short-term;

+ Assets and liabilities are recovered or paid for 12 months or more from the time the balance sheet date are classified as long-term.

For enterprises with normal operating cycle longer than 12 months, assets and liabilities are classified as short-term and long-term according to the following principles:

+ Assets and liabilities are recovered or paid within a normal operating cycle are classified as short-term;

+ Assets and liabilities are recovered or paid in a time that is longer than a normal operating cycle are classified as long-term.

In this case, enterprises must clearly explain the characteristics to determine the normal operating cycle, the average duration of a normal operating cycle, the evidence of the production and trading cycle of enterprises as well as of operation sectors of enterprises.

For enterprises which due to the nature of operations cannot rely on the operating cycle to distinguish between short term and long term, the assets and liabilities are presented under decreasing liquidity.

When preparing the combined balance sheet between the superior unit and subordinate unit which have no legal status, the superior unit must eliminate all balances of items arising from the internal transactions, such as amounts receivable and payable, internal loans...between the superior unit and the subordinate unit, among the subordinate units.

The technique of elimination internal items in summarizing Reports between superior units and dependent cost-accounting subordinate units is similar to the technique of consolidated financial statements.

Items without figures are exempted from presentation on the Balance sheet. Enterprises actively re-number of the items under the continuity principle in each section.

- For enterprises which do not meet the assumption of continuous operation

Presentation in the Balance sheet of enterprises which Table do not meet the assumption of continuous operation is made the same with the balance sheets of enterprises which are operating except a number of adjustments:

+ Short-term and long-term shall not be distinguished: The items set are not based on the remaining period from the reporting date which is over 12 months or within 12 months or more than one normal operating cycle or within one normal operating cycle;

+ Items of provisions for assets, liabilities revalued under net realizable value, recoverable value or fair value shall not be presented;Some indicators have different preparation methods from the Balance Sheet of continuously operating enterprises as follows:

Some items have setting method which is different from the Balance sheet of enterprises which are operating continuously as follows:

+ Item "trading securities" (Code 121)

This item records the book value of trading securities after revaluation. Enterprises shall not present the item "provisions for devaluation of trading securities" because the provisions for devaluation are recorded directly a decrease in the book value of trading securities.

+ Items relating to investments in subsidiaries, associated companies and joint ventures, investments in other units are recorded in the book value after revaluation of investments above. Enterprises shall not present the item "Provision for long-term financial investments" because the provisions are recorded a decrease directly in the book value of the investments.

+ Items relating to receivables are recorded under the book value after revaluation of receivables. Enterprises shall not present the item "Provision for doubtful receivables" because the provisions are recorded a decrease directly in the book value of receivables.

+ Item "Inventories" (Code 140):

This item records the book value of inventories after revaluation. Figures in this item include costs of work in progress and equipment, materials and spare parts classified as long-term on the Balance Sheet of enterprises which are operating continuously. Enterprises shall not present the item "provision against devaluation of goods in stock " because the provisions for devaluation are recorded a decrease directly in the book value of inventory.

+ Items relating to tangible assets, intangible assets, finance lease assets, investment real properties are recorded at book value after revaluation of such assets . Enterprises shall not present the item "Cost" because the book value is revalued price, shall not present the item "accumulated depreciation " because the depreciation has been recorded a decrease directly in the book value of assets.

Other items are set and presented by combining contents and figures of corresponding in the long-term and short-term parts of enterprises which are operating continuously.

Thus, Lawnet has presented the principle of preparing a balance sheet in cases where an enterprise meets or does not meet the assumption of continuous operation under Circular 200/2014/ND-CP.

3. Download the forms of Balance Sheet 2024

- The form of Balance Sheet for enterprise that meets the assumption of continuous operation is Form No. B 01 - DN issued with Circular 200/2014/TT-BTC.

Form No. B 01 – DN: Download

The form of Balance Sheet for enterprise that does not meet the assumption of continuous operation is Form B 01/CDHD-DNKLT, issued with Circular 200/2014/TT-BTC.

Form No. B 01/CDHD – DNKLT: Download

Best regards!

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