Vietnam: Accounting method for some economic transactions at securities companies

Specifically, according to Circular No. 23/2018/TT-BTC of the Ministry of Finance of Vietnam, the accounting method for some economic transactions at securities companies is specified as follows:

When a securities company distributes warrants to investors on the primary market:

When offering warrants, record:

- Dr 112 – Bank deposits (sub-account: escrow account opened at the bank)

- Cr 329 – Payable warrants (sub-accounts are opened to record every type of warrants).

- And record: Cr 018 – Warrants.

When the State Securities Commission of Vietnam (“SSC”) affirms the result of the warrant distribution in writing, the accountant shall record a decrease in the escrow account and an increase in the ordinary deposit account.

In case where the SSC suspends or cancels the offering, accountant shall record:

- Dr 329 – Payable warrants (sub-accounts are opened to record every type of warrants)

- Cr 112 – Bank deposits.

- The quantity of warrants of which the offering is suspended or canceled must be clearly explained.

When conducting transactions in warrants (buy/ sell) for the market-making purpose:

When buying warrants, record:

- Dr 329 – Payable warrants (The book value of warrants)

- Dr 632 – Losses and transaction costs that are directly attributable to the acquisition of financial assets and proprietary trading – sub-account: warrants (losses if the acquisition price is greater than the book value)

- Cr 112 (acquisition price)

- Cr 511 – Income from financial assets at fair value through profit or loss (gains if the acquisition price is lower than the book value).

- Accountant also records: Dr 018 – Warrants.

When selling warrants, record:

- Dr 112 – Bank deposits

- Cr 329 – Payable warrants (sub-accounts are opened to record every type of warrants)

- Accountant also records to: Cr 018 – Warrants.

View more details at Circular No. 23/2018/TT-BTC of the Ministry of Finance of Vietnam, effective from April 27, 2018.

- Thanh Lam -

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