Vietnam: Determination of historical costs of transport or water infrastructure assets

According to Circular No. 75/2018/TT-BTC of the Ministry of Finance of Vietnam, with respect to transport or water infrastructure assets in use before the effective date of the Government’s Decrees on management, use and operation of transport or water infrastructure assets, the historical cost of an asset shall be determined as follows:

- With respect to a transport or water infrastructure asset of which information about the historical cost and the remaining value is available, the available value shall be entered into accounting records.

- With respect to a transport and water infrastructure asset without any information about its value:

+ If there is an equivalent asset (in terms of the size and technical level) which has the accounting value approved by a competent authority under law soft, the value of the equivalent asset shall be deemed as its historical cost.

+ If there is no equivalent asset, its conventional value decided by the Minister of Transport (if it is a transport infrastructure asset), or the Minister of Agriculture and Rural Development (if it is a water transport infrastructure asset), shall be deemed as its historical cost. The form of declaration and registration of information about this type of asset on the national database of public assets must specify that the historical cost of the asset is the conventional value. In this case, it shall be subject to the separate monitoring and reporting mechanism. The conventional value shall be used for determination of the asset's value entered in accounting records, shall not be used for determination of the depreciated value or depreciation costs.

With respect to any transport or water infrastructure assets which are completely constructed and brought into operation from the effective date of the Government’s Decrees on management, use and operation of transport or water infrastructure assets, their historical costs recognized in accounting records shall be the purchase or accounting value approved under regulations in force.

With respect to newly-constructed transport or water infrastructure assets which are brought into operation but have not been recognized as entries in accounting records approved by a competent state authority, the temporarily calculated historical cost shall be used in accounting records. The temporarily calculated historical cost in this case shall be selected in the following priority order: Value recommended for entering in accounting records; value determined according to A-B acceptance testing record; value included in the approved cost estimate of a project. When obtaining the approved cost estimate, the accounting body must adjust the value which has already been accounted for in accordance with laws on accounting.

Moreover, Circular No. 75/2018/TT-BTC also stipulates that the historical cost of a transport and water infrastructure asset shall be changed in the following situations:

- Re-evaluating that asset under the decision issued by a competent state authority;

- Upgrading, repairing and expanding that asset according to the project approved by a competent state authority;

- Dismantling a part or all of components of that asset which are managed according to the standards applied to a tangible asset;

- Being seriously damaged due to natural disasters or force majeure events or other unexpected impacts. In this case, a reduction in its historical cost must be accounted for as prescribed by laws.

Note: Whenever there is any change in the historical cost of a transport or water infrastructure asset, the body authorized to manage that asset must prepare a report clearly stating the bases for such change in the historical cost; simultaneously, must redetermine historical cost indicators, remaining value and accrued depreciation amount of that asset in order to make changes in accounting records, and then must enter them in accounting records in accordance with regulations in force.

View more details at Circular No. 75/2018/TT-BTC of the Ministry of Finance of Vietnam, effective from October 03, 2018.

-Thao Uyen-

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