Legal Counselling

Vietnam: Methods for calculating the depreciation of fixed assets

18:01, 25/09/2018

The Ministry of Finance of Vietnam issued Circular No. 45/2018/TT-BTC on guiding the regime for managing and calculating the depreciation of fixed assets of agencies, organizations or units and fixed assets handed to enterprises by the State without calculation of the state capital portion of such enterprises. This Circular replaces Circular No. 162/2014/TT-BTC and takes effect from July 02, 2018.

According to Vietnam’s new regulations, methods for calculating the depreciation of fixed assets are specified as follows:

1. The annual depreciation expense:

Annual depreciation expense of each fixed asset

Cost of such fixed asset

Depreciation rate (% per year)

Annually, based on the depreciation that increases and decreases in the year, the agencies, organizations, units or enterprises shall calculate the total depreciation of all of their fixed assets as follows:

Accrued depreciation of the fixed asset in year (n)

Depreciation of the fixed asset in year (n -1)

Depreciation of the fixed asset that increases in year (n)

Depreciation of the fixed asset that decreases in year (n)

2. As for the fixed assets of which the prices are changed, the agency, organization, unit or enterprise shall rely on the price standards and residual value of such assets after re-determination, and the depreciation rate of such assets to continue to calculate the depreciation of the fixed assets of the remaining years.

3. As for the fixed assets received from the transfer, separation, merging and dissolution of an agency, organization, unit or enterprise, the annual depreciation of the fixed assets recorded in the accounting book at the agency, organization, unit or enterprise receiving such assets shall be calculated according to the formula specified above.

4. The depreciation expense in the last year of the useful life of a fixed asset is the difference between its cost and the accrued depreciation of the fixed asset.

View more details at Circular No. 45/2018/TT-BTC of the Ministry of Finance of Vietnam, effective from July 02, 2018.

- Thanh Lam -

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