Vietnam’s Circular 28: Guidelines for management, use, and depreciation of fixed assets

Circular No. 28/2017/TT-BTC of the Ministry of Finance of Vietnam guides each case of record of fixed assets being a mixed-use building and depreciation of fixed assets being a mixed-use buildings as follows:

With regard to the asset being a mixed-use building to be used for both business and sale or lease purposes, the enterprise shall determine and have the value of separate parts of the building by its purpose recorded.

If the areas for sale and/or for lease can not be separated, the enterprise must not record the whole building as a fixed asset and must not depreciate it.

- The value of asset (area) of the mixed-use building to be used for business and for lease purposes: the enterprise shall depreciate fixed asset.

- The value of asset (area) of the mixed-use building to be used for sale: the enterprise may not record it as fixed asset and depreciate it.

- Criteria for determining value of each type of asset and allocate of the cost of asset to periods in which the asset is used equivalent to separate purposes of use shall be the ratio of value of each area by purpose of use to the work statement amount; or according to actual used area by purpose of use for recording.

With regard to shared assets of the mixed-use building namely playgrounds, paths, car park, each asset’s value shall be determined and the costs of asset shall be allocated to periods according to the above criteria.

Circular No. 28/2017/TT-BTC of the Ministry of Finance of Vietnam takes effect from May 26, 2017 and is applicable since the fiscal year of 2016.

Source: Finance Magazine

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