New guidance on making provision for devaluation of securities investment

New guidance on making provision for devaluation of securities investment (Illustration image)

Accordingly, the guidance on making provision for loss of securities investment is as follows:

1. Securities investments that are subject to provision

Objects of provision are securities issued by domestic economic organizations in accordance with the law, owned by enterprises, listed or registered for trading on the domestic stock market. , are freely traded on the market and the actual market price of securities at the time of making the annual financial statements is lower than the value of the securities investment being recorded in the accounting books. 

The above provisioning objects do not include government bonds, government-guaranteed bonds, and local government bonds. 

(Compared with the current one, additional regulations on Government bonds, Government-guaranteed bonds and local government bonds are not subject to making provision for loss of securities investment)

2. How to calculate provision for devaluation of securities investment

The level of provision for devaluation of securities investment is calculated according to the following formula:

- For listed securities (including stocks, fund certificates, derivative securities, listed covered warrants): the actual price of securities on the market is calculated according to the closing price at the date of trading. most recent transactions up to the time of making annual financial statements.

In case securities have been listed on the market but there is no transaction within 30 days before the date of making provision, the enterprise shall determine the level of provision for each securities investment according to the provisions of Point b, Clause 2 of this Article. 5 Circular 48/2019/TT-BTC .

In case at the date of making provision, securities are delisted or suspended from trading or trading is stopped, the enterprise shall determine the level of provision for each securities investment according to the provisions of Point b, Clause 2. Article 5 of Circular 48/2019/TT-BTC .

- For shares registered for trading on the trading market of unlisted public companies and state-owned enterprises that are equitized in the form of a public offering of securities (Upcom), the price Actual securities on the market are determined to be the average reference price in the last 30 consecutive trading days before the time of making annual financial statements announced by the Stock Exchange.

In case the shares of a joint stock company registered for trading on the Upcom market have not been traded within 30 days before the time of preparing the annual financial statements, the enterprise shall determine the provision for each investment. securities as prescribed at point b, clause 2, Article 5 of Circular 48/2019/TT-BTC .

- For corporate bonds that have been listed or registered for trading, the bond price on the market is the most recent transaction price at the Stock Exchange within 10 days up to the time of making financial statements.

In case there is no transaction within 10 days up to the time of making the annual financial statement, the enterprise does not make provision for this investment.

Thus, compared with the current one, the regulation on the level of provision for devaluation of securities investment is removed for Government bonds, Government-guaranteed bonds and local government bonds.

Note : The provision balance for investments in Government bonds, Government-guaranteed bonds and local government bonds that enterprises have set up before May 25, 2022 (if any) will be refunded. input, record a decrease in expenses at the time of making the financial statements in 2022.

Circular 24/2022/TT-BTC takes effect from May 25, 2022.

Jewel

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