ACCOUNTING FOR FIXED ASSETS AT AVIATION PRINTING JOINT STOCK COMPANY

Scope of research The thesis concentrated on analyzing the current situation of management,usage and changes in the accounting profession of fixed assets in Aviation PrintingJoint Stock

Internship guide : Dr Pham Duc Cuong Instructor :

Hanoi - 2016

During the time practicing as an intern at Aviation Printing Joint StockCompany, it is my honor to say that after three months working at here, fromJanuary 15th to April 15th 2015, I have taken a huge opportunity being exposed intosuch a highly professional working environment People staffed at Aviation PrintingJoint Stock Company treated me with the respect as colleagues even I was not anofficial staff I found the occasion to acknowledge more about characteristics ofaccounting in practice, while applying the knowledge I have learned at university bythe best way during the internship

Special thanks go to Dr Pham Duc Cuong, lecturer at the School ofAccounting and Auditing, National Economics University and colleagues inaccounting department of AVIPRINT., JSC for their patience, helpful andenthusiastic guidance for me in completing this report

Student,

Tran Thuy Tien

TABLE OF CONTENTS ACKNOWLEDGEMENTS

INTRODUCTION

CHAPTER 1: THEORETICAL ACCOUNTING FRAMEWORK FOR FIXED ASSETS

1.1 Overview of Fixed Assets

1.1.1 Characteristics and classification of fixed assets

1.1.2 Management and usage of fixed assets

1.2 Vietnamese Accounting Regulation on increases and decreases of fixed assets

1.2.1 Determination of cost for fixed assets

1.2.2 Accounting for fixed assets at subledger level

1.2.3 General Accounting for increase, decrease in fixed assets

1.3 Accounting for depreciation of fixed assets

1.3.1 Methods for depreciation of fixed assets

1.3.2 Principles for depreciation of fixed assets

1.4 Accounting for maintenance and repair of fixed assets

1.5 Comparison of VAS and IAS and fixed assets

1.5.1 International accounting for fixed assets

1.5.2 Similarities and differences between VAS and IAS for fixed assets

CHAPTER 2: CURRENT SITUATION OF ACCOUNTING FOR FIXED ASSETS AT AVIATION PRINTING JOINT STOCK COMPANY

2.1 Overview of Fixed Assets at AVIPRINT., JSC

2.1.1 Characteristics and classification of fixed assets

2.1.2 Management and usage of fixed assets

2.2 Accounting application for increases and decreases of fixed assets at

AVIPRINT., JSC

2.2.1 Accounting documents and procedures

2.2.1 Accounting for increase of fixed assets at subledger level

2.2.3 General Accounting for increase of fixed assets

2.3 Accounting application for decreases of fixed assets at AVIPRINT., JSC

2.3.1 Accounting documents and procedures

2.3.2 Accounting for decrease of fixed assets at subledger level

2.3.3 General Accounting for decrease of fixed assets

2.4 Accounting application for depreciation of fixed assets at AVIPRINT., JSC2.5 Accounting application for maintenance and repair of fixed assets at

AVIPRINT., JSC

CHAPTER 3: DISCUSIONS AND RECOMMENDATIONS ON

ACCOUNTING FOR FIXED ASSETS AT AVIATION PRINTING JOINT STOCK COMPANY

3.1 Discussions on accounting for fixed assets at AVIPRINT., JSC

3.1.1 Advantages of accounting for fixed assets at AVIPRINT., JSC

3.1.2 Disadvantages of accounting for fixed assets at AVIPRINT., JSC

4.2 Recommendations on accounting for fixed assets at AVIPRINT., JSC

CONCLUSIONS ON ACCOUNTING FOR FIXED ASSETS AT AVIATION PRINTING JOINT STOCK COMPANY

REFERENCES

APPENDIXES

STATUTORY DECLARATION

I herewith formally declare that I myself have written the submittedBachelor’s Thesis independently I did not use any outside support except thequoted literature and other sources mentioned at the end of this paper

Hanoi, 04/06/2016

Signature

Acc : Account

IAS : International Accounting Systems

JV : Journal- Vouchers

LLC : Limited Liability Company

VAS : Vietnamese Accounting Systems

LIST OF TABLES

LIST OF FIGURES

CHAPTER 1 INTRODUCTION Rationale

In recent years, "Industrialization - Modernizing" is conducted broadly and

comprehensively in Vietnam, scale of the building keeps an essential position in thecountry development in the recent years, together with national manufacturing and economic development are being carried out rapidly, as it creates "living skeletons"

- the basis for the foundation of the national economy Manufacturing activity is essentially the use of labor means to impact on the object of labor to create productsthat serve the needs of humans Entering the market economy, many businesses might tackle a bunch of struggles, for instance, facing bankruptcy as they could not match the consumers' demand and production does not keep the market rising speed As a result, technical innovation and product quality development to fit the growing demands of society are needed As from the beginning, fixed assets play anintegral in the infrastructure of the national economy, thus it is an important element

of the process of social production With companies, fixed assets factor is

technology, business and production capacity Fixed assets therefore are seen as a measure of the level of technology, production capacity and competitiveness of companies For every company in general and particularly Aviation Printing Joint Stock Company, it is significant not just to scale fixed assets but also to effectively exploit available fixed asset resources

Research objectives

The thesis is about accounting for fixed assets at AVIPRINT., JSC - the base

to realize advantages and disadvantages, which affect the effectiveness ofproduction As a result, the company can overcome these shortcomings and create amanagement regime to ensure rational use of fixed assets capacity combined withthe frequent renewal fixed assets, completing the accounting for fixed assets

Research methodology

 Contents:

- General reasoning of fixed assets on accounting in business andcomparison between VAS and IAS

- Current situation of accounting for fixed asset at AVIPRINT., JSC

- Discussion and recommendations to improve the efficiency, managementand complete the work of accounting for fixed assets

 Methodology:

- Sources of data collection:

+ Primary data: Through observation and case studies given at theAVIPRINT., JSC

+ Secondary data: Most of the data come from secondary source, whichinclude AVIPRINT., JSC’s annual reports , Vietnamese accounting systems,Principles of financial accounting textbook, Circular 45/2013 / TT-BTC- guidingthe management, use and depreciation of fixed assets, Decision 200/2015/QĐ-BTCand online websites: Aviation Printing Joint Stock Company and VNDIRECTSecurities Corporation

- Types of research methodology:

Documents are collected fully, uninterrupted and unified from 2013 to 2015shown in the financial statements, accounting vouchers, and other relatedaccounting documents The data then will be analyzed and discussed within thecompany’s situation, thus coming out the conclusion and recommendation for betteraccounting management and further research

- The report is also applied other fundamental approaches to collect data:Qualitative research: It is collecting and analyzing information by observingpeople’s activities Qualitative research refers to the meanings, definitions,characteristics, symbols, metaphors, and description of things.

Quantitative research: It is based on numeric figures or numbers, aims tomeasure the quantity or amount and compares it with past records and tries toproject for future period The objective of quantitative research is to develop andemploy mathematical models, theories or hypothesis pertaining to phenomena

- Data processing methods:

Due to the nature of these styles of research, statistics is the most widelyused branch of this research Furthermore, some of common methods are usedextensively with in fields, for instance, synthetic material facts analysis, combiningtheoretical and practical studies, aggregate statistical analysis

Scope of research

The thesis concentrated on analyzing the current situation of management,usage and changes in the accounting profession of fixed assets in Aviation PrintingJoint Stock Company in recent years, including accounting application forincreases, decreases, depreciation and maintenance and repair of fixed assets underregulations by Circular 200/2014/TT-BTC

Research structure

Six main components of the report content are shown below:

- Acknowledgements

- Introduction

- Chapter 1: Theoretical accounting framework about for fixed assets

- Chapter 2: Current situation accounting for fixed assets at AviationPrinting Joint Stock Company

- Chapter 3: Discussions and recommendations on accounting for fixedassets at Aviation Printing Joint Stock Company

CHAPTER 1 THEORETICAL ACCOUNTING FRAMEWORK

FOR FIXED ASSETS

1.1 Overview of Fixed Assets

1.1.1 Characteristics and classification of fixed assets

A fixed asset is a long-term tangible piece of property that is owned and used

in the production by a firm of its income, not supposing to be consumed or

converted into cash for at least a year Therefore, accountants use depreciation as a way to allocate the costs of a fixed asset over the period in which the asset is

useable to the business Full transaction is recorded by the bookkeeper when the asset is purchased, but regularly is the asset’s value decreased by deducting a

portion of that value as a depreciation expense every year

If one meets the following three factors, it shall be regarded as a fixed asset:

- It is evident to gain economic benefit in the future from the use of such asset

- Having the utilization time of over 01 year

- Primary price of assets must be determined reliably, and is valued at 30,000,000 dong or more

In general, fixed assets classification is comprised of land, buildings andfactories, furniture, fixtures and equipment, intangible assets, machinery andequipment, as well as leasehold improvements, manufacturing in progress, andcapital leases It is the division of all fixed assets in the certain indicators in order tocater to requirements of business management:

-1 Fixed assets used for business purposes are fixed assets managed and used byenterprises for their business purposes

+ For tangible fixed assets, the enterprises can classify them as follows:

Type 1: Buildings and architectures: are the enterprise’s fixed assets formed afterthe manufacturing process, such as head office, warehousing, fences, water tower,

open storage, the works decorating housing, roads, bridges, railways, airfield, piers,wharves, docks and slipway

Type 2: Machinery and equipment: the whole machinery and equipment used in thebusiness operation of the enterprise such as specialized machinery, workingequipment, drilling rigs in the oil and gas area, cranes, technological lines andindividual machines

Type 3: Means of transport, transmission equipment are types of means oftransportation including railway, water way, road, air, pipeline and transmissionequipment, such as information system, electrical system, water pipe and conveyor Type 4: Equipment and management tools: are the equipment and tools used in themanagement of the enterprise’s business operations such as computers formanagement, electronic equipment, equipment, measurement and quality tools,dehumidifiers, vacuum cleaners, anti-termite

Type 5: Perennial orchards, working animals and / or giving products: are theperennial orchards as coffee plantations, tea plantations, rubber plantations,orchards, lawn, green carpet , working animals and / or giving products, such asherd of elephants, horses, buffaloes, cows

Type 6: Other types of fixed assets: are all other fixed assets not listed in the abovefive types such as pictures,

+ Intangible fixed assets: issuance right, patent, inventions, literature, works of art,science, products, results of art performance, video and audio recordings,broadcasting programs, satellite signals carrying coded programs, industrial designs,designs of semiconductor integrated circuits, business secrets, trademarks, tradenames and geographical indications, plant varieties and breeding material

-2 Fixed assets used for welfare purposes, career, security and national defense arethe fixed assets managed and used by enterprises for welfare purposes, career,security and national defense in the enterprises These fixed assets are alsoclassified under provisions of Point 1 mentioned above

-3 Fixed assets preserved, kept or stored are the fixed assets which the enterprisespreserve or keep for other units or keep for the State as prescribed by the competentState agencies

-4 Depending on the requirements on management of each enterprise, theenterprises shall classify more detailed their types of fixed asset in each groupaccordingly.

Classification of fixed assets to help businesses apply the appropriate methodfor each type of asset administration, thereby improving asset managementefficiency There are many different ways to classify and amortization based ondifferent criteria

1.1.2 Management and usage of fixed assets

Degree of equipped fixed assets is one of the manifestations of theproduction scale of companies All manufacturing companies in all economicsectors have autonomy in the procurement and innovation of fixed assets andliquidating fixed assets upon maturity Thus, the structure and size of fixed assetsusually face volatility In order for companies to meet the requirements ofmanagement, fixed assets accounting must perform the following tasks:

- Every fixed asset takes an original file, containing an accounting onemanaged by the accounting department and a technical one belonged to the ITdepartment The accounting record comprises all the documents linked to fixedassets from the time it is put into business to the day of liquidation, transfer thesevouchers are basis for recording fixed assets Fixed assets upon receipt must be heldconsoles, making delivery and testing records by the company

- Companies store fixed assets at the office, works, warehouses or privatecorporate sectors All fixed assets taken to operation in the works needs either acontract or a license Each company has a department specialized securitymanagement of fixed assets

- Fixed assets’ depreciation need strictly reflecting during processing,distribution, or calculating the exact transfer of depreciation to the costs of business.Fixed assets have a plan of maintenance and repair, together with the costestimation Companies are required to accurately reflect the actual cost of repair andsupervise the implementation of the process

- Fixed assets are merely revaluated in the following events:

+ Inventory revaluation of fixed assets in accordance with the State'sdecision

+ Equalization, diversified forms of ownership

+ Usage of assets to joint ventures, equity contributions

+ Adjustment to ensure real value of business fixed assets

Inventory and assets evaluation complies with the provisions of the State.The increase or decrease in the value of assets must be accounted in accordancewith current regulations

Company depreciates fixed assets under Circular 45/2013/ TT-BTC- guidingthe management, use and depreciation of fixed assets

1.2 Vietnamese accounting regulation on increases and decreases of fixed assets

1.2.1 Determination of cost for fixed assets

Each fixed asset must be managed by its primary price, accumulated depreciationand residual value in accounting books

The primary price of enterprise’s fixed assets is only changed in the followingcases:

- Re-evaluating the value of fixed assets in cases:

+ By decision of competent state authority

+ Implementation of enterprise reorganization, enterprise ownership change,enterprise transformation: split, merger, consolidation, equitization, sale, lease,conversion of limited liability company into a joint stock company and from jointstock company converted into a limited liability company

+ Investment made outside enterprise by use of assets

- Upgrading fixed assets

History cost

-Accumulateddepreciation of fixed

assetsBook value

- Dismantling one or a number of parts of fixed assets but these parts are managed

by standard of a tangible fixed asset

1.2.2 Accounting for fixed assets at subledger level

In the process used in production and business fixed assets, the value of fixedassets wears out progressively and partially shifting in production and businesscosts, although tangible assets remained initial physical forms until damaged Onthe other hand, fixed assets are used and stored in different parts of the business.Thus, accountants have the rights to provide important indicators, like assetstructure, the allocation used by location, together with the preservation and usage

of fixed assets so as to spread accountability of physical preservation and usage offixed assets

"Book of fixed assets" is used widely to monitor the fixed assets’ usagemanaged by each unit It recorded increases or decreases of fixed asset units on eachvoucher, reduced amortization, according to chronological order of the transactions

Main contents of Accounting for fixed assets at sublegder level include:

- Prepare and collect the original documents relating to fixed assets in business

- Organize Accounting for fixed assets at sublegder level in the accountingdepartment

- Organize Accounting for fixed assets at sublegder level in the branch unit/department used

Accounting for fixed assets at subledger level is based on the original relateddocuments Under current accounting regulations, the original documents arebelow:

- Minutes of hand-over (Form 01)

- Fixed assets card (Form 02)

- Minutes of liquidation (Form 03)

- Minutes of complete overhaul (Form 04)

- Evaluation of fixed assets (Form 05)

- Registration, allocation spreadsheet of depreciation and amortization

(*) In addition, transactions for fixed assets are related to a number of otherrecords such as: Fixed assets books for entire company or branch unit used,technical documents, accounting records

1.2.3 General Accounting for increase, decrease in fixed assets

Accounts 211 (Tangible fixed assets)

Account 211 has 6 sub-accounts:

- 2111: Buildings and architecture

- 2112: Machinery and equipment

- 2113: Means of transportation, transmission equipment

- 2114: Management tools

- 2118: Other tangible fixed assets

Reflecting the increase in tangible

fixed assets stated at cost

(procurement, manufacturing and

Account 213 (Intangible fixed assets)

Account 213 has 6 sub-accounts:

- 2131: Land use rights

- 2132: The right arising

- 2138: Other intangible fixed assets

Cost of intangible fixed assets

increase during the year

Cost of intangible fixed assets decrease during the year

Balance: Intangible fixed assets

Accounting for increase or decrease in fixed assets is according to the following diagram:

Figure 1.1: Process of recording for increase, decrease in fixed assets

1.3 Accounting for depreciation of fixed assets

1.3.2 Methods for depreciation of fixed assets

a Straight-line depreciation method

- Content of the method:

The fixed assets in the companies are depreciated by the straight-linedepreciation method as follows:

+ Determining the annual average rate of depreciation for the fixed assets bythe following formula:

Annual average rate of

of depreciation re-determined or remaining time of depreciation (determined as thedifference between the time of depreciation registered minus the time ofdepreciation) of the fixed assets

- The rate of depreciation for the final year of the time of depreciation offixed assets is determined as the difference between the primary price of fixedassets and the accumulated depreciation made to the preceding year of the final year

of those fixed assets

Determining the annual rate of depreciation (for the remaining years of fixed assets) as follows:

Annual average rate of

=

Book valuedepreciation of fixed

assets Remaining time of depreciation of fixedassetsThe monthly average rate of depreciation equal to the yearly depreciation

deduction divided by 12 months.

b Adjusted reducing balance method

- Content of the method:

The rate of depreciation of fixed assets by this method is determined such as:Determining the time of depreciation of fixed assets:

The companies shall determine the time of depreciation of fixed assets as provided for in the Circular No 45/2013/TT-BTC of the Ministry of Finance

Determining the time of depreciation of fixed assets:

The companies shall determine the time of depreciation of fixed assets asprovided for in the Circular No 45/2013/TT-BTC of the Ministry of Finance

Determining the annual rate of depreciation of fixed assets in the years by thefollowing formula:

Annual rate of depreciation of = Book value X Accelerated

The accelerated depreciation rate is determined by the following formula:

Time of depreciation of method (%)

fixed assets

Adjustment coefficient is determined by the time of depreciation of fixed

assets specified in the following table:

Time of depreciation of fixed assets Adjustment coefficient

(time)

Over 4 to 6 years (4 years < t < 6 years) 2,0

Table 1.1: Time of depreciation of fixed assets

For the last years, when the annual rate of depreciation determined by thereducing balance method above mentioned is equal to (or lower) the average rate ofdepreciation between the Residual value and remaining number of years ofutilization of fixed assets, then from that year, the rate of depreciation is calculated

by the Residual value of the fixed assets divided by the remaining number of years

of utilization of fixed assets

The monthly rate of depreciation is equal to the yearly deducted depreciationdivided by 12 months

c Method of depreciation based on activities

- Content of the method:

The fixed assets in companies are depreciated by this method as follows:Based on the technical-economic records of the fixed assets, the companiesshall determine the total amount and volume of products made according to thedesign capacity of fixed assets, referred to as the output by capacity design

Based on the actual situation of production, the companies shall determinethe actual amount and volume of products made monthly, annually of the fixedassets

Determining the monthly rate of depreciation of fixed assets by the followingformula:

Monthly made

for a unit ofproduct

In case the design capacity or primary price of fixed assets changes, thecompanies shall re-determine the rate of depreciation of fixed assets

1.3.2 Principles for depreciation of fixed assets

Account 214 (Accumulated depreciation)

Account 214 has 4 sub- accounts:

- 2141: Depreciation of tangible fixed assets

- 2142: Depreciation finance lease tangible fixed assets

- 2143: Depreciation of intangible fixed assets

- 2147: Depreciation of investment property

Reflecting the decrease in

depreciation of fixed assets

(sale, liquidation)

Reflecting the increase indepreciation of fixed assets(extract amortization, increase assessment)

Balance: Accumulated depreciation

- Fixed assets which have been fully depreciated but are still used inproduction and business activities.

- Lost fixed assets which have not yet been fully depreciated

- Other fixed assets which are managed but not owned by the companies(except financial leasing fixed assets)

- Fixed assets which are not managed monitored and included in theenterprise's accounting books

- Fixed assets used in welfare activities serving the enterprise's laborers(excluding fixed assets serving laborers working in the companies, such as mid-shiftrest houses, mid-shift refectories, change houses, toilets, clean water tanks, garages,healthcare rooms or clinics, vehicles transporting laborers to and from work, jobtraining establishments, laborers' houses built by the companies itself)-

- Fixed assets which are houses and residential land in case the companiespurchases houses and residential land for which land use rights have been allocated

by State to the companies for long-term use; depreciation costs are not required to

be calculated for the value of such land use rights

- Fixed assets formed from non-refundable aid transferred by competentagencies to the companies for scientific research purposes

- Intangible fixed assets being land use rights

Depreciation costs of fixed assets specified at Point 2.2, Section IV, Part C ofthe Ministry of Finance's Circular No 130/2008/TT-BTC of December 26, 2008,guiding the implementation of a number of articles of Law No 14/2008/QH12 onCompanies Income Tax, and guiding the implementation of the Government'sDecree No 124/2008/ND-CP of December 11, 2008, detailing the implementation

of a number of articles of the Law on Companies Income Tax, are not allowed to beincluded in reasonable expenses when calculating companies income tax

For fixed assets which have not been fully depreciated and are irreparablydamaged, the companies shall identify causes and compensation responsibilities ofcollectives or individuals at fault Any difference between the book value of theassets and the compensated sum of money and the recovered value (if any) shall be

covered by the companies with its financial provisions If its financial provisions areinsufficient, the companies may include the deficit in its reasonable expenses whendetermining companies income tax.

The calculation of depreciation costs or stoppage of calculation ofdepreciation costs of fixed assets shall be commenced from the date (according tothe number of days of the month) on which fixed assets increase or decrease.Companies shall account fixed asset increase or decrease under the currentregulations on business accounting

The transactions arising during the accounting for depreciation is showed onthe following diagram:

Figure 1.2: Transactions arising during the accounting for depreciation of

fixed assets

1.4 Accounting for maintenance and repair of fixed assets

During the using time, fixed assets are depreciated and may have somedamaged parts because of many different reasons To ensure normal operation, thecompany must conduct maintenance and repair of fixed assets

There are various kinds of damage to the fixed assets, hence, the content,scope and scale of repair work is also different.

- According to the scale: regular and overhaul of fixed assets

- According to the method of conducting: do-it-yourself (DIY) andoutsourcing

The transactions arising during the accounting for repair of fixed assets issummarized in the following diagram:

Figure 1.3: Transactions arising during the accounting for repair of fixed assets

1.5 Similarities and differences between VAS and IAS for fixed assets

Vietnam’s Ministry of Finance has been working to converge IFRSaccounting and VAS accounting, with a goal of eliminating most, if not all, of thekey differences by the time the Government allows or mandates the use of theInternational Financial Reporting Standards Progress has been made, butsignificant differences remain in some parts of accounting for fixed assets

Under international accounting, fixed assets are the sorts of advantages that

have utilizing time over one year, and mostly be invested in production andbusiness activities to generate income including tangible assets (land, buildings,machinery and vehicles); intangible assets (patent, copyright, trademark ) andnatural resources (coal mine, mineral deposits ) The essential distinction amongstVietnamese and international accounting is that under Vietnamese accounting, land

is not recognized as tangible fixed assets and establishment costs are are perceivedspecifically or distributed to production costs

When determining the original cost of fixed assets this includes all necessaryexpenses to put into business, for purchasing of fixed assets, their cost is based onthe basis of purchase price plus the cost of transportation, assembly, testing, minusthe discount awarded by early payment For buildings and equipment, original costincludes the value of materials, wages, design fees, insurance fees, and permit fees.For land at cost includes purchase price, brokerage commissions, cleanup andrenovation expenses Under Vietnamese accounting, fixed assets at cost excludestrade discount and discount payment is recorded when financial income increases,while the international does not exclude it because trade discount is the differencebetween listed price and the invoice price

About accounting for volatility (Decrease/Increase), fixed assets of thecompany will increase when they receive donation, purchase or build Forpurchasing of fixed assets, based on the related documents, accountants debit fixedassets, credit money or liabilities For donated fixed assets, accountants debit fixedassets and credit donation revenue In case of self-manufacturing, accountants allmanufacturing costs on intermediate accounts (manufacturing in progress), whenthe works are completed, they debit original cost of the construction

Fixed assets of the company can decrease because of liquidation, sale,donation or the influence of fires, floods, loses For liquidation, the carrying value

of fixed assets (if not fully depreciated) and the liquidation costs are recognized asexpenses (loss from liquidation) report on current income statement Sale of fixedassets, accountant record additional depreciation up to the time of sale, thedifference between the sale price and the book value is recorded as losses or gainsfrom sale of fixed assets on income statement For donation, the cost of donations

are accounted for at the market price of the assets, the difference between themarket price and the residual value are recognized as gains or losses due to transfer.

In case of fixed assets decrease because of fire, flood or losses, the value of the realdamage is recognized as expense in the income statement Thus, there is nodifference between Vietnamese and international accounting for increase/ decrease

in fixed assets

In terms of depreciation of fixed assets, international accounting divided intotwo cases: for financial accounting and tax purposes For the purposes of financialaccounting, fixed assets can be depreciated according to the methods: straight-line;production; declining balance, total using years method For tax purposes, before

1981, the declining balance and total using years are applied to determinedepreciation expense From 1981 to 1986, ACRS - Accelerated Cost RecoverySystem is used and from 1.1.1987 be replaced by MACRS - Modified AcceleratedCost Recovery System Under MACRS, all tangible fixed assets are divided intoeight periods of use: 3, 5, 7, 10, 15, 20, 291/2 and 311/2 years The tax authoritiesissued depreciation rate for each period When calculating the depreciation underMACRS, depreciated value is the cost, which is not excluded liquidation valueestimated However, the MACRS is not used in preparation of financial statementsbecause this method allocates in a shorter useful life than the estimated Whencalculate depreciation of tangible fixed assets, accountants record increase cost andaccumulated depreciation For intangible assets, straight-line depreciation method isused unless the company can find depreciation method which more appropriate.Time for calculating depreciation of intangible fixed assets such as patent, copyright

is issued by law, for intangible fixed assets such as goodwill and trademarks haveinfinite using time with the time to calculate amortization maximum 40 years.Amortization of intangible fixed assets is recognized increase, decrease directly tocosts, this also means that intangible fixed assets are presented in the balance sheet

at cost less depreciation value Fundamental difference between Vietnamese andinternational accounting for depreciation and amortization shown in the followingaspects: depreciation method under the total using years, the depreciation period forintangible fixed assets and presentation of intangible fixed assets on balance sheet

About repair of fixed assets in international accounting, there are threecategories: regular, overhaul and improvement of fixed assets Regular repairconserve normal operating status for fixed assets; costs are recognized as expenses

in the income statement Overhaul either maintains the normal operation condition

or extends the useful lives of fixed assets than originally estimated time; costs arerecorded as decrease in accumulated depreciation Improvement is replacement one

or some parts of fixed assets in order to make operating efficiency and higherproductivity, costs are recorded at cost and accumulated depreciation increases.Thus, profound differences between Vietnamese and international accounting arethe recognition and settlement costs of overhaul and improvement of fixed assets

CHAPTER 2 CURRENT SITUATION OF ACCOUNTING FOR FIXED ASSETS AT AVIATION PRINTING JOINT STOCK COMPANY

2.1 Overview on accounting for fixed assets at AVIPRINT., JSC

2.1.1 Characteristics and classification of fixed assets

Like other manufacturing companies, all fixed assets at AVIPRINT., JSC areimportant factors of the company, besides the common characteristics such as long-term use (over one year), value over VND 4,000,000,000 when entering intoproduction

Types of fixed assets: due to the nature of the manufacturing industry, thecompany's fixed assets are mainly tangible fixed assets with each stage requiresdifferent operators in variety, value, duration of use, technical features

A growth business especially a manufacturing company like AVIPRINT.,JSC will typically show a continued pattern of investing in fixed assets Below,there are some main fixed assets - an important concern of the company

Laptops and Computers House hall

Machine and equipment Means of transportation

Pad mounted substation Suzuki Blind Van pickup trucks

Paper Napkin machine Forklift trucks

Compressors

Table 2.1: Some fixed assets at AVIPRINT., JSC

2.1.2 Management and usage of fixed assets

Technical condition of fixed assets: Prior to 2003, due to specificmanufacturing industry, company's fixed assets are inherited the material andtechnical base of from the 90s of last century to leave, so the majority of fixedassets were old and obsolete, almost fully depreciated From 2004, to strengthen thebusiness, company has invested to renew fixed assets, apply scientific and technicalprogress to improve production quality; lower expenses so fixed assets areincreased in quantity, value and production capacity

Therefore, fixed assets are mainly machinery and equipment for purpose ofbuilding, installation and transmission the manufacturing In 2015, machinery andequipment were accounted for almost 85%, building was seen at about 11%, means

of transportation was accounted for about 3.5% of the assets in the company In thegroup of fixed assets, the most important is machinery and equipment including:

- Printing machines: roll-to-roll, sheet-to-sheet, …

- Carton and board converting machines: die cutters, box makers, foldergluing, …

- Packaging machines: paper-packing, plastic-packing, …

- Bookbindery machines: book production, cutting lines and folding,sewing and stitching, …

Figure 2.1: Tangible fixed assets valuation in 2015

Fixed asset accounting is one of the most vital requirements of theaccounting process aside from society and the business Currently, being the larger-scale production, accounting for fixed asset is frequently enhanced daily

Within the procedure of fixed asset accounting at AVIPRINT., JSC, thecompany has to acknowledge about the current situation of fixed assets: increase,decrease in quantity and value, usage and depreciation, which give managementaccurate volume of fixed assets, and creating the company’s competitiveness for inthe printing market

With these above objectives, the following operations must be ensured forthe accounting for fixed assets at AVIPRINT., JSC:

- Reflect precisely current number and value of existing fixed assets withinthe company Monitor maintenance and preservation of fixed assets to renew fixedassets in each unit regularly

- Calculate and allocate depreciation of fixed assets at cost, applying line method for depreciation

straight Participate in planning and estimate repair cost of fixed assets

- Calculate and reflect timely situation of printing process, renovation,increase or decrease in fixed assets, together with the liquidation or sale of fixed