Tóm tắt Luận án Fixed asset accounting in mineral mining companies in the northern area

Firstly, harmoniously combine macro management requirements of the goverment and

management requirements of company executives

Secondly, in line with characteristics of business and operation as well as management

requirements of mining companies

Thirdly, ensure harmony with international accounting principles, standards, and


Fourthly, ensure that adequate information is provided in a timely manner for users

and that information has high realiability and legality

Fifthly, meet the economic requirements brought about by FAC information

Sixthly, in line with professional capability of accountants in companies

Seventhly, towards increasingly intensive information technology application

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f FA impairment value In IAS 36 regarding “impairment of assets”, it is required that if the assets show signs of decline in value at the time of preparation of the financial statements and the company intends to continue using that FA in its business activities, it is necessary to determine the impairment value (loss value) of FA in order to perform accounting for asset impairment. Unlike IAS 36, when referring to the loss of assets in exploration and valuation, IFRS 6 assumes that this property will be assessed for impairment when: (1) The exploration right of a company in a defined area expire or expire in the near future; there is also no hope of resuming exploration rights; (2) The main expenses of resource exploration and pricing in a particular area are not included in the budget or cost estimate; (3) The exploration and valuation of resources in a given area does not detect the profitability of the resource and the company decides to suspend operations in that area; (4) Although development in a given area is feasible, there is sufficient data to indicate that the book value of the asset will not be fully recoverable during the successful development or sale phase. Ina ddition, IFRS 6 applies a special cash-generating unit (CGU) to for exploration and valuation assets.  Determination of the residual value of FA after each accounting period The residual value of FA is the value of FA that is invested and not yet allocated to expenses; it reflects the value of FA in the total value of assets and partly helps assess business and production capacity of companies and also help companies assess their capacity. According to the original cost model, the residual value is the difference between the original cost and the depreciation value of FA..  FA value after stop being recognized When FA are liquidated or are no longer able to bring about future economic benefits from using FA, companies need to stop recognizing them FA (IAS 16). In case the FA no longer bring economic benefits in the future and companies have no long-term need of such assets, according to requirements of IFRS 05, companies must must separate these FA and present them in an category (long-term assets available for sale). The principle of recognizing the value of available-for-sale long-term assets is the lower of the two fair values less cost of sale and carrying value. Assets that have been classified as holding assets for sale are not depreciated.  Measurement of FA value according to the re-evaluation model According to re-evaluation, after initial recognition, FA are re-evaluated based on the general price level, the current price, the output price or fair value. Measuring and recognizing FA according to the general price level : Accountants measure and initially recognize FA according to the general price level based on historical price system. At the time of preparing the financial statements, all items of the Balance Sheet including FA are accounted for using an adjusted price index that is the consumer price index or deflator price index.. Measuring and recognizing FA according to the current price: At the time of initial recognition, FA are measured at their historical costs. After the initial recognition, the enterprise's FA are recorded at the current price as the amount of cash or cash equivalents that companies have to spend to purchase, invest or produce assets similar to FA that they are currently holding. On the basis of current prices, the current FA price is determined each time financial statements are prepared. Measuring and recognizing FA according to output price: At the time of initial recognition, the accountant records an increase in FA with the price similar to historical cost. Output prices refer to the use of prices actually observed at the time of creating financial statements to measure FA values. Accordingly, the FA are assessed at the net realizable value as the estimated selling price of the asset less the costs necessary to sell the property. In the financial report, FA were presented according to the output price. Measuring and recognizing FA according to fair value: At the time of initial and post- recognition, the FA is recorded according to fair value. Fair value is the price that can be received if an asset is sold or paid if a debt is paid in a normal transaction between market participants at the valuation date. In addition to the information presented on the financial statements similar to the original price, for FA recorded according to fair value, it is required to present: the time of evaluation, auditors, methods and assumptions to determine the fair price ... Recognition of FA To facilitate the classification of financial accounting information according to each accounting object, the account method is indispensable. Therefore, building a suitable system of accounting accounts for a company to record accounting information is very important. Due to the requirements and nature of the information provided by financial accounting, the account system mainly uses general accounts of level 1 and level 2 as prescribed, coded in then software and cannot be edited or changed by accountants. After calculation, data will automatically be update to the accounts through the accounting entries. To build an appropriate FAC account system, a company needs to base on specific regulations of the government on the account system to apply appropriately. 1.2.3. Presenting and providing FA information in financial statements Presenting and providing FAC information according to the re-evaluation model At present, according to the requirements of IAS 16 and IAS 38, enterprises must fully present on financial statements FA information about the basic method of determining historical price, depreciation method, cycle or depreciation rate; total value and accumulated depreciation and impairment of assets. Consistent method of depreciation must be used such as the case of adding, dismantling, buying through business consolidation, increase or decrease in evaluation, asset loss, compensation for loss, depreciation and other changes. Presenting FA information according to the general price level At the time of preparation of financial statements, all items of the financial statements including the FA are accounted for using an adjusted price index. The basis for adjustment is either the consumer price index (CPI) or the deflation price index (IPD). The difference in the value of net assets at the end of the period is recorded as the profit of the company. Presenting FA information according to the current price On the basis of current prices, the current FA price is determined each time financial statements are prepared. Fluctuations of current price are recorded in operating profit as a separate factor presented in financial statements. Presenting FA information according to the output price In the financial statement, FA are presented according to the output price. The difference between the book value of FA at the end of the accounting year and the market value of the assets presented by the company is profit in the income statement. In addition, companies must present the basis and method of determining the output price and other explanations. Presenting FA information according to the fair price In addition to the information presented on the financial statements that are similar to the original prices, for FA recorded at fair value, its is required to presented: time of evaluation, auditors, methods and assumptions for determination of fair value, the extent to which fair value is determined by reference to market prices or other valuation techniques. 1.3.FAC in companies from management accounting aspects 1.3.1. Collecting FA management accounting information In order to perform the administrative functions, in addition to using the past information like financial accounting, management accounting also receives additional forecasting information so companies can design appropriate detailed documents that fully reflect factors, content to serve the processing and preparation of management accounting report and meet the internal management requirements. In addition, the received FA information is also shown in the documents that are the output information of other units. Management accounting can use additional methods such as: observation, experimental methods, public opinion surveys, direct investigation methods, interviews ... The techniques used when receiving are: analysis, selection, synthesize and estimate to collect primary information or collect secondary information from books, newspapers, prepared reports. 1.3.2. Processing FA management accounting The process of managing FA accounting management information is associated with the management needs according to the functions: planning and decision making on FA; organizing the implementation of FA decision; checking and evaluating the management and use of FA 1.3.3. Presenting and providing FA information in management reports The accounting management information about FA provided by the system is mainly reflected in management reports. Depending on the requirements, management ability of executives at each level in each company or each internal unit of a company, the construction of the general management reporting system in general and management report on FA in particular may vary in terms of the number of forms, lists of indicators, and the structure of the report. 1.4. Trends in applying IAS/IFRS to FAC in several countries in the world and experience lessons for Vietnam 1.4.1. Trends of applying IAS/IFRS in the world The trend of international integration has become stronger and stronger, leading to the harmonization and standardization of countries on international accounting. This requires countries to pay attention to amending, supplementing and completing the framework system. However, each country has different legal environment, political, cultural and social situations, so it has different methods of standardization. 1.4.2. Application of IAS/IFRS in FAC in some countries In Vietnam due to the characteristics of political institutions, the current accounting system is inclined more towards accounting under the Civil Code like France and Germany ... so the author chose FAC of France to study experience for FAC in Vietnam in applying IAS / IFRS. In addition, the author also chose to study more about FAC in China because it is a country with leading mining output in the world and has a transition economy which has many similarities with Vietnam. 1.4.3. Experience lessons in applying IAS/ IFRS to FAC in Vietnamese companies + About the basis of applying FA in Vietnam: international accounting standards +About the application of international accounting practice: Vietnamese accounting needs to be constantly improved to comply with the general practice of international accounting but must also ensure that it is suitable to the country's development conditions, especially in the current conditions when the market economy is still limited. + About terms in FAC standards: The terms used in Vietnamese accounting standards need to be accurate but simple, easy to understand and commonly used to create favorable conditions for learners and accountants to apply them in practice. + About FA recognition criteria: Basically, countries have relatively similar regulations in the accounting standards of international accounting standards, so Vietnam needs to comply with the general provisions of the international accounting standards system but needs specifiy these standards according to Vietnam's conditions in each specific period. + About FA evaluation: According to Vietnamese accounting standards VAS 03 and VAS 04, only the historical cost method is used to evaluate FA. Normally, the value of assets after re-evaluation will be lower because of increasing social labor productivity or development of science and technology, more modern machines and equipment. The old FA is outdated, so most FAs are difficult to retain their original values and need to be re-evaluated. + About receiving, processing and presenting FAC information: accounting for impairment has not been mentioned in Vietnam so in a near future it needed to be added . CONCLUSION OF CHAPTER 1 Chapter 1 has mentioned basic theoretical issues about FAC in companies in many aspects, such as: FA identification criteria; characteristics and structure of FA, the role of FAC information in management; contents of FA financial accounting and management accounting. The foundation of FAA activities in many countries in the wold includes international accounting standards. The thesis has also analyzed the trend of applying IAS/IFRS in FAC in the world and the current practice of IAS/IFRS in FAC of two countries with similarities to Vietnam (China, France). These are important theoretical bases to evaluate the current situation of applying accounting mechanism in mining companies in Vietnam; based on that the author has proposed solutions to improve FAC in companies to meet the requirements of global economic integration process. Chapter 2. THE CURRENT SITUATION OF FIXED ASSER ACCOUNTING IN MINERAL MINING COMPANIES IN THE NORTHERN AREA 2.1. Overview of mining companies in the Northern area. 2.1.1. Mineral resources in the Northern area The North of Vietnam is the area with a long history of geological development; the continuous weathering processes have created favorable conditions for the formation of many types of minerals 2.1.2. Characterics of management organization and mining activities of mining companies in the Northern area History of establishment and development of mining companies in the Northern area The mining industry in Vietnam was formed in the late 19th century by the French. So far, with abundant and diverse mineral potentials, many companies have been established in the North, bringing about high economic efficiency and contributing to the country's economic development. Characteristics of management organization in mining companies in the Northern area About ownership type Of 70 mining companies in the survey. 45 companies receive state investment and 25 companies do not. About organizational structure and management model 62/70 companies are organized according to the three-level model (company - enterprise / team - unit / workshop), 8/70 companies have two-level management model; they are joint stock companies with production team and production units. Survey results show that whatever the management model is, the Board of Directors of the company will run the business activities of the company. Characteristics of FAC activities in mining companies in the Northern area. Accounting policies in use Currently, mining companies in the Northern area are complying with Circular No. 200/2014 / TT-BTC issued on December 22, 2014 on “Guidelines for accounting policies for enterprises” and Circular No. 53/2006 / TT- BTC dated 12/6/2006 on "guiding the application of enterprise administration". The application of accounting policies according to these regulation has helped provide a clear and standard lega; corridor for mining companies in the Northern area and contributed to the transparency of provided accounting information. Application of information and technologies in accounting 64/70 mining companies in the Northern area in the survey has used information and technologies through accounting softwares; 6/70 has used excel for recording. FAC employee assignment In 65/70 companies, there is no distinction between FAC and general accountants. 5/70 have specialized personnel of FAC activities. Characteristics of mining activities that affect FAC in mining companies in the Northern area. Firstly, main mining activities include such activities as geological exploration, investment in building mines, mining, transportation, screening, mineral enrichment for refined products used in other economic sectors. Therefore, mining companies need to invest big capital for FA to continuously innovate advanced and modern technologies. Therefore, businesses need to have appropriate investment and depreciation plans. Secondly, the nature of mining products is that they are located at the production plac. When the mining activities are completed, the raw products must be transported to factories for sorting and refining. Therefore, in addition to investing in specialized FA for exploitation, ecompanies must also invest in other necessary FA such as transportation vehicles, temporary houses for workers in the exploitation areas ... This greatly affects the FA structure of mining enterprises. Thirdly, mineral mines scatteres everywhere and separate from the accounting unit of the company in charge. This nature requires accountants to record, monitor, manage the use and allocation of FA depreciation reasonably for the users, especially the inventory of FA Fourthly, during the mining process, the machinery and equipment that must be moved regularly so there are specialized machine and equipment only used for each field. As a result, these FA can be easily damaged and the risk of decrease in FA value is very high. Mining enterprises need to pay attention to the repair of FA, and at the same time, they will have to consider to record impairment of assets for specialized mining machinery and equipment Fifthly, mining is a specialized industry, so mining companies in the Northern area have distinctive assets such as mining rights, exploration expenses, environmental recovery expenses ... The accounting of these specific FAs also needs to be different from the accounting of other common FA used for business and production. 2.2. Overview of FA in mining companies in the Northern area 2.2.1. Identifying FA in mining companies in the Northern area To be recognized as FA, assets of companies must satisfy 4 criteria. However, the understanding and application of two criteria, namely “the historical price is reasonably determined” and “future economic benefit from using such asset” at companies in the survey sample is still quite vague and not specific. Survey about expenses of exploration and evaluation of mineral resources: Survey results show that 70/70 companies have not capitalized exploration drilling expenses or added such expenses to FA value. Survey about mining rights: Survey results show that 17/70 companies (accounting for 24,3%) has recognized mining rights in intangible FA. Other companies considered mining rights as not eligible to be recognized as Fag; it is not certain that the exploration will bring about future economic benefit because mineral reserves are only estimated and actual exploration may prove different. Particularly, there are companies that have not been decided where to recognized mining rights as intangible FA or long-term prepaid expenses. Survey about environmental recovery expenses: Such expenses were incurred in 43/70 companies and were not capitalized into intangible FA. 2.2.2. Classifying FA in mining companies in the Northern area Survey results show that 100^% of companies in the survey classified FA structure according to form. 2.2.3. Characteristics of FA in mining companies in the Northern area Firstly, FA accounts for a high proportion in the total asset value of mining companies, he mining enterprises' assets, especially the passive FAs such as pits, houses, warehouses, vehicles, tools, machines, mining equipment .. Moreover, it takes long for the formation of FA so fixed capital turnover of companies is often slow. Secondly, in mining enterprises, in addition to the usual FAs in industrial enterprises, there are also specialized FA for each specific industry that requires large investment capital, but have high level of risks due to reduced value during due such as coal presses, spectrum analyzers, screening systems, crane beams .... Thirdly, FA of mining companies are often used in special conditions such as pit, hills, mountain ranges without roads so FA in mining enterprises has a higher level of tangible wear and tear than FA of industrial enterprises in other fields. Fourthly, mining machinery and equipment in mining companies in the Northern area mainly originated from Japan, G8 countries and Northern Europe; they are used for mining or manufacturing explosive materials with the aim of increasing competitiveness and creating the most prominent product of high productivity and quality. This makes FA vulnerable to technology errors that create intangible wear and tear, requiring companies to have faster depreciation policies compared to those of other FAs. Fifthly, tangible FA accounts for a high proportion of total assets, including mainly buildings, specialized mining machinery and vehicles such as: work houses, pit systems, compressors, crane, excavatos,etc. Invisible FA accounted for a small proportion, mainly including land use rights, management software and mining rights. Sixthly, FA in mining companies in the Northern area are mainly funded by the ownership capital, equity capital, and long-term loans. 2.3. Current situation of FA financial accounting in mining companies in the Northern area 2.3.1. Receiving FA financial accounting information In the surveyed mining companies in the Northern region, the main means used to receive FAC information are accounting vouchers, documents and related documents to record economic transactions. 2.3.2. Processing FA financial accounting information Measuring FA value To measure FA value, mining companies in the Northern area use the original cost model through three basic criteria: cost, depreciation and value of FA. In 100% of businesses surveyed, if costs incurred after initial recognition which helps extend the life of the FA or increase the future economic benefits of the enterprise from using FA, the expenses will be capitalized by companies in the historical cost of FA and gradually allocated to operating costs through FA depreciation. In contrast, the expenses incurred which are not eligible for capitalization are recorded immediately in the production and business expenses in the period (if the value is small), the periods right before that (if accrued) or periods right after that (if the value is large, it needs to be allocated, without accruals). Survey results show that 64.3% (36/70) of mining enterprises have begun to receive and consider initial information related to FA impairment; however no company has applied impairment accounting. The author has also conducted surveys of accountants at companies and experts about the implementation of FA impairment accounting. FA financial accounting information 70/70 companies in the sample recognized FA financial accounting according to the government’s standards and accounting regime. 2.3.3. Presenting and providing FA information in financial statements Survey results of financial statements in companies show that FA information was only completed in financial statements of big companies, especially listed companies. For small and medium sized companies, FA information was only about synthesis data. 2.4. Current situation of FA management accounting in mining companies in the Northern area 2.4.1. Collecting FA management accounting information According to the results of the survey, interviews and observations show that receiving information about FA includes implementation information related to FA procurement, equipment, depreciation, repair, transfer, liquidation, sales ... , future information about revenue estimates, FA market prices; and information about characteristics, usage and specifications of FA that companies are about to invest. Regulations on coordinating work between FA accounting management department and related departments were still not tight; therefore the role of FA accounting management in many companies have not been fully brought into play. 2.4.2. Processing FA management accounting information Processing management accounting information to assist FA planning and decision making Decisions related to FA include: investment, use, depreciation, repair and disposal. Company executives completely depend on forecast information they received

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