Kế toán tài sản cố định tại các doanh nghiệp khai thác than thuộc tập đoàn công nghiệp than khoáng sản việt nam tt tiếng anh

MINISTRY OF EDUCATION AND TRAINING
THUONG MAI UNIVERSITY

DANG THI HUE

ACCOUNTING OF FIXED ASSETS IN COAL MINING
ENTERPRISES OF VINACOMIN

Major: Accounting
Code: 62.34.03.01

EXECUTIVE SUMMARY OF PHD DISSERTATION

Hanoi, 2019


The thesis was completed at
Thuong Mai University

Academic supervisors: 1. Ass.Professor, PhD. Pham Thi Thu Thuy
2. Ass.Professor, PhD. Le Thi Thanh Hai

Reviewer 1:

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Reviewer 2:

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Reviewer 3:

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The dissertation will be defended university level council of dissertation
at Thuong Mai University
Time: .......... date........ month..........year 20....

The dissertation can be found at the Vietnamese National Library
and the Library of Thuong Mai University


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INTRODUCTION
1. Rationale
In the process of integration and development, the international accounting
system on fixed assets has constantly been improved. Regulations on
identification, valuation and recognition of fixed assets have been mentioned in a
comprehensive, systematic and more synchronous way in the relevant standards. It
includes the regulation on the application of different pricing models to record and
present information about fixed assets as well as regulations on accounting of
environmental recovery costs; to identify and record the decline inn value of fixed
assets; accounting of mineral pre-exploration costs ...
Vietnam is in the process of operating the socialist-oriented market
mechanism, with open economic policies, attracting foreign investment capital and
gradually integrating with the world economy. To meet the requirements of this
process, Vietnamese accounting system has been constantly improved. However,
the updating and appropriately applying the current regulations on accounting of

fixed assets of international accounting standards are still limited and not yet paid
sufficient attention.
In recent years, the mining industry of Vietnam in general, the coal mining
industry in particular has made an important contribution to the socio-economic
development, contributing positively and effectively to ensuring energy security
and to meet the domestic coal demand. Along with the technology revolution 4.0,
coal mining enterprises continue to equip and renew fixed assets to access
processes of modern mining technology, contributing to increasing productivity,
promoting the substainable development of coal industry. In coal mining
enterprises, fixed assets account for a relatively large proportion in the total asset
value of enterprises, thus fixed asset accounting is considered an important part of
the accounting system of these enterprises. The application of the pricing model to
identify, record and present information about fixed assets in coal mining
enterprises is also a matter for discussion and consideration. Recovery and
protection of the ecological environment are also issues requiring sufficient
attention. However, the regulations on accounting of environmental recovery costs
are only first mentioned in Circular No. 200/2014 / TT-BTC of the Ministry of
Finance, leading to the fact that the application of this regulation in coal mining
enterprises still faces many problems. In addition, the industrial revolution 4.0 has
caused coal mining enterprises to face many challenges such as unupdated
technology, decline in asset value during usage. On which basis and how to to


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identify and record the decline is also a problem for coal mining enterprises in the
current context.
In addition, how to effectively manage and use fixed assets is also a problem
for coal mining enterprises. Important and decisive information that governs the
investment as well as the use of fixed assets is provided by the management
accounting of fixed assets. However, in the coal mining enterprises of Vinacomin

cureently, the management accounting of fixed assets has not been properly
concerned by the managers, the information collected when developing investment
plans is not clear and complete, mainly predictive. The provision of fixed asset
accounting information under management accounting perspective affects the
planning, control and evaluation of the implementation within the enterprise.
Therefore, this issue needs to be researched and improved.
For the mentioned reasons, the author decided to choose "Accounting of
fixed assets in coal mining enterprises of Vietnam National Coal and Mineral
Industries Holding Corporation" as the research topic of the thesis.
2. Overview of research
From an overview of studies published in Vietnam and in the world on fixed
assets and accounting of fixed assets, the PhD student found out that the previous
studies have focused on the content of measuring, recording fixed assets and
presenting in financial statements; studying the compliance of fixed asset
accounting in some countries with common practice, international accounting
standards; the content and extent of application of fixed asset depreciation
methods. The studies on fixed asset accounting is mainly based on the financial
perspective accounting, not yet focusing on the effects of price calculation and
fixed asset accounting according to the price calculation basis, therefore the
appropriate choice of price calculation basis for fixed assets has not been made. In
addition, no research has fully and comprehensively made regarding fixed asset
accounting under management accounting perspective. Therefore, the author
decided to do research on some issues for further research and development in the
thesis as follows:
- Firstly, to study and analyze the views on fixed asset measurement based on
different price evaluation to select the appropriate price calculation method for
fixed assets of Vietnamese enterprises and at the same time to apply in
Vinacomin’s coal mining enterprises.
- Secondly, to analyze and clarify the theoretical basis of accounting of fixed
asset transactions with specific characteristics of coal mining enterprises,

including mining rights, mineral pre-exploration costs, environmental recovery
costs and apply these theories in coal mining enterprises of Vinacomin.


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- Thirdly, studying fixed asset accounting under management accoungting
perspective to enhance the efficiency of using fixed assets in coal mining
enterprises of Vinacomin.
3. Research objectives and tasks
The consistent objective of the dissertation is to do research and propose
solutions to improve fixed asset accounting in coal mining enterprises of
Vinacomin in order to improve the quality of accounting information on fixed
assets, as well as the efficiency of managing and using fixed assets.
With the above research objectives, the thesis defines specific tasks as
follows:
- Systematizing and clarifying the theoretical basis of fixed assets, accounting
of fixed assets in enterprises, paying attention to the accounting of fixed assets
according to the viewpoint of original prices and re-evaluation prices, thereby
proposing a suitable price calculation basis for fixed assets in enterprises.
- Surveying, analyzing and assessing the actual status of fixed asset
accounting in Vinacomin’s coal mining enterprises to confirm the achieved results
and limitations of fixed asset accounting in these enterprises.
- Determining the factors and the level of influence of these factors on fixed
asset accounting in Vinacomin’s coal mining enterprises.
- Proposing solutions to improve fixed asset accounting in coal mining
companies of Vinacomin, contributing to improving the quality of accounting
information on fixed assets, the effectiveness of managing and using fixed assets
in these enterprises.
4. Subjects and scope of the study
4.1. Research subjects

The PhD thesis studies the theoretical and practical issues of fixed asset
accounting in coal mining enterprises of Vinacomin. In particular, the thesis
focuses on studying the principles of measuring, recording, presenting and
providing information on fixed assets as well as the method to collect, process,
analyze and provide information in respond to requirements of fixed asset
management. The thesis studies the application of these principles in the practice
of fixed asset accounting in Vinacomin's coal mining enterprises.
4.2. Research scope
- Research content: The thesis only focuses on studying fixed asset
accounting for production and business activities according to the financial
accounting and management accounting angles; excluding accounting of
outsourced fixed assets and investment in real estate.


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- Research space: The thesis focuses on studying fixed asset accounting in
coal mining enterprises which are subsidiaries of the Group and Joint ventures of
Vinacomin. The dissertation only studies accounting of fixed assets in coal mining
enterprises for the preparation of separate financial statements, not the information
presented on the consolidated financial statements.
- Research period: The real information data are collected and analyzed for
the period of 2014 - 2018.
5. Research questions
To achieve the research objectives, the research questions are raised as
follows:
(1). What is the rationale for fixed assets and accounting of fixed assets under
financial and management accounting perspectives and what are factors affecting
fixed asset accounting in enterprises?
(2). What is the accounting of fixed assets in view of the original price, the
re-evaluation price and the appropriate price calculation basis for fixed assets?

(3). What is the actual situation of fixed asset accounting under the financial
and accouting perspective in Vinacomin’s coal mining enterprises currently?
(4). How do these factors affect fixed asset accounting in coal mining
companies of Vinacomin?
(5). What measures should be taken to improve the accounting of fixed assets
in Vinacomin’s coal mining enterprises under the financial and management
accoungting perspective?
6. Research methods and processes
6.1. Research Methods
The thesis uses the methods of investigation, interview, descriptive statistics,
summarizing, analyzing and comparing to systematize the theoretical basis of fixed
assets, fixed asset accounting in enterprises and conduct surveys of the actual
situation of fixed asset accounting according to financial accounting and
management accounting perspective, factors affecting the accounting of fixed assets
in coal mining enterprises of Vinacomin. From the research results, limitations and
causes are drawn as a basis for proposing solutions in Chapter 3.
6.2. Research process
The research process includes the following steps:
- Step 1: Identify the problem for the study.
- Step 2: Overview of Vietnamese and foreign studies related to the
dissertation topic and identify research "gaps".
- Step 3: Identify objectives, subjects, scope and research questions.


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- Step 4: Systematize the theoretical basis on the fixed assets and fixed asset
accounting in enterprises.
- Step 5: Conduct surveys of fixed asset accounting situation in coal mining
enterprises of Vinacomin.
- Step 6: Conclusions, suggestions and recommendations.

7. New contributions of the thesis
In terms of academics and reasoning: The thesis has clarified the theoretical
issues of fixed asset accounting from the view of the original price and the reevaluation price, thereby selecting the appropriate price calculation basis for fixed
assets. In addition, the thesis also clarified the accounting of mining rights;
mineral pre-exploration costs and environmental reconstitution costs in coal
mining enterprises.
In terms of practice: The thesis has conducted surveys, analyzed and
comprehensively assessed fixed asset accounting in Vinacomin’s coal mining
enterprises in both angles of financial accounting and management accounting.
The thesis has selected a appropriate basis for calculating prices for fixed assets in
Vietnamese enterprises in general and coal mining enterprises in VINACOMIN in
particular, which is the original price combined with accounting of the declining
value of fixed assets in case of the degraded fixed assets with the aim of providing
complete, reliable and transparent information about fixed assets for users.
The thesis has proposed solutions to improve the accounting of featured fixed
assets in coal mining enterprises including mineral exploitation rights; mineral preexploration costs and environmental recovery costs.
In addition, the thesis also proposes solutions on improving management
accounting of fixed assets to provide information for making decisions regarding
investment, management and using assets.
8. The structure of the thesis
In addition to the Introduction, the conclusion references and appendices,
the thesis consists of 3 chapters:
Chapter 1: Literature review of fixed assets and fixed asset accounting in
enterprises.
Chapter 2: Current situation of fixed asset accounting in coal mining
enterprises of VINACOMIN.
Chapter 3: Solutions to improve accounting in coal mining enterprises of
VINACOMIN.

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Chapter 1
LITERATURE REVIEW OF FIXED ASSETS AND
FIXED ASSET ACCOUNTING IN ENTERPRISES
1.1. Fixed assets and the role of fixed asset information
for management
1.1.1. Definition and classification of fixed assets
1.1.1.1. Definition of fixed assets
Currently, there are a number of different views on fixed assets, from the
author's point of view: Fixed assets are assets controlled by an accounting unit with
great value and determined reliably and used for a long period of time and they will
bring certain future economic benefits to the unit.
1.1.1.2. Classification of fixed assets
- Classified in the form of manifestations, fixed assets in enterprises include:
tangible fixed assets and intangible fixed assets.
- Classified by ownership, fixed assets in enterprises include: proprietary fixed
assets and outsourced fixed assets.
- Classified by purpose and usage, fixed assets in enterprises include: Fixed
assets used for production and business activities; Fixed assets used for welfare,
security and defense purposes; Fixed assets awaiting handling and fixed assets
receiving preservation and custody for other subjects.
1.1.2. The role of fixed asset accounting information for management
For corporate management
Fixed asset accounting information is used for planning and estimation process;
organizing implementation; checking; decision-making process and contributing to
innovation and management improvement in enterprises.
For third parties
Fixed asset information not only serves the needs of business management but
also serves third parties such as investors, banks and credit institutions and state
management agencies in making appropriate decisions.

1.2. Accounting of fixed assets in enterprises under the perspective of
financial accounting
1.2.1. Principles and requirements of fixed asset accounting in enterprises
1.2.1.1. Principles of fixed asset accounting
All economic transactions related to fixed assets are recorded on an accrual
basis. Information on fixed assets must be measured, recorded and presented on the
financial statements objectively and on the basis of generally accepted price
calculation basis. The costs that businesses have spent when investing in fixed assets
must be consistent with the benefits that assets bring. The recognition of fixed asset


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depreciation expenses must correspond to the turnover generated by fixed assets in
each accounting period. According to the principle of consistency, the policies and
methods of accounting of selected fixed assets must be uniformly applied at least in
an annual accounting period. Businesses are not valued higher than the value of fixed
assets. Therefore, information on depreciation of fixed assets should be considered on
the basis of prudent principles. Fixed asset accounting must collect, process and fully
provide information of essential nature about fixed assets.
1.2.1.2. Requirement in fixed asset accounting
Accounting reflects fully, promptly, accurately, clearly and comprehensively
economic transactions arising regarding fixed assets in accounting vouchers,
accounting books and financial statements. Information and accounting data of fixed
assets must reflect honestly and objectively in accordance with the current status,
nature, content and value of fixed asset transactions; at the same time, information
must be reflect continuously and classified, arranged in a scientific, systematic,
verifiable and comparable order.
1.2.2. Fixed asset accounting according to view of price calculation
1.2.2.1. Overview of the views on calculating prices for assets
in accounting

Calculating prices for assets from the ‘original price’ point of view
According to original price, assets are measured, recorded and presented in
financial statements on the basis of historical costs. Historical cost is the total cost
that the unit has actually spent on asset formation.
Calculating prices for assets according to the re-evaluation point of view
In this view, after initial recognition, the property must be measured, recorded at
the re-assessed price. Re-evaluation prices can be general prices, current prices,
output prices or fair values.
1.2.2.2. Fixed asset accounting according to price calculation points of view
 Accounting of fixed assets from the ‘original price’ point of view
Initial measurement and recognition of fixed assets
At the time of determining the initial value, fixed assets are recorded at original
price which includes all initial direct related costs to form fixed assets. In addition to
guiding the measurement and recording of common fixed assets for production and
business activities, IASB also issues accounting standard guidelines to measure and
record the specifically featured fixed assets of the mining industry as follows :
- Firstly, mineral pre-exploration costs: According to international financial
record standards (IFRS 06) - "Exploration and assessment of natural resources and
minerals", mineral exploration costs are recorded as intangible fixed assets.
Accordingly, this asset is measured, initially recorded at the original price, including


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all the expenses that the enterprise has spent on mineral pre-exploration drilling
provided that the exploration drilling results discover a reserve of minerals.
- Secondly, regarding mineral exploitation rights: According to IFRS 06, the
cost of purchasing mineral rights is recognized as intangible fixed assets. At the time
of initial recognition, this asset is recognized at original price, which includes all the
expenses paid by the entity to obtain mining rights such as the cost of obtaining a
license exploitation, cost of granting mining rights.

- Thirdly, the cost of environmental recovery costs: according to international
accounting standard No. 37 (IAS 37) - "Reserves, contingent liabilities and potential
assets", environmental recovery costs are compulsory expenses at a specified time in
the future with a defined value, related to the mining project of the enterprise. Also
according IAS 16, enterprises must initially estimate the cost of destruction, returning
the site and restoring the original status as well as obligations that the organization
incurs (recovery costs) when buying property or using properties in a certain period.
Thus, the recovery cost is the cost that constitutes the original price of the tangible
fixed assets.
Measuring and recording fixed assets after initial recognition
Firstly, identifying and recording the depreciation value of fixed assets: In order
to calculate the depreciation value of fixed assets in each stage of production and
business period, enterprises must allocate the original value of fixed assets to the
years of using assets by the company. Enterprises often use straight-line depreciation
method; Decclining balance depreciation method and output-based depreciation
method to calculate depreciation of fixed assets.
Secondly, identify and record the costs incurred after the initial recognition of
fixed assets: The costs incurred after the initial recognition of fixed assets may
include: (i) repair costs to maintain the operational capacity of the fixed assets; (ii)
the cost of repair and upgrading increases the value of fixed assets (recording the
increase in original cost of fixed assets); (iii) fixed asset depreciation costs for the
purpose of recovering investment capital in which depreciation expense of fixed
assets has been presented by the author.
Third, identify and record accumulated losses due to depreciation of fixed
assets: After original recognition, due to many factors, fixed assets may decline in
value. In order to reflect the true value of fixed assets at the time of constructing
financial statements, the accountants should determine the decline value of fixed
assets. Therefore, after initial recognition, fixed assets are determined and recorded
according to the remaining value, equal to original price minus (-) accumulated
depreciation value and accumulated losses due to the decline in value of fixed assets

(if any).
Stop recording fixed assets


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The accountants stop recording fixed assets (also known as the deletion of
fixed assets) in the following cases: (1) When liquidating assets or (2) When the
enterprise no longer receives future economic benefits from using the assetes; (3)
When capitalizing fixed assets, transfer owner’s fixed assets to real estate, missing
inventory check,...
Presenting fixed asset accounting information
In addition to the information presented about fixed asset accounting as the
method of determining original price of fixed assets; depreciation methods; useful life
or depreciation rate ... Financial statements also reflect signs of depreciation of fixed
assets and decline in value of such assets, information on long-term assets held for
sale and terminated operation.
Thus, the advantages of the original prices are reliable, objective,understandable,
easy to apply, but the application of pure original prices in fixed asset accounting has
certain limitations. Information on fixed assets at the original price does not reflect
the real value of fixed assets at the time of reporting, especially when fixed assets are
degraded in value; it does not satisfied the needs of investors or creditors. Therefore,
there should be a combination of fixed asset accounting at the original price with
accounting for depreciation of fixed assets (if any).
Accounting of fixed assets in view of re-evaluation prices
According to the re-evaluation price, after the initial recognition, the fixed
assets are re-evaluated according to the general price, current price, output price
or fair price.
Measure and record fixed assets according to general prices
Accounting of measurement and initial recognition of fixed assets according to
general prices based on the background of the original price system. At the time of

preparing the financial statements, all items of the Balance Sheet, including fixed
assets, are employed as an index to adjust such as consumer price index or deflation
price index.
Measure and record fixed assets at current prices
At the time of initial recognition, fixed assets are measured at original cost. After
initial recognition, fixed assets of enterprises are recorded at current prices, which is
the amount and cash equivalents that the unit must spend to procure, invest or
produce similar assets as fixed assets currently held. According to the current price
basis, the current price of fixed assets is determined each time the financial
statements are made.
Measure and record fixed assets at the output price
At the time of initial recognition, the accountant recorded an increase in fixed
assets at the investment price similar to the original price basis. The output price
refers to the actual use of observed prices at the time of establishing financial


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statements to measure the value of fixed assets. Accordingly, fixed assets are
evaluated according to the net realizable value which is the estimated selling price of
the assets minus the necessary expenses for the sale of assets. In financial records,
fixed assets are presented at the output price
Measure and record fixed assets at fair value
At the time of initial and initial recognition, fixed assets are recorded at fair
value. Fair price is the price that can be received if an asset is sold or payable 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 fixed assets recorded at fair value, it is necessary to present:
the time of evaluation, assessment experts, methods and assumptions to determine
fair value ...
Thus, the revaluation of assets according to fair value is considered and applied

by many countries, but for fixed assets after initial recognition, measuring and
recording fixed assets according to the original prices in combination with the
recognition of the decline in value of fixed assets is still the most suitable option,
especially in conditions of underdeveloped and incompleted market operations in
many countries.
1.3. Accounting of fixed assets in enterprises under the perspective of
management accounting
1.3.1. Management accounting in collecting, processing, analyzing and
providing information for making investment decisions on fixed assets
Decisions related to fixed assets are often long-term decisions. The management
needs information provided by many departments, including information provided by
the division of fixed asset management accounting to make decisions on investment in
fixed assets. Based on the list of fixed assets to be invested, the accounting department
operate in combination with other departments in the enterprise to collect, process,
analyze and provide information for making decision of investment in fixed assets.
1.3.2. Management accounting with the task of collecting, processing,
analyzing and providing information for managing and using fixed assets
Regarding fixed asset management: The objective of the enterprise is that fixed
assets must be managed scientifically and used effectively. Therefore, fixed assets
must be strictly managed both in terms of quantity and values. The management of
fixed assets is carried out on the accounting system of fixed assets at the place of use
and in the accounting department.
Management accounting with the selection of fixed asset depreciation policy:
The selection of appropriate depreciation method is an important measure to
preserve fixed capital and is also an important basis to determine the payback period
of investment in fixed assets from long-term funding sources. Thus, enterprises need
to select scientific depreciation methods based on the objectives of enterprises, the


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nature of production and business activities, management and organization
characteristics ...
Assessment of investment efficiency and use of fixed assets: In order to obtain
useful information on investment, management and use of fixed assets, accountants
need to build a system of indicators to reflect the investment situation of fixed assets
and technical status. and effective use of fixed assets in enterprises.
1.4. Factors affecting fixed asset accounting in enterprises
1.4.1. Internal factors
- Scale and characteristics of production and business activities of enterprises;
- Views and perceptions of enterprise’s management;
- Accounting staff’s qualifications.
1.4.2. External factors
- Market and competition;
- Legal regulations on accounting;
- Application of information technology in accounting.
1.5. Accounting of fixed assets in some countries around the world and
experience lessons for Vietnam
Research on experience of calculating fixed asset prices, accounting for specific
fixed asset transactions in mining enterprises as well as fixed asset management
accounting in some typical countries in the world such as the US and China, some
lessons are drawn for coal mining enterprises of Vinacomin:
Firstly, selectinging the basis for calculating the price of fixed assets
According to US and Chinese accounting, fixed assets are initially recorded
according to the original price principle in combination with reflecting the decline in
value of fixed assets. According to prudent requirements, in case of fixed asset
depreciation, enterprises need to record and present the decline in value in financial
statements.
Secondly, the identification and recognition of some specifically-featured
fixed asset transactions
- Enterprises should capitalize mineral pre-exploration costs as intangible fixed

assets if they meet the conditions for recognition.
- The cost of mining rights is very large, so it needs to be recognized according
to its nature. Therefore, mining companies should record mineral exploitation rights
as intangible fixed assets.
- Environmental recovery costs should be recorded as the costs contributing to
the original price of tangible fixed assets.
Thirdly, regarding accounting for decline in the value of fixed assets
When one of the signs of value decline occurs, the enterprise must determine the
recoverable value of the fixed asset. The recoverable value of fixed asset is the higher
price between fair value minus the cost of sale and the usage value of the asset. If the


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recoverable value of the asset is less than the book value, the accountants must record
the declining value of the fixed asset: recording the increase in cost and the reduction
of fixed assets exactly according to the reduced value. When there are signs of
recovery of fixed asset value, the recoverable value of fixed asset becomes higher
than the book value, the accountants do not record an increase in fixed asset value or
an increase in income to ensure the compliance with the prudent principle and avoid
the adjustment in recording the increasing income required by the business
management.
Fourthly, presenting fixed asset accounting information
- Enterprises need to present methods of measuring asset value at original cost.
- On the date of constructing financial statements, if fixed assets in enterprises
show signs of decline in value, it is necessary for accountants to assess the decline in
that value of fixed assets and should present this information in the financial
statements. In addition, enterprises need to reflect information on long-term assets
held for sale and terminated operations (if any).
CONCLUSION OF CHAPTER 1

In chapter 1, the thesis has analyzed and clarified in detail general issues of fixed
assets and fixed asset accounting in enterprises, including identification and
determination of initial value, recognition and presentation of fixed assets according
to two views on price calculation - the original price and the re-evaluation price. At
the same time, the thesis also studies the measurement and recognition of
specifically-featured fixed assets of mining enterprises. In particular, the thesis
emphasizes the accounting of declining value of fixed assets, presenting information
on long-term assets held for sale and terminated activities - an issue that has not
mentioned in Vietnam. In addition to examining fixed asset accounting from the
perspective of financial accounting, the thesis also studies fixed asset accounting
under management accounting perspective. On the basis of fixed asset accounting
according to the accounting system in the US and China, experience lessons are
drawn for fixed asset accounting in coal mining enterprises of Vinacomin.
Chapter 2
CURRENT SITUATION OF FIXED ASSET ACCOUNTING
IN COAL MINING ENTERPRISES OF VINACOMIN
2.1. Overview of Vinacomin and coal mining enterprises of Vinacomin
2.1.1. Overview of Vinacomin
2.1.1.1. History and development process of Vinacomin
Vietnam Coal - Mineral Industry Group (formerly known as Vietnam Coal
Corporation under Decision No. 563 / TTg dated 10/10/1994 of the Prime Minister)
with an international transaction name of Vietnam National Coal and Mineral
Industries Holding Corporation, or Vinacomin, was established in accordance with


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Decision No. 345/2005 / QD-TTg dated December 26, 2005. Vinacomin is currently
implementing important business activities in the fields of coal industry; mineral and
metallurgical industry; power industry and industrial explosive materials.
2.1.1.2. The organizational structure and management apparatus of

Vinacomin
The subsidiaries in Vinacomin are closely connected and organized according to
the parent company - subsidiary model with the "Multi-level Group" structure. By
5/2018, excluding 11 affiliated companies, Vinacomin has 66 member units including
the parent company of the Group, level 1 subsidiaries, level 2 subsidiaries, affiliated
units, and revenue-generating units.
2.1.1.3. Organization of accounting system and accounting policy of
Vinacomin
Organization of accounting apparatus at the parent company
Vinacomin parent company is a combination of many subordinate units with
scattered operating areas. Therefore, the accounting system at the parent company is
organized according to the model of both concentration and dispersion.
Accounting policy applied at Vinacomin
In addition to the application of accounting standards, enterprises under
Vinacomin are currently implementing Circular 200 / TT-BTC and Circular No. a53 /
2006 / TT-BTC. At the same time, the enterprises in the Group also follow Decision
2917/QD-HDQT of Vinacomin. For the management of fixed assets, Vinacomin
issued Decision 2873 / QD-Vinacomin and Decision 1764/QD-TKV applied
accordingly in units in Vinacomin
2.1.2. Characteristics of organizational structure, management and
production and business activities of coal mining enterprises in Vinacomin
2.1.2.1. Characteristics of management organization in coal mining
enterprises in Vinacomin
Coal mining companies of Vinacomin include 9 companies with 100%
chartered capital of Vinacomin (Group branch) and 10 subsidiaries, which are JSC
with Vinacomin’s holding dominant shares. These companies all organize the
management mechanism according to the online functional model, each part of the
enterprise takes responsibility independently.
2.1.2.2. Characteristics of production and business activities of coal mining
enterprises of Vinacomin affecting the accounting of fixed assets

In coal mining enterprises of Vinacomin, in addition to coal mining and trading
activities, there are business and production activities in some other areas, thus fixed
assets are spread in the coal mining area and in division and departments in
enterprises. The process of coal mining is carried out mainly outdoors or in the
ground and the installation process, the construction of the mining system often takes
a long time. These characteristics significantly affect the process of managing, using
and accounting fixed assets in coal mining enterprises of Vinacomin.


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2.1.2.3. Organizing accounting work in coal mining enterprises of Vinacomin
Most coal mining enterprises of Vinacomin organize centralized accounting
apparatus. Enterprises all apply the journal-documents accounting method.
2.2. Current situation of fixed asset accounting in coal mining enterprises of
Viancomin
2.2.1. Current situation of fixed asset accounting at Vinacomin’s coal mining
enterprises under the view of financial accounting
2.2.1.1. Initial measurement and recognition of fixed assets
The initial and post-initial recognition of fixed assets in Vinacomin’s coal
mining enterprises is based on the original price. The accountant records the costs of
exploration of natural resources and minerals into prepaid expenses (Account 242)
and then allocates them gradually into production costs (Account 627) or directly
accounts for general production costs (Account 627) in the accounting period. All
costs of acquiring mining rights are recorded in prepaid expenses (Account 242), then
allocated to production costs (TK 627). Many respondents (66.67%) answered that in
their enterprises, environmental recovery costs such as land reclamation costs and
accountants all recorded these costs into production costs (Account 627) to calculate
the cost price of exploited coal and mineral products.
2.2.1.2. Measure and record fixed assets after initial recognition
In coal mining enterprises of Vinacomin, fixed assets are initially recognized

according to original price, output price and remaining price. The enterprises
surveyed all said that fixed assets were still recorded later at the initial cost. Then,
value is determined by original price minus (-) declined value.
Current situation of applying depreciation method and fixed asset
depreciation accounting
Enterprises all use straight-line depreciation method to calculate the
depreciation for fixed assets in enterprises. 16.67% of respondents answered that
enterprises applied both methods including straight-line method and declining
depreciation method depending on the characteristics of each fixed asset. Most
respondents (77.78%) believed that enterprises use fixed asset depreciation according
to the principle of round month. After calculating fixed asset depreciation,
accountants record the amount of depreciation deduction in the period into expenses
according to the accounting regulations of accounting standards.
Current situation of repair cost accounting for fixed asset
The surveyed enterprises recorded the maintenance and repair costs of fixed
assets on a regular basis in the period (Debit Account 627, Acc 641 and Acc 642).
For major repair costs of fixed assets: 72.22% of the respondents said that
enterprises did not make plans for major repairs of fixed assets, therefore they did not
accrue repair expenses for fixed assets. When this cost is incurred, it is recognized as


15
prepaid expenses (Account 242), then proceeded to allocate gradually to the objects
of related costs.
Regarding the cost of renovation and upgrading: 38.89% of respondents said
that the entire cost of renovation and upgrading is gathered on Account 2413 and
transferred to Account 242, then gradually allocated to the objects who bear the costs
(Account 627, Account 641, Account 642).
Current status of accounting for decline in value of fixed assets
According to the survey results, 83.33% of respondents said there were signs of

declining value of fixed assets in Vinacomin’s coal mining enterprises. However, these
companies have not yet recorded the decline in the value of fixed assets.
2.2.1.3. Stop recording fixed assets
The enterprises stopped recording fixed assets in case of liquidation and sale of
assets and 16.67% said that enterprises stopped recording fixed assets in case of
transferring fixed assets.
2.2.1.4. Presentation of fixed asset accounting
information on financial statements
Information on fixed assets presented by coal mining enterprises of Vinacomin
in financial statements according to the criteria: Original price, depreciated value and
remaining value. Content related to fixed assets is required to explain in detail on the
notes on financial statements. All companies presented in financial statements
information about fixed assets as required by VAS 03 and VAS 04.
2.2.2. Current situation of fixed asset accounting at Vinacomin’s coal mining
enterprises under the perspective of management accounting
2.2.2.1. Current situation of management accounting in collecting,
processing, analyszing and providing information for making decisions on fixed
asset investment in Vinacomin’s coal mining enterprises
Current situation of collecting fixed asset information: According to the indepth interview results, coal mining enterprises of Vinacomin collected
information on fixed assets including implementation information which is related
to purchase, equipment, depreciation, repair, transfer, liquidation, and sale of fixed
assets ... and future information is the information on estimates of revenue flows
and expenditure flows; budget estimates of fixed assets; market prices of fixed
assets; information on properties, usage and technical parameters of investment
assets that are about to be invested. The regulation on coordination of work
between the fixed asset management accounting division and the relevant
departments has not yet fully implemented, which could not improve the role of
management accounting of fixed assets
Current situation of processing information of fixed assets: Subjects
participating in the process of processing information related to fixed asset

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investment include: fixed asset accountants, chief accountant (or deputy accounting
manager), heads (or deputy heads) of other professional departments in businesses.
61.11% of enterprises applied accounting software to assist in dealing with fixed
asset accounting information; 38.89% of enterprises have not yet applied accounting
software, thus the handling of fixed asset accounting information is not provided to
managers in time.
Current situation of analysis and provision of fixed asset information:
According to the above results, in100% of surveyed enterprises, heads or deputy
heads of finance and accounting departments who perform analysis of fixed asset
information and are responsible for the results of classification. In addition, 22.22%
is carried out by the fixed asset accounting department and 27.78% by the
estimation department performing the analysis of information related to fixed asset
investment. The analysis of fixed asset information in the surveyed units mainly
showed that most of these units used the net present value method - NPV (33.33%)
and the internal rate of return - IRR (27.78%) method to provide information about
the effectiveness of the project. Other methods such as payback period - PP
(11.11%) and profitability index - PI (5.56%) are hardly used to analyze
information.
2.2.2.2. Current situation of management accounting with the collection,
processing, analysis and provision of information for the management and use of
fixed assets in Vinacomin’s coal mining enterprises
Current situation of fixed asset management: In departments using the fixed
assets, enterprises use a lot of fixed assets which have been fully depreciated and
have not been numbered for fixed assets. The majority of Vinacomin’s coal mining
enterprises do not have a clear division of responsibility for fixed asset management
at the departments using the fixed assets and there is no plan for periodic inspection
and maintenance of fixed assets. In the accounting department, in fact, only 22.22%

of respondents answered that they set up fixed asset tags for each asset, the rest only
reflected in the fixed asset book.
Current situation of selecting fixed asset depreciation policy in Vinacomin’s
coal mining enterprises: The number of respondents said that enterprises only used
straight-line depreciation method to calculate depreciation for all types of fixed
assets is 75/90 (83.33%), 15/90 (16.67%) reported that both straight-line
depreciation method and accelerated depreciation method are applied.
Current situation of assessing investment efficiency, efficiency of using fixed
assets in coal mining enterprises of Vinacomin: Most of Vinacomin’s coal mining
enterprises have not yet used the assessment of investment efficiency and use of fixed
assets. In analyzing and evaluating the effectiveness of fixed assets, 16.67% of
respondents answered that the units used criteria of production capacity for fixed


17
assets, 11.11% of respondents said that enterprises used criteria of profitability for
fixed assets, 11.11% of respondents said that enterprises used profit ratio on assets ...
2.3. Results of analyzing factors affecting fixed asset accounting at coal
mining enterprises in Vinacomin
2.3.1. Internal factors
- Firstly, most of the opinions suggested that business scale and characteristics
affect the workload of fixed asset accounting; investment process, procurement and
management and use of fixed assets in enterprises; the selection of fixed asset
depreciation policies and the application of fixed asset management accounting.
- Secondly, most of the respondents stated that the views and perceptions of
enterprise managers affect the issuance of regulations on investment, management
and use of fixed assets within enterprises; contructing management accounting
reports of fixed assets; decision on increase and decrease of fixed assets ...
- Thirdly, the knowledge and skills of the accountants involved also influence
the results of the fixed asset accounting.

2.3.2. External factors
- Firstly, most respondents (72.22%) believed that the market and competition
have an impact on the investment process, procurement of fixed assets of enterprises
and application of management accounting technical tools, especially fixed asset
management accounting.
- Secondly, the majority of opinions (94.44%) believed that the accounting legal
system affects accounting of fixed assets in coal mining enterprises in Vinacomin.
- Thirdly, most of the opinions suggested that information technology helps
to monitor and manage fixed assets more effectively and better in managing
fixed assets.
2.4. Assessing the situation of fixed asset accounting at Vinacomin’s coal
mining enterprises
2.4.1. Achievements
Regarding financial accounting: Coal mining enterprises of Vinacomin have
fully used the system of vouchers, accounting accounts and accounting books.
- Information on fixed assets is presented relatively, appropriately and ensure the
legality in financial statements required by VAS 03 and VAS 04.
Regarding management accounting: The process of collecting, processing,
analyzing and providing information for decisions related to fixed assets is made
quite clearly at the investment stages of fixed asset procurement, management and
use of fixed assets.The accountants of the enterprises have designed a number of
samples of fixed asset management accounting reports. The management of fixed
assets in enterprises is quite scientifically and strictly implemented.


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2.4.2. Limitations and causes of limitations
2.4.2.1. Limitations
* Regarding financial accounting
First, limitations in the initial measurement and recognition of fixed assets

- The recognition of mineral pre-exploration and mining right costs in
Vinacomin’s coal mining companies has not provided transparent information and
met the appropriate principles.
- When incurring environmental recocovery costs, enterprises recorded in
production costs (Acc 627) which is considered as not reasonable.
Secondly, limitations in measuring and recording fixed assets after initial
recognition
- Currently, Vinacomin’s coal mining enterprises still record fixed assets at their
original prices, not including the decline in the value of fixed assets when the fixed
assets show signs of decline in value.
- The majority of coal mining enterprises in Vinacomin are implementing
depreciation of fixed assets according to the principle of round month, which is not in
accordance with current regulations.
- Repair costs of fixed assets are always focused by Vinacomin's coal mining
enterprises, however many enterprises do not make repair plans and do not make
advance deductions for fixed asset repair costs.
- In fact, in these enterprises, there are signs that fixed assets are deteriorating in
value. However, after the initial recognition, fixed assets are still measured and
recorded at original cost, enterprises do not reflect the real value of fixed assets at the
time of preparing financial statements.
Thirdly, limitations in presenting information in financial statements
- Although there are signs of declining value of some fixed assets, enterprises
have not reflected the decline in value of fixed assets on financial statements, leading
to lower real value of assets at the time of financial statements compared to the value
being reflected.
- Businesses do not separate long-term assets held for sale and terminated
activities with the fixed assets targets when preparing financial statements.
* Regarding management accounting
In collecting, processing, analyzing and providing information for investment
decision making of fixed assets: In the coal mining enterprises of Vinacomin, the

content of information that needs to be collected is not clearly defined and the
relationship in providing information between departments. Therefore, the
information fixed asset management accounting has not been provided in time,
failing to meet the requirements of the managers in making investment decisions on
fixed asset.


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In collecting, processing, analyzing and providing information for the
management and use of fixed assets: Many enterprises have not numbered fixed
assets and used large amount of fully depreciated fixed assets. The straight-line
depreciation method application for all types of fixed assets in most of Vinacomin's
coal mining companies is unreasonable. The reports on fixed asset management
accounting are incomplete and most of these enterprises do not organize the
construction and analysis of the criteria system for evaluating the effectiveness of
fixed asset use, only provide detailed information about the equipment situation and
changes in fixed assets.
2.4.2.2. Reasons for limitations
Objective reasons
The accounting standard system has many inconsistencies and incompliance
between related standards. Some transactions occurred but there have not been
clearly-instructed accounting standards or instructions.
Subjective reasons
Firstly, due to the inadequate perception of the management about the role of
management accounting for fixed assets in assisting decision making and running the
business
Secondly, the majority of Vinacomin’s coal mining enterprises are large-scale,
thus the number and types of fixed assets are very large, and distributed in many
places, which causes difficulties in the management, monitoring and recording of
fixed assets.

Thirdly, the record and management of fixed assets has the support of IT like
computer software but not yet efficiently.
Fourthly, the qualification and professional competence of the accounting team
in the enterprises is still limited and uneven, and there has been not enough
knowledge about fixed asset accounting.
CONCLUSION OF CHAPTER 2

In chapter 2, the author has presented the study of the situation of managing and
using fixed assets; surveying the actual situation of accounting of fixed assets in
Vinacomin’s coal mining enterprises in two angles: Financial accounting and
management accounting. On the basis of analyzing the current status of fixed asset
accounting, the author has clarified the results and limitations of fixed asset
accounting in coal mining enterprises of Vinacomin Group, reasons for these
limitations, which is the basis for proposing solutions in Chapter 3. Research results
in chapter 2 can be used by the author in proposing reasonable recommendations for
coal mining enterprises in Vinacomin in the current context in Vietnam.


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Chapter 3
SOLUTIONS TO IMPROVR OF FIXED ASSET ACCOUNTING
IN COAL MINING ENTERPRISES OF VINACOMIN
3.1. Viewpoints and development objectives of coal industry, coal mining
enterprises of Vinacomin and requirements of improving fixed asset accounting
in Vinacomin’s coal mining enterprises
3.1.1. Viewpoints and development objectives of coal industry
Viewpoints on the development of coal industry
To develop the coal industry on the basis of efficiently exploiting, processing
and using the country's coal resources; To make a positive contribution to ensuring
national energy security; To prioritize to meet domestic demand for coal; to ensure

the rational import and export of coal.
Development objectives of coal industry
Building Vietnam's coal industry to become a developed industry; highly
competitive; applying advanced technology compared to the region at all stages of
coal exploration, exploitation, selecting, processing and use of coal; providing
enough coal to meet domestic demand, especially coal for electricity production;
reducing the rate of coal mining losses; completing the construction of Quang Ninh
exploiting facilities.
3.1.2. Viewpoints and objectives of developing coal mining enterprises of
Vinacomin
Viewpoins of developing coal mining enterprises of Vinacomin
Development of Vinacomin’s coal mining enterprises under the motto of
sustainable development: Enahancing both mineral resources and human resources;
environmentally friendly, adapting to climate change; Harmonious with the locality
and community; Establishing mutual beneficial relationshipwith partners and
customers. Continue to build and complete thermal power plants; promote investment
in innovation and modernization of production technology.
Development objectives of coal mining enterprises of Vinacomin
By the end of 2020, to complete the exploration at the level of - 300m for Dong
Bac and Nam Thinh coal basin, Tien Hai district, Thai Binh province. To ensure that
coal mining can meet the demand for domestic coal use, contributing to ensuring
national energy security; Attempt to produce 42 million tons of commercial coal by
2020. Expanding international cooperation and aware of the importance to protect
and improve the ecological environment in the coal region.
3.1.3. Requirements to improve the accounting of fixed assets at coal mining
enterprises of Vinacomin
In order to complete the accounting of fixed assets in Vinacomin’s coal mining
enterprises, it is necessary to ensure the following requirements: Compliance with the
accounting law and legal provisions related to fixed assets; ensuring harmony

21
between Vietnamese accounting standards with international practices and
international accounting standards; suitable to business operation characteristics and
management organization of enterprises; present and provide complete, effective and
highly feasible information.
3.2. Solutions to complete fixed asset accounting at Vinacomin’s coal mining
enterprises
3.2.1. Solutions to improve fixed asset accounting in the perspective of
financial accounting
3.2.1.1. Solutions to select the appropriate price
calculation basis for fixed assets
(1) The period before Vietnam issued accounting standards on "Decreasing
value of assets ": Coal mining enterprises of Vinacomin still measureed, recorded
initially and post- initial fixed assets at the original price.
(2) The period after Vietnam promulgates accounting standards on "Decreasing
asset value":
Accounting departments in Vinacomin’s coal mining companies still measure
and record fixed assets at the original price. After initial recognition, fixed assets are
recorded under the remaning price determined by original cost minus (-) depreciation
value and accumulated losses due to the reduction of fixed asset value (if any).
3.2.1.2. Solutions to complete the identification and measurement of
specifically-featured fixed assets of coal mining enterprises
- Completing the identification, measurement and recognition of coal mining
rights: recognizing coal mining rights as intangible fixed assets.
- Completing the identification, measurement and recognition of mineral
exploration costs:on recognition of mineral pre-exploration costs: (1) The period
before Vietnam issued accouting standards on "Exploration and evaluation of mineral
resources": Enterprises should record mineral exploration costs into production costs
of products. (2) The period after Vietnam issues accounting standards on

"Exploration and assessment of natural resources and minerals": If mineral preexploration costs discover mineral reserves, enterprises should record the intangible
fixed assets if they satisfy the requirements of recognition.
- Completing the identification, measurement and recognition of environmental
recovery costs: environmental recovery costs must be recognized as related direct
costs and recorded as an increase in the cost of tangible fixed assets.
3.2.1.3. Solutions to perfect accounting for repair costs of fixed assets
- Planning the costs of fixed asset repair.
- Estimating the costs of fixed asset repair.
- Completing accounting of major fixed asset repair costs.
3.2.1.4. Solutions to improving the presentation of fixed asset targets in
financial statements
- Presenting information about long-term assets held for sale and the terminated
operation the short-term assets in the financial statements.


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- Presenting information about the value reduction of fixed assets
3.2.2. Solutions to improve fixed asset accounting in the perspective of
management accounting
3.2.2.1. Solutions to improve management accounting with the collection,
processing, analysis and provision of information for investment decision making
of fixed assets
- Perfecting the collection of information for making decisions on investment in
fixed assets.
- Completing the processing and analyzing information to make decisions on
investment in fixed assets.
- Completing the management accounting reporting system to make investment
decisions on fixed assets.
3.2.2.2. Solutions to improve management accounting with the collection,
processing, analysis and provision of information for the management and use of

fixed assets
 Complete management of fixed assets:
(1) For businesses that do not have the conditions to apply fixed asset
management software
- Perfecting fixed asset management in the departments using fixed assets:
Enterprises need to label each fixed asset, complete the fixed asset - monitoring book
form at the place of use and at the same time assign the clear management and use of
fixed assets.
- Completing management of fixed assets at the accounting department: The
monitoring and management of fixed assets in terms of value are expressed through
the establishment of general tracking accounting books, fixed asset cards and
preparing management accounting reports of fixed assets
(2) For enterprises with conditions to apply asset management software
- At the departments using fixed assets: Each fixed asset is attached with barcode
to facilitate the monitoring and management. The user department will update the
status of fixed assets into the software so that the relevant departments and business
executives can obtain the information in a timely manner.
- At the accounting department: The accountants base on the documents to
increase, decrease, repair and upgrade fixed asset to updated into the asset
management software.
 Perfecting fixed asset depreciation accounting: Completing selection of fixed
asset depreciation policy; reasonable determination of fixed asset depreciation time;
completing the time of extracting and stopping the depreciation of fixed assets.
 Developing a system of criteria to evaluate investment efficiency and use of
fixed assets: Based on characteristics of operation and organization management as
well as management requirements of internal enterprises, accountants in Vinacomin’s
coal mining enterprises should set up a system of indicators to assess the situation of


23

equipment use and efficiency of using fixed assets.
3.3. Conditions for implementing the solutions
3.3.1. On the side of state agencies
3.3.1.1. Ministry of Finance
The Ministry of Finance should continue to build and study and issue a number
of new accounting standards on "Depreciation of assets value", "Long-term assets
held for sale and terminated activities "; "Exploration and assessment of natural
resources and minerals".
3.3.1.2. Professional organizations
Vietnam Association of Accountants and Auditors, Vietnam Association of
Certified Public Accountants need to coordinate with the Ministry of Finance, Big
Four auditing companies to strengthen information exchange, experience and
enhancing cooperation with regional groups and international occupation
organizations, and strengthen research on new accouting standards in general and
standards of fixed assets in particular to provide training of knowledge updates for
accountants and auditors in the most effective way.
3.3.2. For the Group and coal mining enterprises of Vinacomin
- Firstly, Vinacomin and coal mining companies need to review, complete and
add regulations guiding and implementing uniformly for fixed asset accounting in the
Group. In addition, the Group needs to promulgate regulations and develop
international accouting standard processes in Vinacomin including international
accounting standards for fixed assets.
- Secondly, management needs to raise their awareness about roles,
importance and opportunities of management accounting in making decisions
related to fixed assets.
- Thirdly, organize training, professional and fostering knowledge,
information technology, update policies, new accounting standards for
accountants on a regular basis.
- Fourthly, improving information technology application in accounting
with the aim to improve accounting productivity and provide fixed asset

accounting information in a full and timely manner to meet the requirements
of information users.
- Fifth, build a roadmap to implement the proposed solutions.
CONCLUSION OF CHAPTER 3

On the basis of theoretical research on fixed assets, fixed asset accounting and
real situation of fixed asset accounting in Vinacomin’s coal mining enterprises in both
angles of financial accounting and management accounting, the thesis has studied and
analyzed the requirements of improving fixed asset accounting. Thus, the author has