![]() ![]() However, only if their historical cost and that of related assets do not exceed the total value recoverable from them and other related assets shall these assets be recognized as tangible fixed assets. Though being unable to directly yield economic benefits like other tangible fixed assets, those assets used for the purposes of ensuring production and business safety or protecting the environment are necessary for enterprises to achieve more economic benefits from other assets. When determining the first criterion (prescribed in Section a, paragraph 06) of each tangible fixed asset, the enterprises must determine the degree of certainty of the acquisition of future economic benefits, on the basis of evidences available at the time of initial recognition, and must bear all related risks. Therefore, the determination of an asset whether or not to be recognized as tangible fixed asset or a production or business expense in the period shall greatly affect the reporting of the enterprises’ operation and business results.Ġ9. Tangible fixed assets often constitute a key component in the total assets and play an important role in the reflection of the financial situation of enterprises. Tangible asset accounting is classified by groups of assets of the same nature and use purposes in the enterprises’ production and business operations, including:Ĭ/ Means of transport, conveyance equipment Į/ Perennial tree garden, animals reared to labor for humans and to yield products.Ġ8. To be recognized as tangible fixed assets, assets must meet simultaneously all the following four (4) recognition criteria:Ī/ Future economic benefits will surely be obtained ī/ Their historical cost has been determined in a reliable way Ĭ/ Their useful life is estimated at more than one year ĭ/ They meet all value criteria according to current regulations.Ġ7. Criteria for recognition of tangible fixed assets: Recoverable value means the value estimated to be obtained in future from the use of the assets, including their liquidation value.Ġ6. Residual value means the historical cost of tangible fixed assets after subtracting the accumulated depreciation thereof. Reasonable value means the value of assets, which may be exchanged among knowledgeable parties in the par value exchange. Liquidation value means the value estimated to be obtained at the end of the useful life of the assets, after subtracting the estimated liquidation cost. ![]() Useful life means the duration in which the tangible fixed assets produce their effect on production and business, calculated by:Ī/ The duration the enterprise expects to use the tangible fixed assets, or:ī/ The volume of products, or similar calculating units which the enterprise expects to obtain from the use of assets. Historical cost means all the costs incurred by the enterprises to acquire tangible fixed assets as of the time of putting such assets into the ready-for-use state.ĭepreciation means the systematic allocation of the depreciable value of tangible fixed assets throughout the useful life of such assets.ĭepreciable value means the historical cost of tangible fixed assets recorded on financial statements, minus (-) the estimated liquidation value of such assets. Tangible fixed assets means assets in physical forms which are possessed by the enterprises for use in production and business activities in conformity with the recognition criteria of tangible fixed assets. For the purpose of this standard, the terms used herein are construed as follows: Enterprises must apply this standard even when they are affected by price changes, except otherwise prescribed by State decisions related to the re-appraisal of tangible fixed assets.Ġ5. Where other accounting standards prescribe methods of determining and recognizing the initial value of tangible fixed assets other than the methods defined in this standard, other contents of tangible fixed asset accounting shall still comply with the regulations of this standard.Ġ4. This standard applies to the accounting of tangible fixed assets, except where other accounting standards permit the application of other accounting principles and methods to tangible fixed assets.Ġ3. This standard aims to prescribe and guide the accounting principles and methods applicable to tangible fixed assets, including criteria of tangible fixed assets, the time of recognition and determination of initial value, costs incurred after initial recognition, determination of value after initial recognition, depreciation, liquidation of tangible fixed assets and some other regulations serving as basis for recording accounting books and making financial statements.Ġ2.
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