Independence- Freedom- Happiness No. 89/2002/TT-BTC Hanoi, 9 October 2002 CIRCULAR

MINISTRY OF FINANCE Socialist Republic of Vietnam Independence- Freedom- Happiness ------------------------- ----------------------------- No. 89/2002/TT-BTC Hanoi, 9 October 2002 CIRCULAR GUIDELINES ON THE IMPLEMENTATION OF THE FOUR (4) VIETNAMESE ACCOUNTING STANDARDS ISSUED UNDER DECISION NO. 149/2001/QD-BTC DATED 31 DECEMBER 2001 OF THE MINISTER OF FINANCE - Pursuant to Decision No. 149/2001/QD-BTC dated 31/12/2001 of the Minister of Finance on the issuance and announcement of the four Vietnamese accounting standards (phase 1). - Pursuant to the Vietnamese enterprises accounting system issued under the Decision No. 1141 TC/QD/CDKT dated 1/11/1995 and to circulars guiding on amendments of and supplements to the accounting system of Vietnamese enterprises of the Ministry of Finance. The MOF hereby provides guidance on the implementation of the four (4) above-mentioned Vietnamese accounting standards applicable for enterprises operating in all industries and economic sectors in the country, except for the enterprises applying the Vietnamese Accounting System for small and medium enterprises issued under Decision No. 1177/TC/QD/CDKT dated 23 December 1996 and Decision No. 144/2001/QD/BTC dated 21 December 2001 of the Ministry of Finance. I GUIDELINES ON THE IMPLEMENTATION OF THE VIETNAMESE ACCOUNTING STANDARD - INVENTORY 1. Accounting for fixed factory overheads: - When fixed factory overheads occur: Dr. 627 - factory overheads (detail of the fixed factory overheads) Cr. 152, 153, 214, 331, 334, etc - At the end of the reporting period, allocate and transfer fixed factory overheads into processing expense of each product unit at the standard productivity level: Dr. 154 - work in progress Cr. 627 - factory overheads (detail of the fixed factory overheads). - If the actual production output is lower than the normal capacity, the accountant has to calculate and determine the fixed factory overheads which are to be absorbed into processing expense based on production units at normal capacity. The absorbed fixed factory overheads will be recorded as part of cost of goods sold in the period (the actual incurred fixed factory overheads which are excess to the absorbed fixed factory overheads will not be recorded to the production unit cost): Dr. 632 - cost of goods sold (detail of absorbed fixed factory overheads) Cr. 627 - general production overheads Unofficial translation by KPMG Page 1

2. Accounting for shortages and/or losses of inventory: - Based on the report of the shortage and/or losses of inventory, the accountant records the shortage and/or losses as follows: Dr. 1381 - shortage of assets awaiting resolution. Cr. 151, 152, 153, 154, 155, 156 - Based on Resolution Report for inventory shortage and/or loss: Dr. 111, 334, etc (the amount to be compensated by organization/individual) Dr. 632 - cost of goods sold (shortages/losses of inventory after deducting the compensation from organization/individual reflected in the cost of goods sold) Cr. 1381- shortage of assets awaiting resolution 3. Accounting for provision for devaluation of inventory: At the end of the reporting period, if the net realizable value of inventory is lower than the historical price, a provision for the devaluation of inventory is to be made. The amount of provision for devaluation of inventory is the difference between the historical price of inventory and the net realizable value. - If the provision for inventory devaluation at the end of current reporting period is higher than that actually made at the end of a previous accounting period, the accountant has to make additional provision for the difference: Dr. 632 - Costs of goods sold (detail of the provision for devaluation of inventory) Cr. 159- Provision for devaluation of inventory - Vice versa, if the provision for devaluation of inventory at the end of the current reporting period is lower than that actually made at the end of previous reporting period, the difference will be reversed. Dr. 159-Provision for devaluation of inventory Cr. 632-Costs of goods sold (detail of the provision for devaluation of inventory) II GUIDELINES ON THE IMPLEMENTATION OF THE VIETNAMESE ACCOUNTING STANDARD - TANGIBLE FIXED ASSETS : 1. Supplement to and amendment of the content of account 211 Tangible fixed assets, the historical cost, in specific circumstances: Purchased tangible fixed assets: the cost of an item of tangible fixed assets comprises its purchase price (any trade discounts and rebates are deducted in arriving at the purchase price), including nonrefundable purchase taxes, and any directly attributable costs of bringing the asset to working condition for its intended use, such as: site preparation; initial delivery and handling costs; installation costs (deducting recoverable values when installing and running pilot tests); professional fees, e.g. for architects and engineers; and other directly related costs. Unofficial translation by KPMG Page 2

Tangible fixed assets constructed by a contractor: the cost of a tangible fixed asset constructed by a contractor is the cost of the work as finally accounted, plus directly related expenses and registration fees (if any). Deferred purchased tangible fixed assets: when payment for an item of tangible fixed assets is deferred beyond normal credit terms, its cost is the cash price equivalent at the date of purchase; the difference between this amount and the total payments is recognised as an expense over the period of credit, unless it is capitalised in accordance with the accounting standard Borrowing Costs. Self- constructed or manufactured tangible fixed assets: the cost of a self-constructed or manufactured asset is the actual construction of manufacturing cost plus (+) installation and pilot test running costs. In case the enterprise converts a product to a tangible fixed asset, the cost of the fixed asset comprises production cost and any directly attributable cost in bringing the asset to working condition for its intended use. Therefore, any internal profits are eliminated in arriving at such costs. Similarly, the cost of abnormal amounts of wasted material, labour, or other resources incurred in the production of a self-constructed asset is not included in the cost of the asset. Exchange of tangible fixed assets: the cost of an item of tangible fixed assets acquired in exchange for a dissimilar item of tangible fixed assets or other assets is measured at the fair value of the asset received, or the fair value of the asset given up adjusted by the amount of any cash or cash equivalents transferred, paid or received. An item of tangible fixed assets may be acquired in exchange for a similar asset that has a similar use in the same line of business and which has a similar fair value. An item of tangible fixed assets may also be sold in exchange for an equity interest in a similar asset. In both cases, no gain or loss is recognised on the transaction. Instead, the cost of the new asset is the carrying amount of the asset given up. Examples of exchanges of similar assets include the exchange of machinery, equipment, means of transportation, service stations and other real estate properties. 2. Accounting method for major transactions relating to an increase in tangible fixed assets 2.1. The tangible fixed asset is purchased on normal credit terms: - When the tangible fixed asset is purchased on normal credit term and brought immediately into use: Dr. 211 - tangible fixed asset (historical cost) Dr. 133 - deductible VAT (if any) Dr. 242 - long term deferred expenses (difference between total contract price less historical cost less VAT (if any)) Cr. 331 - trade creditors (total contract price) - Recording the periodic instalments: Dr. 331 - trade creditors Cr. 111, 112 (periodic instalments include the original cost plus interest) At the same time, the interest is recorded as an expense of financial activity Dr. 635 - expense of financial activity Cr. 242 - Long term deferred expenses Unofficial translation by KPMG Page 3

2.2 If the tangible fixed asset is donated or the result of aid and immediately put into use: Dr. 211 - tangible fixed asset Cr. 711 - other income Other expenses directly related to the donated tangible fixed asset are accounted as costs: Dr. 211 - tangible fixed asset Cr. 111, 112, 331, etc 2.3 If the tangible fixed asset is manufactured by the company: - When the manufactured tangible fixed asset is put into use: Dr. 632 - Cost of goods sold Cr. 155 - Finished goods (issued from warehouse for usage) Cr. 154 - Work in progress (issued for use right after production) - At the same time, record the increase of the cost of tangible fixed assets Dr. 211 - tangible fixed asset Cr. 512 - intra-company revenue (revenue is the actual production) - Expense for instalments and test running of the tangible fixed asset Dr. 211 tangible fixed asset Cr. 111,112,331, etc 2.4 Exchanges of tangible fixed assets: 2.4.1 Tangible fixed asset exchanged for a similar asset: - When the tangible fixed asset is put into use: - Dr. 211 tangible fixed asset (net book value of tangible fixed asset given up) Dr. 214 accumulated depreciation and amortisation (accumulated depreciation of tangible fixed asset given up) Cr. 211 tangible fixed asset (historical cost of tangible fixed asset given up) 2.4.2 Tangible fixed asset exchanged for a dissimilar asset: - Write off tangible fixed asset given up: Dr. Dr. Cr. 811 other expense (net book value of given up tangible fixed asset) 214 accumulated depreciation and amortisation (accumulated depreciation) 211 tangible fixed asset (historical cost) Unofficial translation by KPMG Page 4

- At the same time, record the gain from the exchange: Dr. 131 - Receivables from customer (total received amount) Cr. 711 - Other income (fair value of tangible fixed asset given up) Cr. 3331 - Payable VAT (account 33311) (if any) - Record the cost of tangible fixed asset: Dr. 211 - Tangible fixed asset (fair value of the tangible fixed asset received) Dr. 133 - Deductible VAT (if any) Cr. 131 - Receivables from customers (total received amount) Extra cash received for the difference when the reasonable value of the tangible fixed asset given up is higher than the reasonable value of the tangible fixed asset received in the exchange transaction is recorded as follows: Dr. 111, 112 (extra amount of money received) Cr. 131 - Receivables from customers Extra cash paid for the difference when the reasonable value of the tangible fixed asset given up is lower than the reasonable value of the tangible fixed asset received in the exchange transaction is recorded as follows: Dr. 131 - Receivables from customers Cr. 111, 112 2.5 If the acquired tangible fixed asset is in the form of buildings and structures accompanied with the land-use right and is immediately put into use: Dr. 211 - tangible fixed asset (historical cost detailing the building and structure) MJ Note: Not 2112? Dr. 213 - Intangible fixed assets (historical cost detail of the land-use right) MJ Note: Not 2131? Dr. 133 - Deductible VAT (if any) Cr. 111, 112, 331, etc 2.6 If the tangible fixed assets currently recorded in the accounting books do not meet the four criteria for recognition of a tangible asset stated in the Vietnamese Accounting Standard Tangible fixed assets, it should be treated as instruments and tools. The accountant records the decrease of the tangible fixed asset as follows: Dr. 214 - Accumulated depreciation and amortisation (accumulated depreciation) Dr. 627, 641, 642 (Net book value) (if insignificant) Dr. 242 Long term prepaid expense (if Net book value is significant and needs to be amortised) Cr. 211 tangible fixed asset 2.7 When the capital construction is completed and assets are brought into use: Dr. 211 - Tangible fixed asset Cr. 241 - Construction in progress Unofficial translation by KPMG Page 5

If the assets formed from Construction in Progress do not meet the four criteria for recognition of a tangible fixed asset: Dr. 152, 153 (instruments and tools) Cr. 241 - Construction in progress 2.8 Recording expenditure subsequent to initial recognition of the tangible fixed assets, such as repairing, improving and upgrading costs: - When these expenses are incurred subsequent to initial recognition: Dr. 241 - Construction in progress Cr. 112,152, 331, 334, etc - When the repairing, improving and upgrading of a tangible fixed asset are completed and the tangible fixed asset is immediately put into use: + If the increase in historical cost meets the criteria for recognition of tangible fixed assets as stated in the Vietnamese Accounting Standard: Dr. 211 tangible fixed asset Cr. 241 construction in progress + If the increase in historical cost does not meet the criteria for recognition of tangible fixed assets as stated in the Vietnamese Accounting Standard: Dr. 627, 641, 642 (if the value is small) Dr. 242 - long term prepaid expense (if net book value is significant and needs to be amortised) Cr. 241 - construction in progress 3. Guidelines on accounting for expenses that are not included in the historical costs of tangible fixed assets: For self-constructed tangible fixed assets, unreasonable expenses such as wasted materials, abnormal labour costs or other expenses in the constructing and manufacturing process are not included in the historical cost of tangible fixed assets: Dr. 111, 138, 334, etc (the compensation from organizations, individuals) Dr. 632 - Cost of goods sold Cr. 241 - Construction in progress (if self constructed) Cr. 154 - Work in-progress (if self-made) Unofficial translation by KPMG Page 6

II GUIDELINES ON THE IMPLEMENTATION OF THE VIETNAMESE ACCOUNTING STANDARD - INTANGIBLE FIXED ASSETS : 1. Guidance on the content and accounting method of Account 213 intangible fixed assets: This account is used to record the current value and the movements of the intangible fixed assets of the enterprise. An intangible fixed asset is an identifiable asset without physical substance but which can be measured, which is held for use in production or business, for rental or other uses by the enterprise and which satisfies the recognition criteria of tangible fixed assets. THE RECORDING OF THIS ACCOUNT MUST COMPLY WITH THE FOLLOWING PRINCIPLES: 1. The cost of an intangible fixed asset is the total of all expenses paid by the enterprise to acquire an asset at the time the asset is put into operation for its intended use. - The cost of an intangible fixed asset acquired separately comprises its purchase price (with the deduction of any trade discounts and rebates), taxes (not including refundable taxes) and any directly attributable expenditure incurred in preparing the asset for its intended use. - When payment for an item of intangible fixed assets is deferred beyond normal credit terms, its cost is the cash price equivalent at the date of purchase; the difference between this amount and the total payments is recognised as an expense over the period of credit, unless it is capitalised in accordance with the accounting standard Borrowing Costs. - If the intangible fixed asset is acquired in exchange for equity instruments of the reporting enterprise, the cost of the asset is the fair value of the equity instruments issued. - The cost of land use rights is the value of those rights at the time when land is transferred or the payment upon receipt of the rights from others, or value of the rights received as contribution to a joint venture. - The cost of an intangible fixed asset acquired by way of Government grant is recognised as the initial fair value plus any expenditure that is directly attributable to preparing the asset for its intended use. 2. Expenditure incurred during the development phase of a project must not be recognised as intangible fixed assets but as an expense when it is incurred. From the date that the results of development process satisfy the definition and recognition criteria of intangible fixed asset stated in the Vietnamese Accounting Standard Intangible fixed assets, expenditure is recorded in Account 241 - Construction in progress (2412). At the end of the development process, expenses in forming the intangible fixed asset in the development process must be debited to Account 213 Intangible fixed assets. 3. During the use of the intangible fixed asset, its amortisation must be debited to operating expenses as required by the Vietnamese Accounting Standard Intangible fixed assets. Unofficial translation by KPMG Page 7

4. Subsequent expenditure on an intangible fixed asset after initial recognition should be recognised as an expense when it is incurred. If the following conditions are met, the subsequent expenditure should be added to the cost of the intangible fixed asset: - It is probable that this expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standard or performance; and - This expenditure can be measured and attributed to the asset reliably 5. Expenditure incurred to provide future economic benefits to an enterprise which consists of establishment costs, expenditure on training activities; expenditure on advertising and promotional activities incurred in the pre-operating phase, expenditure in the research process and expenditure on relocating of an enterprise is recognised as an expense in the period or allocated to an expense account over a period of 3 years or fewer. 6. Expenditure on an intangible item that was initially recognised as an expense by a reporting enterprise should not be recognised as a cost of an intangible asset in a subsequent period. MJ Note: Is this a correct interpretation of the Vietnamese? 7. Internally generated brands, publishing titles, customer lists and items similar in substance should not be recognised as intangible assets. 8. Intangible fixed assets are detailed recording individual categories in the Fixed Asset Register. MJ Note: I do not follow this sentence. STRUCTURE AND CONTENTS OF ACCOUNT 213- INTANGIBLE FIXED ASSETS Debit side: Increases in historical cost of intangible fixed asset; Credit side: Decreases in historical cost of intangible fixed asset; Debit balance: Historical cost of current intangible fixed assets at the enterprise. Account 213 - Intangible fixed assets has 6 sub-accounts. - Account 2131 - Land use rights: the value of the intangible fixed asset comprises all expenses directly relating to the land used, including: money paid for the land use rights, site clearing and compensation costs (for cases in which land use rights differ and are not accompanied with any investment in buildings and structures on that land), license fee (if any), etc. Any construction on that land is not included in this account. - Account 2132 Mastheads and publishing titles: the value of the intangible fixed asset comprises expenses paid by the enterprise for the publishing title. - Account 2133 Copyrights and patents: the value of the intangible fixed asset comprises expenses paid by the enterprise for copyrights and patents. Unofficial translation by KPMG Page 8

- Account 2134 - Brand name: the value of the intangible fixed asset comprises expenses directly relating to the purchase of a brand name. - Account 2135 - Computer software: the value of the intangible fixed asset comprises expenses paid by the enterprise for computer software. - Account 2136 - Licences and franchises: the value of the intangible fixed asset comprises expenses paid by the enterprise for licences and franchises, such as: exploring licenses, licenses to produce new products, etc. - Account 2138 - Other intangible fixed assets: this comprises the value of other intangible fixed assets which have not been covered by the above accounts, such as: property rights, rights to use a contract, etc. ACCOUNTING METHODS FOR SOME MAJOR TRANSACTIONS: 1. Acquisition of an intangible fixed asset: - If the acquired intangible fixed asset is used for the production and trading of products and services which are subject to VAT: Dr 213 - Intangible fixed asset (purchasing price before VAT) Dr 133 - Deductible VAT (1332) Cr 112 - Cash at bank; or Cr 141 - Advances to employees Cr 331 - Trade creditors - If the acquired intangible fixed asset is used for the production and trading of products and services which are not subject to VAT: Dr. 213 - Intangible fixed asset Cr. 112, 331, etc 2. If the intangible fixed asset is acquired in instalments and by credit: 2.1 If the acquired intangible fixed assets is used for production and trading of products and services which are subject to VAT under the deduction method Dr. 213 - Intangible fixed asset (original cost before VAT) Dr. 242 - Long-term prepaid expenses (the interest on deferred payment, or selling price less original cost and VAT input (if any). Dr. 133 - Deductible VAT (1332) Cr. 331 - Trade creditors (total selling price) 2.2 If the acquired intangible fixed asset is used for production and trading of products and services which are not subject to VAT or are subject to VAT under the direct method: Unofficial translation by KPMG Page 9

Dr. 213 - Intangible fixed asset (historical cost after VAT) Dr. 242 - Long-term prepaid expense (the interest on the deferred payment, or selling price less original cost and VAT input) Cr 331 - Trade creditors (selling price) 2.3 Periodically, calculate and determine the interest payable for the instalment purchase of the intangible fixed asset: Dr. 635 - Expenses of financial activities Cr. 242 - Long-term prepayments 2.4 When payment is made to the supplier: Dr 331 - Trade creditors Cr 111, 112. 3. Exchanged intangible fixed assets 3.1 Intangible fixed asset exchanged for an asset of a similar nature which is immediately put into use: Upon receiving a similar intangible fixed asset in exchange for an asset and immediately bringing it in to use: Dr. 213 Intangible fixed assets (Cost of received intangible fixed assets is recorded by net book value of fixed assets given up) Dr. 214 Accumulated depreciation of fixed assets (2143) (Depreciation of fixed assets given up) Cr. 213 Intangible fixed assets (Cost of intangible fixed assets given up) 3.2 Exchange of two dissimilar intangible fixed assets: - Write off the intangible fixed assets used for exchange: Dr. 214 Accumulated depreciation and amortisation (Accumulated depreciation) Dr. 811 Other expenses (Net book value) Cr. 213 Intangible fixed assets (Cost) - Also record income on the exchange of intangible fixed assets: Dr. 131 Accounts receivable (exchanged price) Cr. 711 Other income (cost of fixed assets bring to exchange) Cr. 3331 VAT (33311) (if any) - Record the cost of new intangible fixed assets from the exchange: Dr. 213 Intangible fixed assets ( fair value of received fixed assets) MJ note: cost or fair value? Dr. 133 VAT input (1332) (if any) Cr. 131 Accounts receivable (exchange price). Additional income or expenses are recorded as noted under section II point 2.4.2. Unofficial translation by KPMG Page 10

4. Value of intangible fixed assets internally generated during the development process: 4.1. Expenses incurred during the development process are recorded under general administration expenses during the period or as long-term prepayments: Dr. 242 - Long-term prepayment (for significant values) or Dr. 642 - General administration expenses Cr. 111, 112, 152, 153, 331 4.2. A the end of the development process and when the intangible fixed assets satisfy the recognition definitions and standards: a/ Record expenses incurred in the process which are to be capitalised as the cost of intangible fixed assets: Dr. 241 Construction in progress Dr. 133 Deductible VAT (1332 if any) Cr. 111, 112, 152, 153, 331 b/ When the process is completed, the entity must determine the total expenses incurred which are to be capitalised as cost of intangible fixed assets; the record of capitalisation is as follows: Dr. 213 Intangible fixed assets Cr. 241 Construction in progress. 5. If the intangible fixed assets are purchased in the form of land use rights accompanied with buildings and structures, the entity must record separately the costs of intangible fixed assets which (i.e. land use rights), and the tangible fixed assets (i.e. buildings and structures) as follows: Dr. 211 Tangible fixed assets (Cost of buildings and structures) Dr. 213 Intangible fixed assets (Cost of land use rights) Dr. 133 VAT (1332 for fixed assets if any) Cr. 111, 112, 331... 6. Purchases of intangible fixed assets in exchange for certificates of ownership of a Joint Stock Company, in cases when the purchase cost of the intangible fixed assets is the fair value of the issued certificates of ownership: Dr. 213 Intangible fixed assets Cr. 411 Operating capital (details of capital contribution and surplus of share capital. Surplus of share capital is the difference between the fair value and the share price). 7. The cost of granted, donated or gifted intangible fixed assets which are immediately put in use for business operations: Unofficial translation by KPMG Page 11

7.1 Receipt of the granted, donated or gifted intangible fixed assets: Unofficial translation by KPMG Page 12

Dr. 213 Intangible fixed assets Cr. 711 Other income Expenses incurred relating to granted, donated or gifted intangible fixed assets: Dr. 213 Intangible fixed assets Cr. 111, 112... 7.2 The record of corporate income tax payable (if any) on the cost of granted, donated of gifted intangible fixed assets: Dr. 421 Retained earnings Cr. 333 Tax and other payables to State Budget (3334) 7.3 After deducting corporate income tax payable (if any) on the cost of granted, donated or gifted intangible fixed assets, record the increment of operating capital: Dr. 421 Retained earning Cr. 411 Operating capital (details of operating capital) 8. Cost of land use rights contributed by joint venture parties based on land use rights handover, record: MJ Note this is not clear Dr. 213 Intangible fixed assets Cr. 411 Operating capital. 9. Record of items credited to intangible fixed assets - research expenses, goodwill and establishment expenses - prior to issuance of the new Vietnamese Accounting Standards: - If net book value of these intangible fixed assets is fully written off to the expenses of the period: Dr. 627, 641, 642 (Net book value) Dr. 214 Accumulated depreciation and amortisation (Depreciated amount) Cr. 213 Intangible fixed assets (Cost) - If net book value of these intangible fixed assets is significant, transfer to long-term prepayments account for allocation over the following financial years: Dr. 242 Long-term prepaid expenses Dr. 214 Accumulated depreciation and amortisation (Depreciated amount) Cr. 213 Intangible fixed assets (Cost) 10. Accounting for the sale and disposal of intangible fixed assets is as accounted for in the same way as the sale and disposal of tangible fixed assets (See details in account 211). Unofficial translation by KPMG Page 13

2. Additional guidelines on accounting for amortisation of intangible fixed assets At the end of financial year, enterprises reconsider the term and method of amortisation of intangible fixed assets. If there was any change in the amortisation rate, the adjustment entries of amortisation are as follows: - If there is an increase in amortisation during the year, which was due to changes in the method and/or term of amortisation of intangible fixed assets, the increase would be recorded: Dr. 627, 641, 642 (the increased charge of amortisation) Cr. 214 Accumulated amortisation (2143) - If there is an decrease in amortisation during the year, which was due to changes in the method and/or term of amortisation of intangible fixed assets, the decrease would be recorded: Dr. 214 - Accumulated amortisation (2143) Cr. 627, 641, 642 (the decreased charge of amortisation) 3. Supplement account 242 Long-term prepaid expenses This account is used for expenses incurred related to the business result of operations for several financial years and the transfer of these expenses to operating costs for the following accounting periods. Long-term prepaid expensesinclude: - Prepaid expenses for operating leased fixed assets (land use rights, plant, warehouse, office, shop and other fixed assets) used for business operations over multiple years; - Lease payments for infrastructure prepaid for multiple years; - Prepaid expenses used for business operation for multiple years; - Establishment expenses and advertising expenses incurred in the pre-operating period; - Research expense costing a significant amount of money; - Expenses incurred in the development period that not do not qualify to be capitalized as intangible fixed assets; - Training expenses for managers, staff and technical workers; - Re-allocation expenses or re-structuring expenses; - Goodwill arising on business acquisitions or mergers; - Insurance premiums (fire, explosion, civil liability for vehicle owners, vehicle insurance, assets insurance, etc.) and other one off fees for multiple years; - Tools and supplies under current assets for one time use with a significant value and the tools and supplies themselves that are used for business operations for more than one year must be allocated to costs under multiple years. - Interest arising on purchase on credit, mortgages and financial leases of fixed assets; - Significant repair and maintenance expenses that are incurred once with a significant amount to be allocated and amortized over many years; - Others. Unofficial translation by KPMG Page 14

THE RECORDING OF ACCOUNT 242 MUST COMPLY WITH THE FOLLOWING PRINCIPLES 1- Only record in account 242 those expenses incurred relating to operating results for more than one financial year; 2- If the above expenses are related to the current financial year only, they must be recorded immediately in the operating expenses of current financial year and not be reflected in the account 242 Long term prepaid expenses. 3- The calculation and allocation of long term prepaid expenses to each accounting period must be based on the nature and level of expenses to choose the appropriate method and criteria. 4- Accountants have to keep track in detail of each item in long term prepaid expenses that have been incurred and allocated to each accounting period and the remaining unallocated balance. STRUCTURE AND CONTENTS OF ACCOUNT 242 LONG TERM PREPAID EXPENSES. Debit side: Long term prepaid expenses actually incurred during the period. Credit side: Long term prepaid expenses that have been allocated to operating expenses during the period. Debit balance: Long term prepaid expenses that have not been allocated to operating expense of the period. ACCOUNTING METHODS FOR SOME MAJOR ECONOMIC TRANSACTIONS 1. When long term prepaid expenses occur such as establishment costs, staff training expenses, advertising expenses in the pre-operating period, research expenses or reallocation expenses. a/ If the expenses are insignificant, directly record these expenses to the operating expenses. Dr. 641 Selling expenses (advertising expense) Dr. 642 General administration expenses (establishment expense, staff training expense, research expense, etc.) Dr. 133 Deductible VAT (If any) Cr. 111, 112, 152, 153, 331, 334... Unofficial translation by KPMG Page 15

b/ If the expenses are significant and to be allocated to multiple years, then record those expenses under account 242 Long term prepaid expenses : Dr. 242 Long term prepaid expenses Dr. 133 Deductible VAT (if any) Cr. 111,112, 152, 331, 334, 338,... c/ Periodically allocate long term prepaid expenses to operating expenses: Dr. 641, 642 Cr. 242 Long term deferred expenses. 2. In case of leasing fixed assets or infrastructure, when a prepayment for multiple years and operating cycles is made: Dr. 242 Long term prepaid expenses Dr. 133 Deductible VAT Cr. 111, 112... Periodically allocate the leasing of fixed assets and infrastructure: Dr. 635, 642 Cr. 242 Long term prepaid expenses. 3. In respect of instruments and tools issued for one time use with significant value, which must be allocated to operating expenses, the following 2 methods can be applied: - Allocate twice - Allocate multiple times. 3.1. If allocating twice: When issuing instruments and tools based on goods issued notes: Dr. 242 Long term prepaid expenses Cr. 153 Instruments and tools At the same time, carry out the initial allocation (equal to 50% of the value of instruments and tools issued) to operating expenses. Dr. 627, 641, 642 Cr. 242 Long term prepaid expenses When there is a notice of impairment, losses or use, the remaining value of instruments and tools is charged to operating expenses according to the following formula: Unofficial translation by KPMG Page 16

Amount to be allocated = Value of impaired tools - Scrap value - Compensation on the second occasion 2 (if any) (if any) Accounting record entries: Dr. 152 - Raw materials (Scrap value, if any) Dr. 138 - Other receivables (Compensation) Dr. 627,641, 642 (amount of second allocation) Cr. 242 - Long term prepaid expenses (amount of second allocation) 3.2. If multiple allocations: When instruments and tools for rent are issued for use, the accounting must be based on their value and the times and extent to which these tools are involved in the operation, in order to determine the number of times of allocation and the allocating amount for each type of instruments and tools. The basis for determining the allocation amount at each time can be the duration of use or volume of products or services that instruments and tools are involved in producing in each accounting period. Accounting method is the same as in the case of allocating twice. In both cases of allocating twice and multiple allocations, accountants have to keep track of the expense to ensure that the total allocated expenses are appropriate in comparison with actual incurred expenses and cost centres. 4. Credit purchase of intangible fixed assets must comply with the principles in section 2.1 part II Guidance to accounting standards Tangible fixed assets IV GUIDELINES ON THE IMPLEMENTATION OF THE VIETNAMESE ACCOUNTING STANDARD - REVENUE AND OTHER INCOME 1. Correction: Abolish the phrase Sales discounts in paragraph 6 of accounting standard Revenue and other income under decision No 149/2001/QD/BTC dated 31/12/2001 issued by Minister of Ministry of Finance. 2. Revenue accounting: 2.1 Account type 5: Revenue Account type 5 is used for total revenue of the business in the reporting period. Revenue is the gross inflows of economic benefits during the period arising in the course of the ordinary activities of an enterprise when those inflows result in increases in equity. Unofficial translation by KPMG Page 17

The amount of revenue arising on a transaction is usually determined by agreement between the enterprise and the buyer or user of the asset. It is measured at the fair value of the consideration received or receivable taking into account the amount of any sales discounts, sales rebates and sales returns. THE RECORD OF THIS ACCOUNT MUST COMPLY WITH THE FOLLOWING PRINCIPLES: 1- Revenue and expenses relating to the same transaction must be recorded together under the matching concept and in the same accounting period. 2- Revenues in the accounting period are only recorded when all the conditions of revenue recognition have been satisfied for revenues from sale of goods, revenues from rendering of services, interest revenue, copyright revenue, dividend revenue and shared profit according to points 10, 16 and 24 of the accounting standard Revenue and other income (Decision No. 143/2001/QD BTC dated 31/12/2001 issued by Ministry of Finance) and other prevailing accounting regulations. 3- Where goods or services are exchanged or swapped for goods or services which are of similar nature and value, the exchange is not regarded as a transaction which generates revenue. 4- Revenues (including intra-company revenue) must be separately recorded under the following accounts: revenues from sales of goods, revenues from services rendered, interest revenue, copyright revenue from sales, dividends received. In addition, each of these must be analysed. Details of revenue from sales of goods, for example, might be analysed into revenues from sales of merchandise and revenues from sales of finished goods...mj Note is something missing here? to ensure the completeness of revenues in order to support the management purposes and preparation of the income statement. 5- The deduction of items such as sales discounts, sales rebates and sales returns must be recorded separately. The items are deducted from gross sales. 6- In the principal accounts, the entity must determine the operating results at the end of the accounting period. A total net sale is credited to account 911 Income Summary. Revenue accounts are rendered nil balances at the end of each accounting period. There are six revenue accounts, grouped in three categories: a) Group account 51 includes 3 sub-accounts: - Account 511 Revenue (including revenue from sales of goods, from services and from government grants) - Account 512 Intra-company revenues - Account 515 Income from financial activities b) Group account 52 there is only one account: - Account 521 Sales discounts c) Group account 53 includes 2 sub-accounts: - Account 531 Sales returns; - Account 532 Sales rebates. Unofficial translation by KPMG Page 18

Unofficial translation by KPMG Page 19

2.2 Account 511 Revenue a. Rename Account 511 from Sales revenue to Revenue b. Content of Account 511 Revenue This account is used to reflect an enterprise s revenue from sales of goods or rendering of services to customers arising during an operating period from the following transactions and events: - The sales of goods: Sales of products produced and of merchandise purchased by the enterprise. - The rendering of services: The implementation of work formally agreed for one or more accounting periods, such as providing services of transportation, tourism, operating leasing, etc. Revenue is defined as the amount received or receivable by the enterprise from sales of goods or rendering of services to customers, including extra-charge and surcharge (if any). In the case of an enterprise gaining revenue in foreign currencies, the amount so earned shall be translated into Vietnam Dong using the rate at the date of transaction or the average inter-bank rate announced by the State Bank. Net sales earned by an enterprise may be less than the gross sales revenue as a result of recording sales discounts and sales rebates and sales returns (which could result from the fact that the quality or specification of the goods are not in compliance with the quality or specification stated in the economic contracts) and contributions to special consumption tax, export duty, VAT under the method of direct calculation on value added, in respect of the sales of goods in the period. THE RECORD OF THIS ACCOUNT MUST COMPLY WITH THE FOLLOWING PRINCIPLES: 1. Account 511 Revenue shall be the revenue of goods sold or services rendered, which have actually been earned in the period regardless of whether cash is received or receivable. 2. Accounting for revenue shall adhere to the following principles: - Where sales of products, goods and services are subject to VAT under the deduction method, revenue is recorded at the price before VAT; MJ Note: before or after? - Where sales of products, goods and services are not subject to VAT or subject to VAT under the method of direct calculation on value added, revenue is recorded at the gross price; - Where sales of products, goods and services are subject to export duty or special consumption tax taxable of special sales tax, revenue is recognised based on the gross price (including special consumption tax, or export duty); - If the entity produces or processes goods for another entity, it should only record as revenue the fees received from the entity to produce such goods; - If the entity acts as a sales agent for another entity, only its commissions from sales should be recorded as revenue; - If revenue is received in installments, the entity must only record the selling price in its revenue account. Interest receivable should be considered as income from financial activities; Unofficial translation by KPMG Page 20

- For goods and merchandise which have been sold and recognised as sales but which, for some reason (quality, style, specification), are declined for payment, returned or for which allowance is required by the customer and accepted by the enterprise, this sales shall be recorded in separate sub-accounts 531 Sales returns or account 532 Sales rebates or account 521 Sales discounts ; - If the sales invoice has been issued to customers and payment has been received but the goods have not yet been delivered to the customer, this amount should not be considered as revenue and instead should be credited to account 131 "Receivables from customers". Once the goods sold are delivered to the customer, the selling price should be recognised as revenue and credited to account 511 "Revenue"; - If there is a prepayment of leasing fees for property and infrastructure for a number of years, each year s revenue shall be the total prepayment divided by the number of years prepaid; - For an enterprise engaged in providing products, goods and services as required by the Government, which will subsidise the engagement under current regulations, the subsidy revenue shall be the amount advised or granted by the Government. The subsidy revenue is recorded under account 5114 Revenue from government grants ; - The following circumstances are not to be recorded as sales: Goods, materials or work in progress which have been produced by another entity; Goods, work in progress and services provided from one branch to another, or from one company to another in the same corporation (inter-company products, work in progress and services); The amount received from selling or liquidating fixed assets; The amount of goods on consignment or services rendered for which payment has not yet been accepted by the customer; The amount of the company's goods held at a sales agent (which are not considered as revenue); Other income which is not considered as revenue. c. Structure, content and accounting method for major transactions under account 511 Revenue and creation of sub-accounts are stipulated to be the same as requirements for the account 511 Sales revenue in the Vietnamese Accounting System for Enterprises (attached to Decision No. 1141/TC/QD/CDKT dated 1/11/1995 of Ministry of Finance and other Circulars amendingand supplementing the Vietnamese Accounting System). VAT under the method of direct calculation on value added incurred during the period, is credited to account 3331 VAT and debited to account 511 Revenue. ACCOUNTING METHODS FOR SOME MAJOR TRANSACTIONS 1. Installments and credit sales: a. Where goods sold are subject to VAT under the deduction method: - When the company records its revenue by installments, the first installment, amount receivable and interest are recorded as follows: Unofficial translation by KPMG Page 21

Dr. 111, 112, 131 (total selling price) Cr. 511 Revenue (5113 - cash price before VAT) Cr. 333 Taxes and other payables to State budget (3331 VAT ) Cr. 3387 Deferred revenue (remaining balance of total selling price before VAT less cash price) - When the following installments are received, record as: Dr. 111, 112, Cr. 131 - Receivables from customers - Record of interest on the outstanding payments: Dr. 3387 Deferred revenue Cr. 515 Income from financial activities (Interest on the amount due) b. Where goods sold are not subject to VAT or subject to VAT under the method of direct calculation on value added: - When the company records its revenue by installments, the first installment, amount receivable and interest are recorded as follows: Dr. 111, 112, 131 Cr. 511 Revenue (first installment including VAT) Cr. 3387 Deferred revenue (remaining balance of total selling price less first installment including VAT) - When the following installments are received, record as: Dr. 111, 112 Cr. 131 Receivables from customers - Record of deferred interest on the outstanding payments: Dr. 3387 Deferred revenue Cr. 515 Income from financial activities (Interest on the amount due) 2. Account for VAT under the method of direct calculation on value added: At the end of the accounting period, accountant determines the VAT under the method of direct calculation on value added and records VAT payable as follows: Dr. 511 "Revenue" Cr. 3331 "VAT " 2.3 Account 3387 Deferred revenue Rename account 3387 from Prepaid revenue to Deferred revenue This account is used for deferred revenue of an entity in the accounting period. Unofficial translation by KPMG Page 22

Deferred revenue includes: - The amount received on prepayments over more than one year for operating lease fixed assets - The remaining balance of a total selling price less the first installment - Interest received in advance for providing financial facilities (bonds, stocks, etc.) THE RECORD OF THIS ACCOUNT MUST COMPLY WITH THE FOLLOWING PRINCIPLES: - For the instalment sales, revenue should be recognized at cash price at the point of revenue recognition.. - Cash price shall be determined by discounting the nominal value of future receivable amounts to the net present value at the point of revenue recognition using the effective interest rate and cash price is credited to account 511 Deferred revenue. Deferred revenue will be recorded as revenue for the period as stipulated in the paragraph 25(a) in Standard Revenue and others income. MJ Note: I am not sure I follow this. - When receiving the prepaid amount for the operating lease of fixed assets for multiple years, this prepaid amount is recorded as deferred revenue. And it will be equally credited to the "Revenue" account in following years. Debit side: STRUCTURE AND CONTENTS OF ACCOUNT 3387 DEFERRED REVENUE Transfer to Account Revenue, or Account Income from financial activities (interest, royalty fee, dividends). Credit side: Deferred revenue incurred in the accounting period. Credit balance: Deferred revenue at the end of the accounting period. 1. Credit and installment sales ACCOUNTING METHODS FOR SOME MAJOR TRANSACTIONS: a. Where goods sold are subject to VAT under the deduction method: When performing an installment sale, sales and service revenue in the accounting period is recorded at the first installment, the remaining balance of the total selling price less first installment of account Deferred revenue. Unofficial translation by KPMG Page 23

Dr. 111, 112, 131 Cr. 511 - Revenue (first installment before VAT) Cr. 3387 - Deferred revenue (Remaining balance of total selling price before VAT less first installment) Cr. 333 - Taxes and other payables to State Budget (3331 VAT). - Periodically calculate and allocate the interest on installments as follow: Dr. 3387 - Deferred revenue Cr. 515 Income from financial activities - When receiving the installment payment, including the difference between selling price and first installment, record: Dr. 111, 112 Cr. 131 Receivables from customers b. Where goods sold are not subject to VAT or subject to VAT under the method of direct calculation on value added: - Revenue is recorded at the first installment; the remaining balance of total selling price less first installment is recorded as Deferred revenue. Dr. 111, 112, 131 Cr. 511 - Revenue (first installment including VAT) Cr. 3387 Deferred revenue (remaining balance of total selling price less first installment including VAT) - At the end of the period, determine the VAT payable under the method of direct calculation on value added: Dr. 511 - Sales and service revenue Cr. 3331 VAT payable - Periodically calculate the interest on installments and record as: Dr. 3387 Deferred revenue Cr. 515 Income from financial activities - When receiving the installment including interest: Dr. 111, 112 Cr. 131 Receivables from customers Unofficial translation by KPMG Page 24

2. Accounting for deferred revenue on operating leases of fixed assets: The revenue for a period is equal to the total prepayment received divided by the number of lease years. When receiving the prepayment for number of lease years, record: a. In the case of an enterprise registered recording tax under the deduction method: - Record of pre-payment received from lessee for multiple years: Dr. 111, 112 (total prepayment received) Cr. 3387 Deferred revenue (total price before VAT) Cr. 3331 VAT - Also record the revenue for the current period: Dr. 3387 - Deferred revenue Cr. 511 - Revenue - In the following accounting periods, revenue will be recognised as follows: Dr. 3387 - Deferred revenue Cr. 511 - Sales and service revenue (revenue in the accounting period) - When the lease agreement is terminated or annulled, record the refund amount: Dr. 3387 - Deferred revenue (before VAT) Dr. 531 Sales returns (where sales are recognised before VAT) Dr. 3331 VAT payable (refund to lessee concerning tax) Cr. 111, 112, 3388 (total amount paid or payable) b. In the case of an enterprise registered recording tax under the direct method: - Record of prepayments received from lessee for multiple years: Dr. 111, 112 (total prepayment received) Cr. 3387 Deferred revenue (total prepayment received) - For revenue recognised in the period: Dr. 3387 Deferred revenue Cr. 511 Revenue - In the following accounting periods, revenue will be recognised as follows: Unofficial translation by KPMG Page 25

Dr. 3387 - Deferred revenue Cr. 511 - Revenue (revenue in the accounting period) - Reflecting the VAT payable under the direct method: Dr. 511 Revenue Cr. 3331 VAT - When the lease agreement is terminated or annulled, record the refunded amount: Dr. 3387 - Deferred revenue (net of VAT) Cr. 111, 112, 3388 (total amount paid or payable) 2.4 Rename account 512 from Inter-company sales revenue to Intra-company revenue This account is used for sales revenue from goods sold and services rendered among units of a business entity. Structure, contents and accounting methods for major transactions of this account are stipulated to be the same as requirements in the Vietnamese Accounting System (attached to Decision No. 1141/TC/QD/CDKT issued by Ministry of Finance on 1/11/1995). 2.5 Supplement account 515 Income from financial activities This account is used for interest, royalties, dividends and other income from financial activities. Income from financial activities includes: - Interest income from: capital loans, bank accounts, credit and installment sales, discounts received from purchase of materials, goods and services, and financial leasing; - Income from operating leases of intangible fixed assets and giving rights to use assets (copyrights, trademarks, goodwill, computer software); - Income from capital contributions and joint ventures; - Income from investments in short- and long-term securities; - Income from operating leases of tangible fixed assets; - Income from other investment activities; - Income from foreign currency and exchange activities; - Income from transferring capital; - Other income Unofficial translation by KPMG Page 26