Circular No. 48/2019/TT-BTC date 08th August, 2019 by the Finance of Ministry guiding the appropriation and use of Provisions for devaluation of inventories, loss of financial investments, bad receivable debts and warranty for products, goods and construction work at enterprises, that takes effect from 10 October 2019 and applies for the fiscal year 2019, replaces the Circular No. 228/2009/TT-BTC and all amended Circular for Circular No. 228/2009/TT-BTC.
According Clause 3, Article 4 in Circular No. 48/2019/TT-BTC:
“3. When making financial statement, based on the enterprise’s documents proving that the original price of inventory is higher than their net realizable price and regulations prescribed in Clauses 1 and 2 of this Article, enterprises shall make provision as follows:
Making provision for devaluation of inventories from 2019 need to comply with the regulation at Article 4 in Circular No. 48/2019/TT-BTC and the Company does not make provision for devaluation of services and work in progress. When record additional or reversal provision need to comply with the Clause 3, Article 4 in Circular No. 48/2019/TT-BTC
According Clause 1, Article 4 in Circular No. 48/2019/TT-BTC:
“1. Provisions shall be made for devaluation of materials, tools, equipment, goods, goods in transit, goods dispatched for sale, goods stored in tax-suspension warehouse, finished goods (hereinafter referred to as inventory) which have their book original prices are higher than the net realizable value and:
- There are lawful invoices and documents according to the Finance Ministry's regulations or other documents which can prove their costs.
- They are owned by the stocking enterprise at the time of making financial statements.”
Therefore, just making provision for devaluation of materials, tools, equipment, goods, goods in transit, goods dispatched for sale, goods stored in tax-suspension warehouse, finished goods.