ANNUAL REPORT 2024
TOGETHER IN BELIEF, LEADING IN INNOVATION
196
197
Tangible fixed assets
Depreciation and amortization
Depreciation of tangible fixed assets and amortization of intangible assets are calculated on a straight-line basis over the estimated useful life of each asset as follows:
Tangible fixed assets are stated at cost less accumulated depreciation. The cost of a tangible fixed asset comprises its purchase price and any directly attributable costs of bringing the tangible fixed asset to working condition for its intended use and the costs of dismantling and removing the asset and restoring the site on which it is located, if any. Expenditures for additions, improvements and renewals are added to the carrying amount of the assets and expenditures for maintenance and repairs are charged to the consolidated income statement as incurred. When tangible fixed assets are sold or retired, any gain or loss resulting from their disposal (the difference between the net disposal proceeds and the carrying amount) is included in the consolidated income statement. The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset and the arrangement conveys a right to use the asset. A lease is classified as a finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the asset to the lessee. All other leases are classified as operating leases. Rentals under operating leases are charged to the consolidated income statement on a straight-line basis over the lease term.
Buildings and structures 4 - 39 years Machinery and equipment 2 - 12 years
Means of transportation
Software 2 - 8 years Others 2 - 15 years
Office equipment 3 - 12 years 3 - 8 years
Land use rights with definite useful lives are amortized over the terms stipulated in their land use rights certificates whereas land use rights with the infinite useful lives are not amortized. Construction in progress represents the costs of acquiring new assets that have not yet been fully installed or the costs of construction that have not yet been fully completed. Construction in progress is stated at cost, which includes all necessary costs to construct, repair, renovate, expand, or re-equip the projects with technologies, such as construction costs, tools and equipment costs, project management costs, construction consulting costs, and borrowing costs that are eligible for capitalization.
Construction in progress
Leased assets
Construction in progress will be transferred to the appropriate fixed asset account when these assets are fully installed or the construction project is fully completed, and depreciation of these assets will commence when they are ready for their intended use. Construction costs are recognized as expenses when such costs do not meet the conditions to be recognized as fixed assets. Borrowing costs Borrowing costs consist of interest and other costs that the Group incurs in connection with the borrowing of funds and are recorded as expense during the year in which they are incurred. Prepaid expenses Prepaid expenses are reported as short-term or long-term prepaid
Where the Group is the lessee
Intangible assets
expenses on the consolidated balance sheet and amortized over the period for which the amounts are paid or the period in which economic benefits are generated in relation to these expenses. The prepaid land rental represents the unamortized balance of advance payment made in accordance with contracts of land use right transfer as below:
Intangible assets are stated at cost less accumulated amortization.
The cost of an intangible asset comprises its purchase price and any directly attributable costs of preparing the intangible asset for its intended use. Expenditures for additions, improvements are added to the carrying amount of the assets and other expenditures are charged to the consolidated income statement as incurred. When intangible assets are sold or retired, any gain or loss resulting from their disposal (the difference between the net disposal proceeds and the carrying amount) is included in the consolidated income statement. Land use rights are recorded as intangible assets when the Group obtained the land use rights certificates. The costs of land use rights comprise all directly attributable costs of bringing the land to the condition available for intended use. The advance payment for land rental, of which the land lease contracts have effectiveness prior to 2003 and Land use right certificate being issued, are recorded as intangible fixed asset according to Circular No. 45/2013/TT-BTC issued by the Ministry of Finance on 25 April 2013 guiding the management, use and depreciation of fixed assets (“Circular 45”).
Prepaid land rental
Vibe and Move Vietnam Company Limited dated 26 October 2016 for land plot No. 441 located in Thai Hoa ward, Tan Uyen city, Binh Duong province for a period of 39 years and 5 months; Nguyen Van Phan and Nguyen Thi Hue dated 31 January 2007 for land plot located in Thai Hoa ward, Tan Uyen city, Binh Duong province for a period of 43 years and 11 months; and
Le Thi Kim Cuc and Le Duc Nghia dated 16 June 2016 for land lot No. 218 located in Thai Hoa ward, Tan Uyen city, Binh Duong province for a period of 49 years and 5 months; Stock Company dated 11 November 2017 for land plot No. 818 and No. 820 located in Dat Cuoc commune, Bac Tan Uyen disrict, Binh Duong province for a period of 38 years and 9 months. Binh Duong Mineral and Construction Joint
Land use rights
Such prepaid rental is classified as long-term prepaid expenses for allocation to the consolidated income statement over the remaining lease period, according to Circular 45.
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