Learn about account 711 – other income, how to account for account 711: liquidation of fixed assets, recovery of bad debts that have been written off, collection from contract compensation…
I. Accounting principles
Other income accounts are used to record income outside the normal production and business activities of the unit, including the following:
- Income from sale or liquidation of fixed assets;
- The difference between the fair value of assets divided from the business cooperation contract (BCC) is higher than the investment cost of constructing jointly controlled assets;
- Revenue from profits from revaluation of fixed assets, materials, goods invested in associated companies or contributed to joint ventures and other investments;
- Income from sale and leaseback of assets;
- Refundable export taxes, value added tax, special consumption tax, environmental protection tax payable but then reduced or refunded;
- Collect fines from customers who violate economic contracts;
- Collect compensation from a third party for lost property. For example: insurance compensation…;
- Collect receivables from bad debts that have been written off;
- Collection from customer debts with unidentified payer;
- Revenue from customer bonuses from the consumption of goods, products and services not included in revenue;
- From gifts, donations in kind or money from organizations and individuals;
- Promotional goods value does not have to be returned to the supplier;
- Other income than those listed above.
II. Instructions on how to account for account 711 – Other income
1. Structure and content of reflection
➤ Debtor:
- Value added tax payable (if any) on other income arising during the period for enterprises paying value added tax by the direct method;
- At the end of the period, transfer other income during the period to account 911 – Determine business results
➤ The party with:
- Record other income arising during the period;
➨ Other income account – Account 711: no ending balance.
2. Instructions for accounting for common occurrences
| Income from sale or liquidation of fixed assets | ➤ Record the amount from liquidation and sale:
– Debit account: 111/112/131 – Total payment amount – Credit account: 711 – Amount received from liquidation and sale (excluding VAT) – Credit account: 3331 – VAT payable (if any) ➤ Costs arising from liquidation and sale of fixed assets: – Debit account: 811 – Incurred expenses excluding VAT – Debit account: 1331 – VAT incurred – Credit account: 111/112/141/331 – Total payment ➤ Record reduction in original value of fixed assets from liquidation and sale: – Debit account: 214 – Value of depreciated fixed assets liquidated, sold – Debit account: 811 – Remaining value of liquidated and sold fixed assets – Credit account: 211/213 – Original price of liquidated and sold fixed assets |
| Amounts received from donations from individuals/organizations in kind or cash | – Account Debit: 152/153/156/211/111/112…
– Account: 711 |
| Collect compensation from third parties for lost property.
For example: insurance compensation… |
➤ Receive compensation:
– Account Debit: 111/112… – Account: 711 ➤ Expenses incurred in connection with handling damages: – Debit account: 811 – Incurred expenses – Debit account: 1331 – Account number: 111/112/331… |
| Recovered receivables from bad debts that have been written off | ➤ For bad debts that have been written off and now have been collected, based on the debt cancellation minutes:
– Debit account: 2293 – if provision for doubtful debts has been made – Debit account: 6422 – if no provision for doubtful debts has been made – Account: 131 ➤ When collecting from bad debts: – Account Debit: 111/112… – Account: 711 |
| Export taxes that are refundable, value added tax, special consumption tax, environmental protection tax that must be paid but are later reduced or refunded | ➤ When the enterprise receives a tax refund decision from the tax authority:
– Debit account: 3331/3332/3333… – Account: 711 ➤ When receiving refund from the State budget: – Account Debit: 111/112 – Account number: 3331/3332/3333… |
| When the promotion program ends, if the promotional goods are not used up and do not have to be returned to the manufacturer or distributor, other income is recorded. | – Account Debit: 156
– Account: 711 |
| Liabilities with unidentified creditors, when written off and included in other income | – Account Debit: 331/338
– Account: 711 |
| When the construction warranty period expires, if the amount of reserve to be returned for construction warranty is greater than the actual cost incurred or is not covered by warranty, the unused reserve to be returned for construction warranty must be refunded. | – Account Debit: 352
– Account: 711 |
| At the end of the period, calculate and account for the value added tax payable by the direct method of other income. | – Debit account: 711
– Account number: 33311 |
| At the end of the period, transfer other income during the period to account 911 – Determine business results | – Debit account: 711
– Account number: 911 |
III. Frequently asked questions about account 711 – Other income
1. What are the differences and similarities between sales revenue, service provision revenue and other income?
➤ Similarities: terms of economic benefits that the business receives during the business operation period
➤ Other points:
- Sales and service revenue are revenues from normal production and business activities:
- Selling products manufactured by the enterprise, selling purchased goods…;
- Perform work as agreed in the economic contract;
- Other income is income outside of normal production and business activities: income from liquidation of fixed assets, income from contract compensation, etc.
2. If a business liquidates assets and issues VAT invoices to customers, is this revenue considered sales revenue or other income?
Proceeds from the liquidation of corporate assets are recorded in other income.
3. If a business has monthly revenue from distributor sales bonuses, which account should this revenue be recorded in?
Revenue from distributor sales bonuses will be recorded in other income – account 711.