220 Government Finance Statistics Manual 2014
- If the asset is acquired from the producing unit
as a fi nished good, then the timing is determined
in the same manner as for the purchase of an ex-
isting asset—that is, when economic ownership
changes hands. Typically, this time is not the time
at which the asset was produced or the time at
which it is put to use in production. - When another unit produces buildings and
structures under a contract of sale agreed in ad-
vance with the general government unit, and the
production extends over more than one report-
ing period, then ownership of the structure is
deemed to be transferred to the government unit
as work proceeds; stage or progress payments
may approximate the value of the transactions in
fi xed assets to be recorded.^10 In the absence of a
contract of sale, the incomplete production each
period is added to work in progress of the con-
tractor (see also paragraph 7.37). - When production is carried out on own account,
there is no formal transfer of ownership. Th e pro-
ducing unit eff ectively takes possession progres-
sively as production proceeds, so that the asset is
acquired as each transaction involved in its pro-
duction is recorded. For example, if a government
unit constructs a building using its own work-
force, then each use of goods and services and
work performed by employees is classifi ed as an
acquisition of the fi xed asset as work takes place.
8.16 Consumption of fi xed capital, in principle,
should be recorded continuously throughout each
reporting period. In practice, consumption of fi xed
capital can be computed only aft er the end of the re-
porting period because its value depends on the aver-
age price of the asset over the entire reporting period
(see paragraphs 6.53–6.61).
8.17 Fixed assets acquired or disposed of by means
of a fi nancial lease are deemed to be acquired or dis-
posed of when the lease is signed or economic control
of the asset otherwise changes hands.
Consumption of Fixed Capital.
8.18 Consumption of fi xed capital is an internal
transaction that refl ects the fact that an institutional(^10) A transaction in other accounts receivable/payable is recorded
if the value of the stage payment exceeds the value of the work
put in place. As work proceeds, an acquisition of fi xed assets is
recorded by the fi nal owner until the other accounts receivable/
payable are exhausted.
unit used up a portion of each of its fi xed assets through
its productive activities during the reporting period
and the value of those assets declined correspondingly.
As a result, consumption of fi xed capital (23), which is
recorded as an expense, is also recorded as a transac-
tion that reduces the value of the respective category
of fi xed asset, so that there is no impact on expenditure
nor net lending/net borrowing (see paragraph 4.20).
Th e recording of consumption of fi xed capital is dis-
cussed in detail in paragraphs 6.53–6.61 and Box 6.1.
Netting of Transactions
8.19 It is recommended that transactions in non-
fi nancial assets other than inventories be presented
as acquisitions, disposals, and consumption of fi xed
capital, as indicated in Table 8.1. Th e net investment
in a category of nonfi nancial assets is computed as
acquisitions minus disposals minus consumption of
fi xed capital.
8.20 Acquisitions of, use of, and disposals of in-
ventories should be netted because the separate data
for acquisitions and disposals are not economically
meaningful. In addition, as a matter of practice, it is
oft en impossible to estimate individual transactions
in inventories (see paragraphs 8.44–8.47). Inventories
are not subject to consumption of fi xed capital.Classifi cation and Recording of Transactions in Nonfi nancial Assets.
8.21 Th e classifi cation of transactions in nonfi nan-
cial assets is shown in Table 8.1. Th e table summarizes
transactions in nonfi nancial assets as acquisitions,
disposals, and consumption of fi xed capital.
8.22 Th e classifi cation of transactions in nonfi nan-
cial assets is identical to the classifi cation of stock po-
sitions in nonfi nancial assets employed in Chapter 7
(Table 7.2). Chapter 7 also provides full defi nitions of
the assets included in each category, and those defi -
nitions are not repeated here. Th is chapter provides
guidance applicable to transactions aff ecting all or
most categories of nonfi nancial assets. Th e remain-
der of this section provides guidance only on those
transactions for which the general guidance may not
be suffi cient.
8.23 In addition to the classifi cation of transac-
tions in nonfi nancial assets described in this chapter,
the Classifi cation of the Functions of Government
(COFOG) can also be applied to the acquisitions