Government Finance Statistics Manual 2014

222 Government Finance Statistics Manual 2014

Table 8.1 Classifi cation of Transactions in Nonfi nancial Assets (concluded)

Acquisitions of Disposals of

Consumption of

fi xed capital^1

Net investment

in nonfi nancial

assets

Intangible nonproduced assets 3144.1 3144.2 3144

Contracts, leases, and licenses 31441.1 31441.2 31441

Marketable operating leases 314411.1 314411.2 314411

Permits to use natural resources 314412.1 314412.2 314412

Permits to undertake specifi c activities 314413.1 314413.2 314413

Entitlement to future goods and

services on an exclusive basis

314414.1 314414.2 314414

Goodwill and marketing assets 31442.1 31442.2 31442

Memorandum items

Own-account capital formation 3M1

Compensation of employees 3M11

Use of goods and services 3M12

Consumption of fi xed capital 3M13

Other taxes on production minus other

subsidies on production

3M14

(^1) Consumption of fi xed capital is not recorded for inventories. It is recorded for nonproduced assets only to the extent of costs of ownership
transfer on nonproduced assets other than land (a fi xed asset). For land, the costs of ownership transfer are included, by convention, with
land improvements (a fi xed asset).
(^2) In GFS, only the net changes in inventories resulting from transactions are recorded, but gross acquisitions and disposals may be recorded, if
needed.
minus disposals of these assets. COFOG is described
in the annex to Chapter 6.
Fixed Assets (311)^11
8.24 Th e cost of acquisition of assets from third par-
ties is determined by the market price of the transac-
tions. Government or public sector units can also incur
costs associated with the production or the mainte-
nance of fi xed assets. To determine the amount of these
costs that should be recorded as the value of own-
account production of fi xed assets during the reporting
period, a distinction between major improvements of
assets and maintenance of assets is necessary. Th e sec-
tion on Fixed Assets fi rst describes how to distinguish
transactions that should be recorded as acquisitions of
fi xed assets from transactions that should be recorded
as expense related to maintenance. Th e recording of
transactions in specifi c categories of assets follows.

Major improvements versus maintenance and repair

8.25 Major improvements (such as renovations,

reconstructions, and enlargements) to existing assets

that increase their productive capacity, extend their

(^11) Th e numbers in parentheses aft er each classifi cation category
are the GFS classifi cation codes. Appendix 8 provides all classifi -
cation codes used in GFS.
service lives, or both, are classifi ed as acquisitions
of fi xed assets. On the other hand, maintenance and
repair of fi xed assets constitute an expense classifi ed
as the use of goods and services (22) (as mentioned in
paragraph 6.45). By defi nition, however, major im-
provements do not lead to the creation of new assets
that can be separately identifi ed and valued. Instead,
the value of such an improvement is added to the
value of the existing underlying asset.
8.26 Although the distinction is not clear-cut,
major improvements to assets are distinguished from
maintenance and repairs by the following features:

• Th e decision to renovate, reconstruct, or enlarge
  an asset is a deliberate investment decision that
  may be undertaken at any time and is not dic-
  tated by the condition of the asset. Major reno-
  vations of ships, buildings, or other structures
  are frequently undertaken well before the end of
  their normal service lives.


• Th e major renovations, reconstructions, or en-
  largements increase the performance or capac-
  ity of existing assets or signifi cantly extend their
  previously expected service lives. Enlarging or
  extending an existing road, building, or structure
  constitutes a major change in this sense, but a
  complete refi tting or restructuring of the interior
  of a building also qualifi es.