Transactions in Nonfi nancial Assets 227
specifi c fi xed asset or possibly valuables (313). In
other words, the balancing entry depends on the
nature of the production process. Th e acquisition
of gold, diamonds, etc. intended for use in pro-
duction is recorded under materials and supplies
(31221), but the acquisition of the same items to
hold as a store of value is recorded under valu-
ables (313).- Transactions that add to work-in-progress inven-
tories (31222) are, in principle, recorded continu-
ously as production takes place. Th e counterpart
transactions are reduction in other assets, such
as materials and supplies, and the other costs
incurred in production.^17 When production is
completed, all work in progress is reclassifi ed as
fi nished goods (31223). Th is reclassifi cation is re-
corded as other changes in the volume of assets
under the respective subcategories of invento-
ries. Withdrawals of work-in-progress inventories
(31222) should be valued at their cost of produc-
tion, where all inputs are valued at their current
market prices at the time of withdrawal rather
than the prices paid for them. Th e diff erence be-
tween the prices payable for the inputs and their
current market prices is a holding gain or loss.
Th e ownership of work-in-progress inventories
is transferable, if necessary. For example, it may
be sold under exceptional circumstances, such as
the liquidation of a public corporation. - Work-in-progress inventories should be recorded
for single-use cultivated biological resources.
Any cultivation of resources with repeat yields,
other than on own account or under an agreed
contract with another unit, is also included in
work-in-progress inventories. However, repeat-
yield resources, being cultivated on own account
or under an agreed contract with another unit,
are recorded as the acquisition of fi xed assets. - A good is fi nished when its producer has com-
pleted its intended production process and such
inventories of fi nished goods (31223) may be held
only by the units that produce them. When fi n-
ished goods are sold or otherwise disposed of
(e.g., as compensation of employees in kind or
social benefi ts in kind), a transaction must be
(^17) As explained in paragraph 6.27, an adjustment is made to use of
goods and services (22) to account for those items used to produce
nonfi nancial assets, such as work-in-progress inventories.
recorded to reduce inventories of fi nished goods
(31223), which is balanced by an increase in use
of goods and services (22). Th e distribution of
fi nished goods as compensation of employees in
kind or social benefi ts in kind is always recorded
as use of goods and services (22) by the unit that
produced these goods (see paragraph 6.39).
- Finished goods entering inventories are valued at
the prices of those goods before adding any taxes,
transport, or distribution margins, at the times
the entries take place; fi nished goods withdrawn
from inventories are valued at the prices before
adding any taxes, transport, or distribution mar-
gins, at the time when their withdrawals take
place. Th e diff erence between the “entering” and
“withdrawal” values of fi nished goods is a hold-
ing gain or loss. - When goods held as goods for resale (31224)
are sold or otherwise disposed of, two transac-
tions are recorded. First, reduce inventories of
goods for resale (31224) and record a counterpart
transaction in expense, recorded as use of goods
and services (22) expense at the purchase price.
Second, record (at the sale price) a sales of goods
and services (142), which is balanced by either
an increase in currency and deposits (3202) or
other accounts receivable (3208). Th e diff erence
between the value recorded as sales of goods and
services and use of goods and services is refl ected
in the net operating balance (NOB). By conven-
tion, goods acquired by government for distribu-
tion as social transfers in kind or other transfers
in kind but that have not yet been so delivered
are also included in goods for resale. Th e distri-
bution of such goods is recorded as a reduction
in inventories of goods for resale (31224), and an
increase in subsidies (25), grants (26), social ben-
efi ts (27), or current transfers not elsewhere classi-
fi ed (2821). - Goods for resale added to inventories are valued
at their actual or estimated purchase prices, in-
cluding any transportation charges paid to other
units but not the costs of any transport services
produced on own account by the unit taking de-
livery. In principle, goods acquired by barter are
valued at their estimated purchasers’ prices at
the time of acquisition. However, because there
are no taxes or margins on bartered goods, the
purchaser’s price is the same as the basic price.