Other Economic Flows 257
Uncompensated seizures
10.62 Government units may take possession
of the assets of other institutional units without full
compensation for reasons other than the failure to pay
taxes, fi nes, or similar levies. Such seizures of assets,
legal or illegal, are not capital transfers because they
do not take place by mutual agreement of the units
involved. Th e diff erence between the market value of
the assets seized and any compensation provided is
recorded as an other change in the volume of assets, in
the form of an uncompensated seizure. Foreclosures
and repossessions of assets by creditors are transac-
tions when the contractual agreement between debtor
and creditor provides this avenue of recourse.
Other volume changes not elsewhere classifi ed
10.63 Th e value of a fi xed asset is continuously re-
duced by consumption of fi xed capital until the asset
is disposed of or has no remaining value. It is pos-
sible for the assumptions underlying the calculation
of consumption of fi xed capital to be inaccurate, in
which case corrections to the value of the asset need
to be made through other changes in the volume of
assets. Similarly, if the assumption about the rate of
shrinkage of inventories was inaccurate, this should
also be corrected through an entry in other changes
in the volume of assets. Financial assets and liabilities,
such as those related to insurance, pension, and stan-
dardized guarantee schemes, can also be aff ected by
volume changes.^16
Fixed assets (511)
10.64 Th e calculation of the consumption of fi xed
capital refl ects an assumption about normal rates of
physical deterioration, obsolescence, and accidental
damage. Each of these assumptions may prove to be
faulty. In that case, an adjustment in the form of other
changes in the volume of assets must be made.
10.65 Physical deterioration may include the eff ect
of unforeseen environmental degradation on fi xed as-
sets. Entries must, therefore, be made through other
changes in the volume of assets for the decline in the
value of the fi xed assets from, for example, the unfore-
seen eff ects of acidity in the air and acid rain on build-
ing surfaces or vehicle bodies.
(^16) See paragraphs 10.39–10.40 and A2.54.
10.66 Th e introduction of improved technology
can render an asset obsolete or accelerate the rate of
obsolescence. For example, improved models of the
asset or of a new production process that no longer re-
quires the asset may lead to unforeseen obsolescence.
In consequence, the amount included in consump-
tion of fi xed assets for their expected obsolescence
may have been underestimated, so an entry in other
changes in the volume of assets should be recorded.
10.67 Th e amount included for normally expected
damage—as included in the calculation of consump-
tion of fi xed capital—may fall short of the actual dam-
age. Adjustments must therefore be made through
other changes in the volume of assets for the decline
in the value of the fi xed assets due to these events.
While these losses may be larger than normal, they
are not on a scale suffi ciently large to be considered
catastrophic—they are therefore included in other
volume changes not elsewhere classifi ed.
10.68 As explained in paragraph 6.60, costs of
ownership transfer should, in principle, be written off
over the expected time the asset will be in the posses-
sion of the purchaser. If the asset is disposed of before
the costs of ownership transfer are completely writ-
ten off , the remainder should be recorded as an other
change in the volume of assets.
10.69 Production facilities with long construction
periods may cease to have an economic use before
they are completed or are put into service. For exam-
ple, a nuclear power plant or industrial site may never
be put into service. When the decision to abandon is
made, the value of the fi xed asset (or in some cases,
work-in-progress inventories) as recorded in the bal-
ance sheet should be written off through an other
change in the volume of assets.
Exceptional losses in inventories (512)
10.70 Exceptional inventory losses from fi re, rob-
bery, insect and vermin infestation of grain stores,
and unusually high levels of disease in livestock, etc.
are included as other changes in the volume of assets.
In this context, exceptional losses indicate that the
losses are not only large in value but also irregular in
occurrence. Even very large losses that occur regularly
should be taken into account when calculating the net
change in inventories, as explained in paragraph 8.47.
Th e adjustment for unforeseen damage could be an