Other Economic Flows 259
When two units are merged, all fi nancial claims and
liabilities that existed between them are eliminated.
Symmetrically, when a unit splits into two or more
units, new fi nancial claims and liabilities may appear
between the new units.
10.79 In cases where general government units issue
negotiable securities that sell in secondary markets,
the holders of the securities may change during the life
of the security. In debt data classifi ed by counterparties,
this change in the debtor/creditor relationship should
be recorded as a reclassifi cation under other changes
in the volume of assets (see also paragraphs 9.25 and
9.86). For example, a central government debt security
may be sold originally to a bank and then subsequently
sold by the bank to a local government unit. To show
on the central government’s balance sheet that the new
holder of the security on the reporting date is the local
government, entries in other changes in the volume
of assets are recorded in the central government ac-
counts, reducing the security liability to the bank and
increasing the liability to the local government.^20 No
transactions between the central government, bank,
and the local government should be imputed to reclas-
sify the holder of the securities.
Changes in classifi cation of assets and liabilities
10.80 Depending on the degree of detail of the
classifi cations of assets, there may be reclassifi cations
of existing assets and liabilities from one category to
another, usually when there is a change in the purpose
for which an asset is used. Th e change in classifi cation
is recorded as other changes in the volume of assets
with the same value for both entries. If the change in
the use also means a change in its value, then a second
entry in other changes in the volume of assets is re-
corded for the entrance into the asset boundary of the
asset with the higher value. It is not recorded as a re-
valuation since the value increase is due to the change
in use and is not due to price changes.
10.81 Th e use of a structure may be changed from
a dwelling to a government offi ce building or vice
versa. If these types of structures are classifi ed sepa-
(^20) Because the local government has a claim on central govern-
ment, without the central government being involved in the
transaction, the same other volume change would be recorded
on the local government’s balance sheet to show that the central
government is the creditor.
rately, then an entry in other changes in the volume
of assets is recorded. Th e positive change in one asset
category is balanced by a negative change in the other
asset category. A conversion resulting solely from new
investment in a building is not an other change in the
volume of the asset but a transaction in fi xed assets
(see paragraph 8.28).
10.82 In all instances, work in progress needs to
be reclassifi ed to fi nished goods prior to sale, through
an entry in other changes in the volume of assets. In
principle, reclassifi cation from one type of inventory
to another or from fi xed assets to inventories should
not involve a change in value. If at the time of con-
version, the previous value is diff erent from the ap-
propriate new value, an entry in other changes in the
volume of assets should be recorded under economic
appearance or disappearance as appropriate. If this is
found to be happening systematically, the valuation
techniques for inventories should be re-examined.
10.83 As explained in paragraph 8.42, transactions
in the costs of ownership transfer of nonproduced as-
sets other than land are classifi ed as fi xed assets and
these costs are subject to consumption of fi xed capi-
tal. To maintain the integration of stock positions and
fl ows, the costs of ownership transfer of nonproduced
assets other than land and the consumption of fi xed
capital relating to these costs are reclassifi ed to the
respective nonproduced assets through an entry in
other changes in the volume of assets.^21 Th is reclas-
sifi cation is considered to take place at the time of re-
cording the transactions in cost of ownership transfer
and consumption of fi xed capital, respectively.
10.84 Some examples of changes in the classifi ca-
tion of fi nancial assets and liabilities are:
- When monetary gold held in the form of gold
bullion becomes a reserve asset, it enters the
fi nancial assets in the balance sheet as a reclas-
sifi cation via other changes in the volume of as-
sets from valuables to monetary gold. At the time
it is acquired by a monetary authority, it is fi rst
classifi ed as inventory or a valuable.^22 Th e same
(^21) Two entries are recorded in other changes in the volume of
assets: a reduction in the fi xed asset costs of ownership transfer on
nonproduced assets other than land (31133) and an increase in the
value(s) of the respective nonproduced assets.
(^22) Gold is reclassifi ed to inventories if not primarily held as a store
of value.