Government Finance Statistics Manual 2014

Some Cross-Cutting Issues 315

A4.17 Land is the classic case of an asset subject
to a resource lease, but all other natural resources are
also treated this way. An exception, when a long-term
lease of land may be recorded as the sale of land, is
described in paragraph A4.26.^4

Licenses and Permits to Use a Natural Resource

A4.18 In many countries, licenses and permits to
use natural resources are issued by government be-
cause government claims ownership of the resources
on behalf of the community. However, government

(^4) Further discussions of natural resources in the next section also
indicate other cases where the use of a resource should be taken
as the sale of the resource.
could also issue these licenses and permits if the re-
sources are privately owned.
A4.19 As illustrated in Figure A4.1, there are three
diff erent sets of conditions that may apply to the use
of a natural resource:

• Th e owner may permit the resource to be used
  to extinction. Th is option results in the sale (or
  possi bly an expropriation) of the nonproduced
  resource asset itself.


• Th e owner may permit the resource to be used
  for an extended period of time in such a way
  that, in eff ect, the user controls the use of the
  resource during this time with little if any inter-
  vention from the legal owner. Th is permit leads
  to the creation of an intangible nonproduced
  asset classifi ed as contracts, leases, and licenses

Figure A4.1 Illustrating the Treatment of Licenses and Permits to Use a Natural Resource

For the owner, classify the

amounts receivable as the

disposal of a

nonproduced asset in

the form of natural

resources

(or an expropriation—an other

change in the volume of

assets and liabilities)

The owner can extend or

withhold continued use of the

asset from one year to

another—it corresponds to

a resource lease

No

For the owner, classify the

amounts receivable as the

disposal of an intangible

nonproduced asset

in the form of contracts,

leases, and licenses

Yes

Yes

No

Does the owner allow

the use of the natural resource

to extinction?

Does the owner allow the

use of the natural resource

for an extended period,

with little or no

intervention?

For the owner, classify

the amounts receivable as

revenue in the form of

rent (1415)