124 Government Finance Statistics Manual 2014
such tools. In countries in which they account for a
signifi cant part of the value of the total stock of ma-
chinery and equipment, they may be regarded as fi xed
assets and their acquisition and disposal by public
sector units recorded under the net acquisition of
nonfi nancial assets.
6.44 Goods and services acquired to increase in-
ventories of materials and supplies, work in progress,
fi nished goods, and goods for resale are included in
changes in inventories (312), a type of nonfi nancial
asset (see paragraph 7.75).
6.45 Goods and services consumed for the ordi-
nary maintenance and repair of fi xed assets constitute
use of goods and services. However, major renova-
tions, reconstructions, or enlargements of existing
fi xed assets are recorded as acquisitions of fi xed as-
sets. See paragraphs 8.25–8.27 for more information
on distinguishing these activities.
6.46 Goods and services used in research and de-
velopment are recorded as acquisitions of fi xed assets
in the category intellectual property products (31132),
except in cases where it is clear that the activity does
not create any future economic benefi t for its owner,
in which case it is recorded as use of goods and ser-
vices. For a description of the recognition criteria
for intellectual property products, see paragraphs
8.37–8.41.
6.47 Goods and services used in mineral explora-
tion and evaluation are not recorded as use of goods
and services. Regardless of whether successful, they
are needed to acquire new reserves and so are all clas-
sifi ed as acquisitions of fi xed assets recorded as intel-
lectual property products (31132).
6.48 Materials to produce coins or notes of the
national currency or amounts payable to contractors
to produce the currency are included in use of goods
and services. Th e issuance of the coins or notes is a
fi nancial transaction that does not involve revenue or
expense. Commemorative coins that are not actually
in circulation as legal tender are classifi ed as nonfi -
nancial assets (see paragraph 7.135).
6.49 Expenditure on military equipment, includ-
ing large military weapons systems and armored
vehicles acquired by the police and internal security
services, are recorded as acquisition of the respective
categories of fi xed assets, namely weapons systems(3114) or machinery and equipment (3112). Expen-
diture on military goods, such as single-use weapons
(ammunition, missiles, rockets, bombs, torpedoes)
and spare parts, should be recorded as inventories
until used, when they are recorded as use of goods and
services and a withdrawal from inventories (see para-
graphs 7.74 and 7.86).Other boundaries related to use of goods and services
6.50 Th ere is a signifi cant conceptual diff erence
between rentals of fi xed assets under an operating
lease and the acquisition of an asset under a fi nan-
cial lease. Under an operating lease, (see paragraph
A4.6) the lessor remains the economic owner of the
fi xed asset and payments by the lessee are recorded
as payments for a service, and therefore recorded as
use of goods and services. Under a fi nancial lease (see
paragraphs 8.17 and A4.10), the lessee becomes the
economic owner of the fi xed asset and payments are
recorded as payments of interest and repayments of
principal by the lessee to the lessor, and thus do not
aff ect use of goods and services (also see paragraphs
A4.6–A4.15).
6.51 Amounts payable for the use of nonproduced
naturally occurring assets, such as land, are classifi ed
as rent (2814) and not as use of goods and services (22).
See paragraphs 5.131–5.132 for a description of this
boundary.
6.52 Explicit fees for fi nancial services should al-
ways be classifi ed as use of goods and services. How-
ever, some transactions include an implicit fee for
fi nancial services that is not recorded separately in
GFS. Th ese implicit fees can be calculated only in the
context of an analysis of the whole of the economy
or industry. As indicated in paragraph 6.81, fi nancial
intermediation services indirectly measured (FISIM)
can usually be estimated only indirectly by compilers
of the national accounts. Similarly, the service fee im-
plied by nonlife insurance premiums can be estimated
only by looking at all the transactions and costs of the
insurance industry (see paragraph 6.125).Consumption of Fixed Capital [GFS] (23)
6.53 Consumption of fi xed capital is the de-
cline, during the course of the reporting period, in
the current value of the stock of fi xed assets owned
and used by a government unit as a result of physical