Government Finance Statistics Manual 2014

178 Government Finance Statistics Manual 2014

classifi cation of nonfi nancial assets is shown in

Table  7.2; more detailed classifi cations of these cat-

egories are provided in the discussions of the various

types of fi xed assets, where relevant.^17

Fixed assets (611)

7.35 Fixed assets (611) are produced assets that

are used repeatedly or continuously in production

processes for more than one year. Th e distinguishing

feature of a fi xed asset is not that it is durable in some

physical sense, but that it may be used repeatedly or

continuously in production over a long period of

time, which is taken to be more than one year (by con-

vention). Some goods, such as coal used as fuel, may

be highly durable physically but cannot be fi xed assets

(^17) Th e classifi cation of assets and liabilities in this chapter is
supplemented by description of transactions in Chapters 8 and 9,
while other economic fl ows related to these assets and liabilities
are described in Chapter 10.
because they can be used only once. Fixed assets are
further classifi ed as buildings and structures (6111),
machinery and equipment (6112), other fi xed as-
sets (6113), and weapons systems (6114).
7.36 In general, in the absence of observable mar-
ket prices for used assets, the written-down replace-
ment cost is used as a proxy for the current market
value of fi xed assets. In the remainder of this section,
it is noted when a particular type of fi xed asset is likely
to be more accurately valued by another method.
7.37 Th e production of some fi xed assets may
span two or more reporting periods. Th ese nonfi nan-
cial assets should be refl ected on the balance sheet,
in principle, when economic ownership changes, as
evidenced by the transfer of risks and benefi ts associ-
ated with the asset. For high-value fi xed assets such as
ships, heavy machinery, and other equipment, owner-
ship changes are recorded at the time agreed between
the parties; for example, it could be a progressive
change in line with stage payments, or in full on de-
livery. When a contract of sale is agreed in advance
for the construction of buildings and structures, in-
complete structures are being acquired in each period
through progress payments and classifi ed as fi xed
assets on the purchaser unit’s balance sheet (i.e., the
structure is being sold by the construction contrac-
tor to the purchaser in stages as the latter takes legal
possession of the structure). When progress payments
exceed the value of the incomplete asset, the excess
should be recorded as a trade advance that will be ex-
hausted as work proceeds. In the absence of a contract
of sale, the incomplete structure is recorded as work
in progress, and completed structures are recorded as
fi nished goods, on the balance sheet of the unit doing
the construction until ownership of the asset changes.
Fixed assets being constructed on own account are
treated as fi xed assets rather than inventories of work
in progress. Th ese general principles also apply to the

production of cultivated assets (see paragraph 7.62).

7.38 Fixed assets acquired under a fi nancial lease—

most likely machinery and equipment—are treated as

if purchased and owned by the user or lessee (the eco-

nomic owner) rather than the lessor (the legal owner).

Th e acquisition is treated as being fi nanced by a fi -

nancial claim, classifi ed as a loan. For example, if a

bank purchases an airplane and then leases it to the

national airline, the airplane is recorded as an asset of

Table 7.2 Summary Classifi cation of

Nonfi nancial Assets

61 Nonfi nancial assets

611 Fixed assets

6111 Buildings and structures

61111 Dwellings

61112 Buildings other than dwellings

61113 Other structures

61114 Land improvements

6112 Machinery and equipment

61121 Transport equipment

61122 Machinery and equipment other than

transport equipment

6113 Other fi xed assets

61131 Cultivated biological resources

61132 Intellectual property products

6114 Weapons systems

612 Inventories

613 Valuables

614 Nonproduced assets

6141 Land

6142 Mineral and energy resources

6143 Other naturally occurring assets

61431 Noncultivated biological resources

61432 Water resources

61433 Other natural resources

6144 Intangible nonproduced assets

61441 Contracts, leases, and licenses

61442 Goodwill and marketing assets