218 Government Finance Statistics Manual 2014
- Consumption of fi xed capital is an internal trans-
action that records the decrease in the value of
fi xed assets because they have been used repeat-
edly or continuously in production. - Inventories can be acquired (additions) or dis-
posed of (withdrawals) through internal transac-
tions as well as transactions with other units. For
example, withdrawals from inventories of materials
and supplies for use in the production of general
government services and transfers of completed
production from work-in-progress inventories to
inventories of fi nished goods are internal transac-
tions. Recurrent losses and spoilage of goods held in
inventories are also treated as internal transactions.
8.4 All transactions that increase a unit’s holdings of
nonfi nancial assets are labeled acquisitions. With the
exception of consumption of fi xed capital, all transac-
tions that decrease a unit’s holdings of nonfi nancial
assets are labeled disposals. Th us, the results of trans-
actions in a particular category of nonfi nancial assets
can be presented either as total acquisitions, total dis-
posals, and consumption of fi xed capital, or as net in-
vestment in nonfi nancial assets.^2 Th e net investment in
a nonfi nancial asset is its acquisitions minus disposals
minus consumption of fi xed capital. Th e gross invest-
ment in a nonfi nancial asset is its acquisitions minus
disposals (i.e., consumption of fi xed capital is not taken
into account). On a cash basis, the purchases minus the
sales of nonfi nancial assets are referred to as the net
cash outfl ow from investment in nonfi nancial assets.
8.5 Th e remainder of this chapter fi rst describes
costs of ownership transfer, valuation, time of re-
cording, consumption of fi xed capital, and netting of
transactions that aff ect nonfi nancial assets and then
provides details on the classifi cation of transactions
that aff ect specifi c categories of nonfi nancial assets.
Costs of Ownership Transfer
8.6 Costs of ownership transfer are the costs as-
sociated with acquiring and disposing of nonfi nancial
assets (other than inventories^3 ) and consist of:- All professional charges or commissions incurred
by both units acquiring or disposing of an asset,
(^2) Th e net investment in inventories is referred to as “changes in
inventories.” Net investment in nonfi nancial assets can be positive
or negative.
(^3) Usually, there are no costs of ownership transfer on inventories.
such as fees paid to lawyers, architects, surveyors,
engineers, and valuers, and commissions paid to
estate agents and auctioneers
- Any trade and transport costs separately invoiced
to the purchaser - All taxes payable by the unit acquiring the asset
on the transfer of ownership of the asset - Any tax payable on the disposal of an asset
- Any delivery and installation or disinstallation
costs not included in the price of the asset being
acquired or disposed of - Any terminal costs^4 incurred at the end of an
asset’s life, such as those required to render the
structure safe or to restore the environment in
which it is situated.
8.7 Th e costs of ownership transfer on fi xed as-
sets, valuables, and nonproduced assets are treated as
transactions in fi xed assets. In particular, transactions
in the: - Costs of ownership transfer on fi xed assets are
recorded as transactions in the relevant fi xed
asset - Costs of ownership transfer on valuables are re-
corded as transactions in valuables (313.1) - Costs of ownership transfer on land are re-
corded, by convention, with land improvements
(31114.1), a fi xed asset - Costs of ownership transfer on nonproduced as-
sets other than land are recorded in fi xed assets
as transactions in costs of ownership transfer on
nonproduced assets other than land (31133.1), as
explained in paragraph 8.42; in the balance sheet,
however, these costs of ownership transfer on
nonproduced assets other than land are incorpo-
rated in the value of the asset to which they relate
(see paragraph 3.111), even though the asset is
nonproduced (i.e., there are no costs of owner-
ship transfer on nonproduced assets other than
land shown separately in the balance sheet).
(^4) In the case of some signifi cantly large and important assets, such
as oil rigs and nuclear power stations, there may also be major
costs associated with the decommissioning of the asset at the end
of its productive life. For some land sites, such as those used for
landfi ll, there may be large costs associated with rehabilitation of
the site. Th ese are referred to collectively as terminal costs.