232 Government Finance Statistics Manual 2014
resulting from a fi nancial lease is usually the value of the
nonfi nancial asset leased (if no initial down payments
or fees are involved). Th e value of other accounts pay-
able resulting from the purchase of goods or services
is the value of the goods acquired or services received.
9.11 As mentioned in paragraph 3.119, the value of
a transaction expressed in a foreign currency is con-
verted to the domestic currency using the midpoint
of the buying and selling exchange rates at the time
of the transaction.^2 If a transaction expressed in a for-
eign currency involves the creation of a fi nancial asset
or liability, such as other accounts receivable/payable,
and is followed by a second transaction in the same
foreign currency that extinguishes the fi nancial asset
or liability, then both transactions are valued at the
exchange rates eff ective when each takes place.
9.12 Government units or public corporations may
acquire or dispose of fi nancial assets on a nonmarket
basis as an element of their fi scal policy rather than
as a part of their liquidity management. For example,
they may lend money at a below-market interest rate
or purchase shares of a corporation at an infl ated
price. It is generally accepted that concessional loans
occur when units lend to other units and the contrac-
tual interest rate is intentionally set below the market
interest rate that would otherwise apply. Th e degree
of concessionality can also be enhanced with grace
periods^3 and frequencies of payments and maturity
periods favorable to the debtor. Since the terms of a
concessional loan are more favorable to the debtor
than market conditions would otherwise permit,
concessional loans eff ectively include a transfer from
the creditor to the debtor. However, the means of in-
corporating the transfer impact within the SNA and
other macroeconomic statistics have not been fully
developed, although various alternatives have been
advanced. Accordingly, until the appropriate treat-
ment of concessional debt is agreed, information on
concessional debt should be provided in supplemen-
tary tables, and in the memorandum items conces-(^2) Th e diff erence between buying or selling prices and midpoint
prices represents a service charge and should conceptually be
reported as sales of goods and services (142) or use of goods and
services (22). Th e service charge may be estimated from the aver-
age trade margin spread between the buying and selling rates. If
not signifi cant or not practical to identify, it is recommended to
disregard any service charge in GFS.
(^3) Th e treatment of grace periods is discussed in paragraphs 6.69.
sional loans at nominal value (6M391) and implicit
transfers resulting from loans at concessional interest
rates (6M392), discussed in paragraph 7.246.
Time of Recording.
9.13 On an accrual basis, transactions in fi nancial
assets and liabilities are recorded when economic
ownership of the asset changes—that is, when the
asset is created or liquidated—and when the addi-
tion or reduction in the amount of the fi nancial in-
strument occurs, such as the accrual of interest and
subsequent reduction when debt service payments
are made.^4 Th is time is usually clear when the transac-
tion involves an exchange of existing fi nancial assets
or the simultaneous creation or extinction of a fi nan-
cial asset and a liability. In most cases, it will be when
the contract is signed or when money or some other
fi nancial asset is paid by the creditor to the debtor or
repaid by the debtor to the creditor.
9.14 In some cases, the parties to a transaction may
perceive economic ownership to change on diff erent
dates because they acquire the documents evidencing
the transaction at diff erent times. Th is variation usually
is caused by the process of check clearing or the length
of time checks are in the mail. Th e amounts involved in
such “fl oat” may be substantial in the case of transfer-
able deposits and other accounts receivable or payable.
If there is disagreement on a transaction between two
general government units or a government unit and a
public corporation, the date on which the creditor re-
ceives the payment is the date of record because a fi -
nancial claim exists up to the point that the payment is
cleared and the creditor has control of the funds.
9.15 When a transaction in a fi nancial asset or li-
ability involves a nonfi nancial component, the time of
recording is determined by the nonfi nancial compo-
nent. For example, when a sale of goods or services
gives rise to a trade credit, the transaction should be
recorded when economic ownership of the goods is
transferred or when the service is provided. When
a fi nancial lease is created, the loan implicit in the
transaction is recorded when control of the fi xed asset
changes.(^4) On the pure cash basis of recording, transactions are recorded
when cash is paid or received. See Chapter 3 for more details on
the cash basis of recording.