Economic Flows, Stock Positions, and Accounting Rules 59
the producer. For nonmarket goods and services
produced by general government units or non-
profi t institutions serving households (NPISHs),
however, no allowance should be made for any
net operating surplus in the calculation of the
market price.- Assets can be valued at the discounted pres-
ent value of their expected future returns. Th is
method is particularly prominent for a number
of fi nancial assets, natural assets, and intangible
assets. For some fi nancial assets, the present mar-
ket value is established by discounting future pay-
ments or receipts to the present, using the market
interest rate. In principle, therefore, if a reason-
ably robust estimate of the stream of future earn-
ings to come from an asset can be made, along
with a suitable discount rate, this method allows
an estimate of the present value. However, it may
be diffi cult to determine the future earnings with
the appropriate degree of certainty, given that as-
sumptions are also needed about the asset’s life
span and the discount factor to be applied. Be-
cause of these uncertainties, the other possible
sources of valuation described in the preceding
paragraphs should be exhausted before resorting
to this method.
Valuation of other economic fl ows
3.126 Apart from transactions, the change in the
value of assets and liabilities between two end-periods
also results from holding gains and losses, and other
changes in volume of assets and liabilities. Th e valua-
tion of these other economic fl ows is discussed in the
remainder of this section.
Holding gains and losses
3.127 Holding gains and losses accrue continu-
ously and apply to both nonfi nancial and fi nancial
assets and liabilities. Since all fi nancial assets, except
gold bullion, are matched by liabilities either within
the domestic economy or with the rest of the world,
it is important that holding gains/losses are recorded
symmetrically. A holding gain occurs when an asset
increases in value or a liability decreases in value; a
holding loss occurs when an asset decreases in value
or a liability increases in value. Holding gains and
losses during a reporting period are shown separately
for assets and liabilities. In practice, the value of hold-
ing gains and losses is calculated for each asset and
liability between two points in time: the beginning of
the period or when the asset or liability is acquired or
incurred, and the end of the period or when the asset
or liability is sold or extinguished.Other changes in the volume of assets
3.128 In order to determine the valuation of the
other changes in the volume of nonfi nancial assets, it
is usually necessary to determine the market value of
the asset before and aft er the economic event, such as
its appearance, disappearance, catastrophic loss, or re-
classifi cation (see paragraphs 10.46–10.84). Th e value
of the other change in volume is calculated as the dif-
ference in the market value of the asset immediately
before and aft er the event.
3.129 Other changes in the volume of fi nancial
assets and liabilities are recorded at the market or
market-equivalent prices of similar instruments. For
writing-off of marketable fi nancial instruments that
are valued at their market values, the value recorded
in the other changes in the volume of asset account
should correspond to their market values prior to
being written off. For nonmarketable fi nancial instru-
ments that are recorded at nominal values, the value
recorded in the other changes in the volume of assets
account should correspond to their nominal value
prior to being written off. For all reclassifi cations of
assets and liabilities, values of both the new and old
instruments should be the same.Currency
Unit of account
3.130 Th e compilation of GFS, particularly trans-
actions and stock positions with nonresidents, is com-
plicated by the fact that the values may be expressed
initially in a variety of currencies or perhaps in other
standards of value, such as Special Drawing Rights
(SDRs). Th e conversion of these transactions and
stock positions expressed in another currency, or a
commodity into a reference unit of account, is a requi-
site for the construction of consistent and analytically
meaningful statistics. If fi nancial assets or liabilities
are in foreign currency units, data in a single currency
unit are needed for compiling meaningful statistics.3.131 From the perspective of the national com-
piler, the domestic currency unit is the obvious choice
for measuring transactions and stock positions. De-
nominating government finance transactions and