Operations with non-financial assets
This ethane of economic turnover reflects the processes associated with the movement of non-financial assets in the economy.
In general, in the PCA, the term economic asset is defined as an economic object that is subject to property rights and whose possession or use for a certain period provides economic benefits.
In the SNA, non-financial and financial assets are distinguished as part of economic assets.
At this stage, the main economic asset involved in the turnover of resources are non-financial assets which, in accordance with the SNA methodology, are determined by the residual principle as assets not included in financial assets.
In the SNA, non-financial assets are classified according to a number of characteristics, the main one of which is the sign of their formation within the framework recognized in the System. In accordance with this principle, nonfinancial assets are divided into two groups: produced assets and assets formed outside these boundaries, which are identified in the SNA as non-produced assets.
Within the produced assets , the following items are selected as elements:
• fixed capital;
• inventories of tangible current assets;
The fixed capital is defined as the type of the produced assets, the characteristic feature of which is the repeated or constant use of it in the production process for a period of not less than one year.
In the structure of fixed capital in the SNA is allocated:
• material fixed capital, elements of which are its types, such as living quarters, other buildings and structures (including non-residential buildings and other structures), machinery and equipment (including transport equipment and other machinery and equipment), cultivated assets;
• intangible fixed capital, elements of which are geological exploration, computer software, originals of entertainment, literary and artistic works and other fixed assets.
Stocks of tangible current assets consist of stocks of goods that are at the disposal of producers before the beginning of their processing, sale, delivery to other units or use for other purposes, as well as stocks of goods purchased from other units and intended for use in intermediate consumption or for resale without further processing.
In the inventory of material current assets as elements include:
• raw materials and materials;
• work in progress;
• Finished goods;
• goods for resale.
Raw materials include goods that are stored in stock for their subsequent use for intermediate consumption in the production process.
Work in Process consists of products that are in an intermediate stage and require additional processing to deliver it to other institutional units.
Finished products are goods that are in stock from the producing units before delivery to other units.
Goods for resale are goods acquired for the purpose of resale without further processing.
Values in the SNA are defined as a type of assets characterized by a significant and constantly increasing value and purchased to reduce the risks of depreciation of available resources (precious metals, antiques, jewelry, etc.).
Unproduced non-financial assets include assets that are not the result of productive activities.
The non-produced assets in the SNA are allocated tangible and intangible non-produced assets.
K non-produced tangible assets include assets of natural origin: land, subsoil, uncultivated (natural) biological and groundwater resources.
Unproduced intangible assets are generally defined as assets formed as a result of legal or accounting actions (in the SNA - legal or accounting forms) in connection with the production process and giving certain rights to their owners (patents, copyrights, licenses, trademarks, lease rights or other transferred contracts, business reputation, etc.).
At this stage, the movement of non-financial assets for economic entities will be determined:
• The total gross fixed capital formation, which combines the resulting flows of acquisitions and transfers of tangible and intangible fixed capital and the costs of institutional units associated with the improvement of the state of non-produced non-financial assets;
• changes in inventories of tangible current assets;
• balance of acquisitions and transfers of values;
• balance of acquisitions and transfers of non-produced non-financial assets;
• balance of capital transfers.
In accumulation of fixed capital for the resulting flows of acquisitions and transfers of tangible and intangible fixed capital, the elements determining purchases and disposals of new and existing fixed capital are singled out separately.
As part of the costs of institutional units associated with improving the state of non-financial assets, the following are singled out:
• Expenses for improving the condition of non-produced non-financial assets of capital nature ;
• costs associated with transferring ownership of non-produced non-financial assets
In the SNA, the concept of improving the condition of non-produced assets refers only to to land resources , and in terms of the accumulation of fixed capital is associated with costs aimed at increasing their economic potential (expansion of agricultural areas, melioration and irrigation works, etc.).
The costs associated with the transfer of ownership of non-produced assets include all types of incremental costs of institutional units associated with this type of transfers and treated as part of the total value of the fixed capital that is accumulated (costs for additional professional services, commissions and fees paid to intermediaries , consultants, taxes paid when transferring ownership of this type of asset, etc.).
In the SNA, as part of capital transfers between institutional units, transfers are made in kind and in cash.
Capital transfers in kind are associated with the transfer of ownership of assets (other than tangible current assets and financial assets) or write-off of accounts payable, capital transfers in cash - transfer financial resources due to operations of transfer or acquisition of assets (other than inventories of tangible current assets). In the latter case, the condition for obtaining an institutional unit of cash transfers is, as a rule, an obligation to use them for the purpose of acquiring the relevant capital assets.
As part of capital transfers to the SNA, the following elements are distinguished:
• taxes on capital;
• Investment subsidies;
• Other capital transfers.
Taxes on capital in the SNA are defined as taxes that impose the value of nonfinancial assets, net (in the form of an excess of the value of assets over liabilities) the value of equity owned by institutional units, or the value of assets transferred between institutional units in the form of transfers (taxes on inherited property, donation, etc.).
Taxes on capital are paid by enterprises and households to the state on an irregular basis and are considered in the SNA as a specific type of transfers. This group does not include taxes on the sale of assets that in the SNA relate to the group of taxes on products, taxes on assets used as fixed capital, which are classified as "other production taxes," taxes on household property that are not fixed capital, etc.
Investment subsidies consist of capital transfers in cash or in kind, provided by government to other sectors or non-resident units to finance the cost of acquiring fixed capital.
A characteristic feature of cash subsidies is the objective nature of this type of transfers and the obligation of their use by recipients for the formation of fixed capital. Therefore, the condition for obtaining such subsidies, as a rule, is the participation of relevant institutional units in specific investment projects.
Investment subsidies in kind consist of transfers from the government sector to other resident or non-resident units in the form of the transfer of individual elements of fixed capital (buildings, structures, machinery, equipment, etc.).
Other capital transfers consist of other types of capital transfers (except for capital taxes) and investment subsidies, including in the form of cancellation of debts by mutual agreement of the parties, compensation for economic damage as a result of natural and man-made factors, government transfers to cover losses, etc.
In more detail, the elements of non-financial assets and their economic classifications used in the SNA are discussed in Ch. 5, devoted to the study of issues of national wealth statistics.
The result of this stage of economic turnover is the formation of residual resources or indebtedness in institutional units that determine the initial economic conditions for their participation in transactions with financial assets.
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