1993 SNA Update Information - Expert comments for issue:
Cost of ownership transfers |
| Issue description | | Issue description in [English] | [French] | [Russian] | [Spanish] | | The cost of transferring ownership of financial assets is treated as current expenditure while that for non-financial assets is treated as capital expenditure. The initial question was whether costs of ownership transfer on non-financial assets should continue to be treated as capital expenditure or be treated as current expenditure. The review was expanded to cover the treatment of costs of ownership transfer on disposal of an asset, including terminal costs, and the period over which costs of ownership transfer should be written off via consumption of fixed capital. |
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| Expert comments | | Number of expert comments for selected issue: | 1 | | Date posted | Source | Comment |  | | 8/11/2004 | Fadhil Mahdi (ESCWA) | The Canberra II Group handled this issue where there were three options proposed for treatment of COT:
Option 1: To treat all COT as current expenditure
Option 2: To treat all COT as capital e1tpenditure
Option 3: To treat all COT on acquisition for first owner as capital expenditure and all subsequent COT as current expenditure
We think that the third option is more logical and relevant because all COT of an asset during its first period of owning is part of the gross fixed capital formation while subsequent COT is current expenditure since it represents, in most cases, a very minimal value of transferring ownership of an asset that has been repeatedly used overtime. In addition, this option will keep the gross fixed capital formation of the country unchanged. |
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