Transcript 69th Session of the CoC- Review of the Scale Methodology

Production Account
Goods and Services Account
Training Workshop on System of National Accounts
for ECO Member Countries
14-17 October 2012, Tehran, Islamic Republic of Iran
United Nations Statistics Division
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Outline of Presentation
 Production account
 Goods and services account
2
Production
 Production is presented in the SNA in two accounts
• Production account
• Goods and services account
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Production Account
Production account
 Measures output, intermediate consumption and value
added of economic activity and institutional unit
 Records consumption of fixed capital
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Production account
Output
 Value of goods and services produced by an establishment
 Excludes
• Value of any goods and services used in an activity for which the
establishment does not assume the risk of using the products in
production
• Value of goods and services consumed by the same establishment
except for goods and services used for capital formation (fixed
capital or changes in inventories) or own final consumption
 Recorded under “Resources”
 3 types of output
• Market output
• Non-market output
• Output for own final use
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Output
Time of recording
 Usually recorded when production is completed
 Work-in-progress in cases where output takes a long time to produce
Valuation
 Market output
• Basic prices or producers’ prices
• Basic prices preferred in system of VAT or similar deductible tax
 Non-market output
• Total production costs (intermediate consumption + compensation
of employees + other taxes less other subsidies on production +
consumption of fixed capital)
 Output for own final use
• Average basic prices
• Total production costs (intermediate consumption + compensation
of employees + other taxes less other subsidies on production +
consumption of fixed capital + return to fixed capital)
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Intermediate Consumption
 Consists of value of goods and services consumed as inputs by a
process of production, excluding fixed assets whose consumption is
recorded as consumption of fixed capital
 Recorded under “Uses”
 Includes
• Rentals paid on use of fixed assets
• Goods and services supplied by other establishments of same
enterprise
• Goods and services used as inputs into ancillary activity
 Excludes
• Consumption of fixed capital
• Goods and services (intermediate products) produced and used
within the establishment
• Expenditures on valuables (work of arts, precious metals, etc.) as
stores of value
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Intermediate Consumption
Time of recording
 When they enter the process of production
Valuation
 At purchaser's prices (net of deductible VAT) when purchased
from outside
 At prices that are used to value output plus any additional
transport charges when obtained from other establishments
belonging to same enterprise
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Boundary between Intermediate Consumption and
Compensation of Employees
Intermediate consumption
Compensation of employees
Employees are obliged to use goods and
services in order to enable them carry
out work
Goods and services are used by
employees in their own time and at their
own discretion
1.
2.
1.
3.
4.
5.
6.
7.
Tools or equipment used at work
Specialized clothing used mainly at
work
Accommodation services at the place
of work
Meals or drinks provided to workers on
active duty
Transportation and hotel services
provided for business
Changing facilities, washrooms,
showers, baths, etc. necessitated by
the nature of the work
Medical facilities provided because of
the nature of work
2.
3.
4.
5.
Durable goods used extensively away
from work
Uniforms which employees choose to
wear extensively away from work
Ordinary housing services provided to
employees and their dependents
Services of vehicles used away from
work and transportation allowances
Ordinary medical facilities provided to
employees and their dependents
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Boundary between Intermediate Consumption and Gross
Fixed Capital Formation
Intermediate consumption
1.
2.
3.
4.
Recurrent expenditure on small
durable producer goods, like hand
tools, that are a small share of total
expenditure on machinery and
equipment
Regular maintenance, repair of
fixed assets and replacement of
parts that is required to keep fixed
assets in working order
Research and development, staff
training, market research are
recorded as intermediate inputs
though they may bring future
benefits
Durable military goods such as
bombs, torpedoes and spare parts
Gross fixed capital formation
1.
2.
3.
4.
Expenditure on hand tools if it is
large compared to total
expenditure on machinery and
equipment
Major renovation that is not
dictated by the condition of the
asset and enhances the
efficiency or capacity of fixed
assets
Mineral exploration and
evaluation, computer software
Expenditures on military
equipment, including large
military weapons systems
services
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Consumption of Fixed Capital
 Cost of production
 Can be measured as the decline, during accounting period, in
current value of stock of fixed assets owned (and used) by a
producer as a result of physical deterioration, normal
obsolescence or normal accidental damage
 Is calculated for all fixed assets, i.e. tangible and intangible fixed
assets, but not for valuables and non-produced assets
 Is valued using actual or estimated prices of fixed assets prevailing
at the time the production takes place but not the prices at the time
fixed asset was originally acquired
 Deviates from depreciation as recorded in business accounts
particularly during inflation
 Gross and net recording of aggregates
 Valuation of non-market output
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Measurement of Value Added and associated
aggregates
Value added




Balancing item in production account
Output less intermediate consumption
Measures the value created by production
Can be measured gross (GVA) or net of consumption of fixed
capital (NVA)
• Gross concept is preferred
Aggregates associated with Value added
 Value added at basic prices
 Value added at producers' prices
 Value added at factor cost (not recommended)
 Gross domestic product (GDP)
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Value Added, GDP and Valuation
Output at basic prices
Intermediate consumption at purchaser's prices (net of
deductible VAT)
=
Gross value added at basic prices
=
Compensation of employees
+
Other taxes less subsidies on production
+
Gross operating surplus/mixed income
Other taxes less subsidies on production
=
Value added at factor cost
Gross value added at basic prices
+
Taxes less subsidies on products
=
GDP
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The SNA Presentation: Production Account
For Industries and Institutional Sectors
Uses
Resources
Intermediate consumption
Output
Market output
Output for own final use
Non-market output
Gross value added
Consumption of fixed capital
Net value added
For the Total Economy
Uses
Resources
Intermediate consumption
Output
Market output
Output for own final use
Non-market output
Taxes less subsidies on products
Gross domestic product
Consumption of fixed capital
Net domestic product
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Goods and Services Account
Goods and services account
 Brings together total supply and total uses of goods and
services
 Balanced in itself
• No balancing item
 Resources – right hand side
 Uses – left hand side
 Forms the basis to derive GDP
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Goods and Services Account
Uses
Resources
Intermediate consumption
Output
Market output
Household consumption expenditure
Output for own final use output
General government consumption
expenditure
Non-market output
Gross fixed capital formation
Changes in inventories
Acquisitions less disposals of valuables
Imports of goods and services
Exports of goods and services
Taxes less subsidies on products
Total use
Total resources
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Goods and Services Account
Derivation of GDP
Total supply (resources) = Total uses
Output + Imports of goods and services + Taxes less subsidies on products
= Intermediate consumption + Household consumption expenditure +
Government consumption expenditure + Gross fixed capital formation
+ Changes in inventories + Acquisitions less disposals of valuables +
Exports of goods and services
Output – Intermediate consumption + Taxes less subsidies on products
= Household consumption expenditure + Government consumption
expenditure + Gross fixed capital formation + Changes in inventories +
Acquisitions less disposals of valuables + Exports of goods and services –
Imports of goods and services
Production-based GDP = Expenditure-based GDP
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Thank You
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