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1993 SNA Update Information - Country 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.
Country comments
Number of country comments for selected issue:88
  Date postedSourceComment
 10/10/2006SwedenFurther clarification/analysis required
 15/09/2006United KingdomWe agree with all the recommendations made by the AEG.
 15/09/2006LatviaAfter deep discussions and expert consultations we basically support the 1993 SNA Update Issues.
 15/09/2006NorwayAs stated in previous comments, Statistics Norway agrees to the proposed recommendations on cost of ownership transfers. However, regarding terminal costs our view is, as stated earlier, that terminal cost should be recorded as gross fixed capital formation and written off as consumption of fixed capital in the year of acquisition. This is in line with the recommendation, except that we suggest that this should be the main principle and not only done when adequate data is lacking.
Our main argument for this is that one can look upon the terminal costs as representing an investment in protective capital to prevent future environmental damage and thus they are not directly related to the production activity in the past. The investments taking place at the end of the life of the underlying capital asset should be written off immediately, i.e. the protective service is rendered at the moment the asset is removed. This recording avoids the peculiarity of having a negative value of an asset recorded in the national accounts, and a very uncertain imputation is avoided. This latter is due to the fact that costs related to dismantling for example oil rigs etc in the future are uncertain partly because of unknown request regarding environmental protection and partly because of technological developments.
 18/08/2006ItalyWe are in favour of the AEG recommendation, but there could be some problem in international comparability if countries will compile its figures according to one or the other of the two different ways recommended.
 31/07/2006MongoliaWe agree with the AEG recommendation to continue to record the cost of ownership transfers as gross fixed capital formation and to write off the cost of ownership transfer of an asset over the period of ownership.
 28/07/2006LithuaniaIn general we support the recommendations.
 27/07/2006EgyptIt is suggested that the cost of ownership remain treated as it is in the present SNA. That means that cost of ownership transfer in the non-financial asset should continue to be treated as capital expenditure.
 06/01/2006State Bank of PakistanIn principle we agree with the recommendation of the AEG but we foresee many practical as well as technical problems with the implementing of these recommendations, especially in the context of developing countries where it would be difficult to obtain data with so much detail. It will also not be easy to estimate the costs of ownership and terminal costs, thereby incurring inconsistencies.
 19/12/2005KenyaAgreed
 29/11/2005TadjikistanМы согласны с тем, что расходы на передачу прав собственности на актив должны списываться в течение периода владения активом; это позволяет не завышать чистую прибыль.
 29/11/2005CambodiaWe wish to agree with AEG recommendation in principle that COT as fixed capital formation. However, it will be difficult in practice on how to write off its COT over the useful life and its consumption of fixed capital and furthermore on how to treat the terminal costs. Thus it should be provided a clear guideline for practice in estimating the COT and terminal cost and their consumption of fixed capital over its useful life. For Cambodia, it is difficult in practice to gathering data and information.
 30/06/2005Slovak RepublicFor the present we still keep our standpoint that means we agree with recording costs of ownership transfers as a gross fixed capital formation. As concern depreciation we prefer writing-off altogether with asset over the entire life of asset. The question is, how to depreciate costs of ownership transfers of non-produced non-financial assets (land). As regards terminal costs, we see some additional space for discussion because of some uncertainty in this issue.
 30/06/2005Serbia and MontenegroWe agree with the recommendations made at the December 2004 meeting of the AEG.
 22/06/2005Bank of GhanaThe debate here is whether the Commission on Turnover (COT) of fixed assets should be expensed or capitalized. Besides, if COT on fixed assets is to be capitalized, what should be the service life; how should we treat COT when the underlying asset is sold by the original owner, and, by extension, how to treat the termination costs of the underlying asset. The position of the AEG (which we agree with), is that costs of ownership transfer on disposal of an asset should be written off over the period of the asset held. Further, installation and de-installation costs should be included in costs of ownership transfer if separately invoiced, and in the purchaser's price of the asset and otherwise. Terminal costs should be recorded as capital formation when they occur but the whole cost should be written-off as consumption of fixed capital over the life of the asset, analogous to costs of ownership transfer on disposal etc.
 03/06/2005Central Bank of VenezuelaWe agree with the proposal to continue treating nonfinancial asset transfer costs as gross fixed capital formation, based on the argument that expected returns on the use of capital should be sufficient to cover transfer costs as well as the cost of the asset itself.
We disagree with the proposal to depreciate nonfinancial asset transfer costs over the period in which the asset is expected to be held. The practical application of this proposal may not be viable due to the difficulty in obtaining the necessary data. For example, in countries with high inflation, the early calculation of disposal costs could give rise to estimates with a higher degree of errors. In addition, one should bear in mind that the treatment suggested would imply different depreciation rates for transfer costs caused merely by the intention of the agents to hold or not hold an asset over its entire useful life. Furthermore, the intention to hold or not hold an asset could change from one period to another.
We believe that the terminal costs of the assets should be booked as gross fixed capital formation, and should be offset immediately as consumption of fixed capital.
With respect to installation, deinstallation, and transport costs, we agree they should be included as nonfinancial asset ownership transfer costs if invoiced separately. If not, they would be part of the acquisition price for the asset.
Companies' accounting practice could differ with respect to the booking of nonfinancial asset ownership transfer costs. Since current expenditures can be identified, we recommend considering them as gross fixed capital formation and offsetting them in the same accounting period as consumption of fixed capital.
 23/05/2005IsraelFrom a conceptual point of view, we agree with the recommendation of the AEG on this issue. We do, however, see many practical problems with implementing the recommendations. Especially the spreading of terminal costs seems difficult, and some clear guidelines for implementation should be given.
 19/05/2005Bank of Indonesia[Comments referring to Part I]
BI agrees with AEG approval in recording COT as fixed capital formation and how it should be written off depends country's tax regulation.
 19/05/2005Bank of Indonesia[Comments referring to Part II]
BI supports the concept and it is common in practice that installation or de-installation cost is separated in an invoice but it is recorded as cost of ownership.
 18/05/2005Central Bank of ChileWe agree with the proposal to consider the costs of ownership transfer as gross fixed capital formation in the case of nonfinancial assets. However, we envision difficulties in defining the period the owner is expected to hold the asset.
With respect to the incorporation of the costs of disposal of assets, we believe it is necessary to analyze this in depth to achieve greater clarity on the implications this could have for measurements. By introducing disposal costs valuing a future flow, it is not considered that this flow will be produced and consumed in due course, which generates a quadruple entry, and to some extent there will be a temporary doubt counting of the decrease in net worth.
 16/05/2005JordanIt is acceptable to change the SNA regarding written of the cost of ownership transfer over the period during which the acquirer expects to hold the asset. Thus there will be no overestimation of operating surplus
 16/05/2005Eastern Caribbean Central BankWe agree with the AEG recommendations in principle. However, in our region it may be difficult to obtain this type of information from enterprises and probably could lead to some inaccuracy in the accounts.
 12/05/2005European Central BankThe ECB agrees with the decision taken by the AEG. However, it is not in favour of the possibility to follow two options for the treatment of terminal costs as this will worsen the international comparability of such data.
 11/05/2005IndiaIndia agrees with the decisions of the AEG. However, in many cases the COT gets embedded with the cost of the fixed asset and remains as such, during the life span of the asset.
 10/05/2005USAThe U.S. Bureau of Economic Analysis endorses the recommendations made by the AEG.
 09/05/2005AustraliaAustralia agrees with the AEG recommendations
 09/05/2005MaldivesWe wish to agree with the AEG in treating the cost of ownership transfer as capital formation. Furthermore we wish to raise exception on extinguishing the value of cost of transfer when the asset is sold because the operationalization of this in actual compilation would be too complicated. Instead, the cost of ownership transfer becomes an integral value of the asset.
 09/05/2005United KingdomWe agree with the recommendations that costs of ownership transfer on disposal of an asset should be written off over the period the asset is held. Installation and de-installation costs should be included in costs of ownership transfer if separately invoiced, and in the purchaser`s price of the asset otherwise. Terminal costs should be recorded as capital formation when they occur but the whole cost should be written off as consumption of fixed capital over the life of the asset, analogous to costs of ownership transfer on disposal. When this recommendation on terminal costs cannot be followed for lack of adequate data, these costs should still be recorded as GFCF but written off as CFC in the year of acquisition.
 09/05/2005Central Bank of IranWe agree with the AEG recommendation to continue to record the cost of ownership transfers as gross fixed capital formation and to write off the cost of ownership transfer of an asset over the period of ownership. But we think depreciating COT over the period during which the owner expects to hold the asset may be difficult to implement. We disagree to recording terminal costs as capital formation. Because these costs don’t lead to formation of any assets. In our view these costs should be considered as current expenditures.
 09/05/2005ItalyWe agree from a theoretical point of view with the AEG decision but we don't know if adequate data are available.
 06/05/2005TurkeyWe agree with the recommendations made by the Advisory Expert Group on National Accounts at its second meeting in December 2004.
 06/05/2005Commonwealth of Independent States We agree that costs of ownership transfer should be written off over the period during which the asset is held; this allows not to overestimate net operating surplus.
 06/05/2005Macao, SAR ChinaRegarding the COT should be written off over the period the asset is held, we concern about the feasibility of finding out the length of the period the asset is held in case of Macao.
 06/05/2005VietnamWe agree with recommendation of AEG in principle but implement ability of this issue is difficult in practice. Because it is lack of expected length of time an asset is hell and on terminal cost of an asset.
 05/05/2005SwedenWe agree on the following AEG recommendations:
- that costs of ownership transfer on disposal of an asset should
be written off over the period the asset is held.
- installation and de-installation costs should be included in costs of ownership
transfer if separately invoiced, and in the purchaser’s price of the asset otherwise.
- that terminal costs should be recorded as capital formation when they occur.
We do not agree on the following AEG recommendations:
- that the whole [terminal] cost should be written off as consumption of fixed capital over the life of the asset, analogous to costs of ownership transfer on disposal.
- that when this recommendation on terminal costs cannot be followed for lack of adequate data, these costs should still be recorded as GFCF but written off as CFC in the year of acquisition.
Comment: The standard solution is to account for gross fixed capital formation (land improvements) when the expenditure is made and to write it off according to the guidelines already laid down in the SNA. From a statistical and accounting perspective, according to the proposal, an unknown value is to be distributed (written off) before it even has become an expenditure. And when the actual cost is known it might deviate considerably from the accounted value and thus opt for a revision of the accounts. In fact there is no good way of accounting for degradation in the SNA. The gradual degradation of a production site during the time production is undertaken is not accounted for in SNA less there is an explicit expenditure. When the expenditure is made it will also be more or less obvious how large part of it that is capital formation and thus should be written off in the future.
 04/05/2005DenmarkStatistics Denmark supports all the recommended changes. Regarding de-installation costs, Statistics Denmark believes de-installation cost only can refer to the seller of an asset. If the costs of the actual, physical de-installation are borne by the purchaser, it should be treated together with installation costs.
Regarding Terminal costs, we think that in cases where these costs cannot be anticipated or cannot be predicted it should be voluntary to record them as either investment or current expenditure. There is no effect on net-items with this addition to recommendation 3.
 29/04/2005NorwayStatistics Norway agrees to the proposed recommendations 1 and 2. As for the proposal in point 3 (and 4), terminal costs, we have however some reservations:
The proposed recommendation is to treat terminal costs in the same way as costs of ownership transfer on disposal of an asset, i.e. estimating a retrospective consumption of fixed capital bringing the value of the underlying asset to a negative value which will be offset by the terminal cost at the end of the period. The underlying reasoning must be that the costs of dismantling of an oil rig at the end of its operational life, represents the value of environmental costs accruing in the period the production of oil takes place. Also in oil companies business accounts the same view is taken.
By our opinion an alternative view could be: the terminal costs represents an investment in protective capital to prevent future environmental damage and are thus not directly related to the production activity in the past. The investments taking place at the end of the life of the underlying capital asset should be written off immediately, i.e. the protective service is rendered at the moment the asset is removed. This recording avoids the peculiarity of having a negative value of an asset recorded in the national accounts, and a very uncertain imputation is avoided. This latter is due to the fact that costs related to dismantling for example oil rigs etc in the future are uncertain partly because of unknown request regarding environmental protection and partly because of technological developments.
Our view that terminal cost should be recorded as GFCF and written off as CFC in the year of acquisition, will be in line with point 4 in the recommendation, except that we suggest that this should be the main principle and not only done when adequate data is lacking.
Regarding imputations in the accounts; we fully agree that imputations are necessary in the National Account and should be done. It is, however, important that the imputations are transparent and that methods used are agreed upon. International comparability is important and too many imputations using poor/missing data and can destroy this comparability. Also, some imputations are mostly interesting for national analysis/purposes and various methods of recording can be advocated, depending on type of analysis. In such cases we think the analysis/imputations should be done within satellite accounts or by the user, while the core accounts should be more or less unaffected and thus be the instrument for international comparability.
 28/04/2005Trinidad and TobagoWe agree with the recommendations of the AEG.
 25/04/2005Bank of Sierra LeoneWith reference to the above subject we agree with the recommendations of the Expert Group on National Accounts (AEG) especially where there is harmonization of definitions and other concepts between the Balance of Payments (BOP) and system of National Accounts (SNA).
 25/04/2005Central Bank of West African States cb_WesternAfricanStates14;
 19/04/2005SingaporeWe agree with the recommendation to write off the cost of ownership transfer of an asset over the period of ownership. This resolves the issue of the cost of ownership repeatedly adding to GFCF, especially in times where there are frequent transfers of ownership, eg in the speculative purchases of property in a property boom. We also agree that terminal cost should be recorded as capital formation and written off as consumption of fixed capital over the life of the asset. We expect however, that data availability might make it difficult for this to be carried out in practice and anticipate as suggested that practical considerations will mean that it is very likely for these costs to written off as consumption of fixed capital in the year of acquisition.
 14/04/2005Bank of FranceLa Banque approuve les recommandations du Groupe consultatif.
 13/04/2005Bank of KoreaBasically, we agree with the recommendation of the AEG. However, since it is not so easy to estimate the costs of ownership and terminal costs, it may incur inaccuracy.
 12/04/2005GreeceWe agree with the recommendations of the AEG on the issues for which a decision has been taken, at the December 2004 meeting of the group.
 12/04/2005Central Bank of HondurasLas recomendaciones del GCE sobre el tema, de continuar tratando los costos de transferencia de capital de activos no financieros como formación bruta de capital, considerando más adecuado depreciar los costos de transferencia no durante el tiempo de la vida útil del activo sino durante el periodo durante el cual se espera mantener, permiten aclarar las opciones de valoración.
 12/04/2005Central Bank of Cote d`IvoireLa proposition visant à inclure les coûts d`installation et de déménagement dans le coût du transfert de propriété si ces coûts sont facturés séparément paraît appropriée. Concernant la période sur laquelle ce coût doit être amorti (celui-ci étant considéré comme une formation brute de capital fixe), il serait logique de ne retenir que celle pendant laquelle l`acquéreur compte détenir l`actif. Toutefois, vu les difficultés qui pourraient naître lors de la détermination de cette période, cette question mériterait d`être approfondie.
 11/04/2005Central Bank of KuwaitKuwait agreed that : costs of ownership transfer on disposal of an asset should be written off over the period the asset is held.
- Installation and de-installation costs should be included in costs of ownership transfer if separately invoiced and in the purchaser’s price of the asset otherwise.
- Terminal costs should be recorded as capital formation when they occur but the whole cost should be written off as consumption of fixed capital over the life of the asset, analogous to costs of ownership transfer on disposal.
- Because of the lack of data, so the recommendation on the terminal costs cannot be followed, in this case these costs should be recorded as GFCF but written off as CFC in the year of acquisition.
 11/04/2005Bank of Tanzania/National Bureau of StatisticsWe concur with AEG recommendation.
 11/04/2005Hong Kong, ChinaWe fully support the AEG recommendation that costs of ownership transfer should continue to be treated as capital formation.
While we agree that the estimates of capital formation in fixed assets at purchaser`s price should also include installation and de-installation costs, if separately invoiced, we envisage some practical difficulties in obtaining reasonable estimates of the terminal costs written off as consumption of fixed capital in the year of acquisition. This is because terminal costs are determined by various dynamic factors, including the progress in technology and other costs to preserve the environment.
 11/04/2005IranThe expenditure is included in GFCF within the time period it occurs, so we agree on this recommendation of AEG.
 11/04/2005Germany m2(c)de14b;
 11/04/2005MalawiI fully endorse the recommendations of the Expert Group on National Accounts.
 11/04/2005Philippines At present, the Philippine System of National Accounts (PSNA), follows the 93 SNA, i.e., capitalizing the COT as part of the acquisition of a non-financial asset. This is consistent with how owners view the cost of the asset they have acquired. The Treatment of COT with regard to disposal is easier to operationalize following the existing SNA recommendation (disposal costs be recorded at the time of disposal, treated as fixed capital and then be written off immediately in the other changes in assets account) rather than write it off over the period the asset is held. Writing off during the “period the asset is held” can be a problem because data on this is not readily available. This is specific to the company disposing the asset which is not uniform across all owners of the same asset.
 11/04/2005Russian FederationWe agree with the recommendations made by the AEG on National Accounts.
 11/04/2005South African Reserve Bank We accept the recommendations of the AEG. However, the practical implementation thereof, given the lack of adequate data sources could pose a problem.
 11/04/2005South AfricaSouth Africa agrees with the recommendations in principle. We, however, foresee problems with the practical implementation thereof. Unsure if information will be available for ‘over the period the asset is held’ but information will be available ‘over the life time of the asset’.
 01/04/2005PolandIn the scope of costs of ownership transfer as well as mineral exploration we support proposed by the AEG changes.
 18/03/2005Palestinian Central Bureau of StatisticsPCBS disagree with the recommendation that considers the transfer of ownership on non-financial assets as capital formation (this treatment may have negative impacts on the value of capital formation for different economic transactions in terms of inflating or deflating the actual values), and support to separate it from the value of the asset and treat it as current expenses, PCBS recommend to hold more deep discussions on this issue.
 17/11/2004Central Bank of Chile m1(c)cbchile14;
 03/11/2004Bank of Tanzania/National Bureau of StatisticsThe inclusion of the cost of ownership as part of the capital formation is agreed and we don`t have an objection to its depreciation only be extended to the period one owns the asset, in order to link the value of the asset with capital services, while not overestimating operating surplus.
 18/10/2004National Bank of Tajikistan The National Bank of Tajikistan agrees with the recommendations of the AEG.
 14/10/2004National Bank of PolandWe are for the option to treat COT as capital expenditure as in the present SNA. The recommendations that the cost of ownership transfer should be written off over the period during a which the acquirer expects to hold the asset, maybe in some cases difficult to implement, namely if the asset is sold before the expected period. Clarification of accounting procedures in such case is needed.
 13/10/2004European Central BankThe AEG has approved the recommendation to continue to record the cost of ownership transfers as gross fixed capital formation. However, it should be written off over the period during which the acquirer expects to hold the asset. Although the ECB would tend to agree in principle with these proposals, a final decision can be reached only when a consistent solution can be proposed for all sub-items under discussion, and implications for related statistics have been assessed. Furthermore, some guidance to compilers on how to estimate the expected period of ownership of the asset would be welcome.
 12/10/2004NicaraguaWe agree to treat the cost of ownership transfer of non financial assets as gross fixed capital formation. However, our experience suggests that accounting records of enterprises do not facilitate the compilation of this cost in developing countries in order to follow SNA 93´s recommendations. In regards to the comments made by inter-secretariat working groups, these costs should be treated as gross fixed capital formation. If recommendations of this group lead to a treatment of amortization of depreciation according to the second approach suggested by Canberra II Group (to depreciate cost during the expected period holding the asset), implicitly this will require to answer the subjective question "how long is the enterprise expected to hold the capital good purchased as an asset?". In general this is not an easy task given the difficulties to obtain information directly from the enterprise.
 12/10/2004Bank of ColombiaDe acuerdo con la recomendación del grupo AEG, particularmente en los cambios conceptuales del SCN 1993 con el fin de armonizar los periodos de registro de los costos de transferencia de la propiedad.
 12/10/2004Reserve Bank of AustraliaWe support the AEG recommendations.
 06/10/2004National Bank of MoldovaWe support that cost of ownership transfer should remain capital formation and be depreciated over the period during which the acquirer expects to hold the asset. We also encourage the efforts to maintain consistency with the ongoing revisions of the Balance of payments manual.
 05/10/2004Bank of Korea Basically, we agree with the recommendation of the AEG. However, further discussion is needed to clarify the other issues, especially on the terminal cost.
 04/10/2004South African Reserve BankWe agree with the recommendations of the AEG. However, greater clarity should be provided on the issue of the time the owner is expected to hold the asset. Data sources would be a major constraint.
 30/09/2004Lesotho - Central BankComment: Cost of ownership Transfers (COT} must be included under asset value and its service life determined like any other asset.
 30/09/2004Central Bank of Madagascar- Madagascar est favorable au traitement des coûts de transferts de propriétés à l`acquisition d`un actif, c`est-à-dire devant être amortis sur la période durant laquelle l`acquéreur espère garder le bien (au lieu d`un amortissement sur la vie entière du bien). Cette approche permettra de mieux considérer le cas de cession du bien avant la fin de sa vie utile.
- Madagascar accepte la recommandation d`amortir les coûts espérés du transfert de propriété à la cession d`un bien sur la période de détention du bien au lieu d`un amortissement immédiat (dans les autres variations du compte des actifs) que nous jugeons illogique.
- Nous sommes favorable au traitement des coûts d`installation, de désinstallation et les coûts de transport comme des coûts de transfert de propriété lorsque séparément facturés, sinon à inclure dans le prix d`acquisition du bien. Ce nouveau traitement rend plus facile la comptabilisation par l`agrégation de ces différentes catégories de postes et apporte des précisions par rapport aux dispositions du SCN 1993.
- Nous approuvons l`introduction des trois méthodes explicites d`établissement des trois prix (prix de cession, prix d`acquisition et prix réalisable). Nous estimons que disposer des méthodes explicites telles que préconisées dans les recommandations, non seulement facilite le traitement des coûts de transferts de propriété par les comptables nationaux, mais également rentre bien dans le cadre du processus d`harmonisation de la méthodologie pour une meilleure comparaison au niveau mondial.N
- Nous soutenons le traitement des coûts finals comme des coûts de transfert de propriété puisqu`il s`agit d`une amélioration par rapport au SCN 1993.
 30/09/2004Bank of LatviaLatvia is in agreement with the recommendations of the AEG and we do not have any particular comment at this stage.
 30/09/2004Bank of GuyanaCost of ownership transfers should be considered as an expense, since the actual transaction cost is a liability to the organisation acquiring the new assets.
 27/09/2004AustriaAustria agrees with the recommendation to treat COTs as gross fixed capital formation and with the proposal for depreciation although this may not always be easy to implement in practice. We propose to be more precise in the terminology used, i.e. the different types of assets (Non-financial and Financial, Produced and Non-produced, Tangible and Non-tangible) to which the recommendations refers. This would facilitate to make discussions and later on the implementation more transparent and clearer.
 20/09/2004IndiaThe cost of ownership transfers is treated as capital expenditure as it is included in the acquisition cost of the asset on the part of the units acquiring the assets. Its service life should be the same as the life of the asset. However, in view of its implications on the operating surplus, we agree with the AEG recommendation of depreciating the COT over the period in which the asset is held by the acquirer.
The termination costs of the asset need to be treated as current expenditure as such costs do not form part of any asset. This treatment is in line with the 1993 SNA that associated costs of ownership transfer incurred by the units disposing of the assets do not form part of the assets.
 24/08/2004United KingdomWe agree with the recommendation to leave costs of ownership transfer for non-financial assets as gross fixed capital formation. And, that its depreciation only be extended to the period one owns the asset, in order to link the value of the asset with capital services, while not overestimating operating surplus.
 12/08/2004AustraliaAustralia strongly supports the AEG recommendations.
 11/08/2004Germany m1(c)de14;
 11/08/2004CanadaCanada agrees with the recommendation to continue to capitalize costs of ownership transfer.
 11/08/2004Slovak RepublicCost of ownership transfers in conditions of Slovak Republic is treated as a part of asset and it is written-off together with asset. This issue was also discussed last year within the framework of Phare project on Capital Stock and Consumption of fixed capital, but it was not resolved up to date and some uncertainty how to correctly continue still persist. In our opinion it is not easy to separate the value of COT from accumulated stock of assets. As regards two main recommendations, we agree with treatment COT as a capital formation but we prefer depreciating the COT over the entire life of the asset.
 11/08/2004South AfricaWe are in agreement to include the cost of ownership as part of the capital formation. However, greater clarity should be provided on the issue of the time the owner is expected to hold the asset. Data sources would be a major constraint.
 11/08/2004USAThe United States supports this recommendation of the Advisory Expert Group and encourages maintaining consistency with the ongoing revisions of the Balance of Payments manual and the public sector accounting framework.
 11/08/2004NorwayWe agree that COT should remain capital formation, and be depreciated over the period during which the acquirer expects to hold the asset.
 11/08/2004DenmarkStatistics Denmark supports all the proposed changes to the SNA regarding cost of ownership transfer. We think that estimation of disposal cost (recommendation iii) should only be done in cases where the expected disposal cost is of a significant amount in relation to the underlying asset. It should be noted that making estimates of future terminal cost (recommendation v.) could be highly sensitive to political decisions. International guidance for estimating terminal cost is needed.
 11/08/2004JordanIt is acceptable to change the SNA regarding written of the cost of ownership transfer over the period during which the acquirer expects to hold the asset. Thus there will be no overestimation of operating surplus.
 11/08/2004The NetherlandsWe agree with the AEG-recommendations. More discussion, however, is needed on the other issues addressed in the issues paper (SNA/M1.04/12), in particular on the registration of disposal costs, installation costs and terminal costs. The practical feasibility of some of the proposals made on the latter issues may be (much) more demanding than suggested in the paper.
 11/08/2004New Zealand• Classify COT as fixed capital formation. Provisional agreement. The arguments for and against this recommendation as they apply to (a) initial and subsequent purchases and (b) to flow accounts and balance sheets (net worth) (as set out in the Canberra II papers) are still being considered by Statistics NZ and no final position has been taken. • Depreciate COT over the period during which the acquirer expects to hold the asset. As above, provisional agreement. The recommendation to depreciate over the ownership period would seem to follow logically from the COT classification and the need to correctly measure the decline in asset value through the period of use – however, whether or not the recommendation can be implemented is another matter. It requires the value of COT to be separated from the fixed asset itself, plus information on how long the owner will retain the asset. While this treatment might be expected to apply only to a limited range of assets within certain industries, given the approximate nature of depreciation estimates in the first place, the practical value of this refinement might be questioned.
 11/08/2004Macao, SAR ChinaWe are pleased to express our agreement with the proposal.
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