3.46
Output is to be recorded and valued when it is generated by the production
process.
3.47
All output is to be valued at basic prices, but specific conventions hold for:
3.48
Definition:
The basic price is the price receivable by the producers from the purchaser for a unit of a good or service produced as output minus any tax payable (see point 4.27) on that unit as a consequence of its production or sale (i.e. taxes on products), plus any subsidy receivable on that unit as a consequence of its production or sale (i.e. subsidies on products). It excludes any transport charges invoiced separately by the producer. It includes any transport margins charged by the producer on the same invoice, even when they are included as a separate item on the invoice.
3.49
Output for own final use (P.12) is to be valued at the basic prices of similar
products sold on the market; as a consequence, net operating surplus or mixed
income can occur for such output. This also applies to services of
owner-occupied dwellings (see paragraph 3.64.). However, it will usually be necessary to value output of own-account
construction by costs of production.
3.50
Additions to work-in-progress are valued in proportion to the estimated
current basic price of the finished product.
3.51
If the value of output treated as work-in-progress is to be estimated in
advance, it should be based on the actual costs incurred, plus a mark-up for the
estimated operating surplus or an estimate of mixed income. The provisional
estimates should subsequently be replaced by those obtained by distributing the
actual value (when it becomes known) of the finished products. The latter is the sum
of the values of:
If the own-account construction of a structure is not yet completed within a
single accounting period, the value of the output and the corresponding gross
fixed capital formation should be estimated by applying the fraction of the total
costs of production incurred during the relevant period to the estimated
current basic price. If it is not possible to estimate the basic price of the
finished structure, it must be valued by its total costs of production. If some or
all of the labour is provided free, as may happen with communal construction by
households, an estimate of what the cost of paid labour would have been included
in the estimated total production costs using wage rates for similar kinds of
labour in the vicinity or region.
3.53
The total output of an other non-market producer (a local KAU) is to be valued
at the total costs of production, i.e. the sum of:
By convention, interest payments are not included as costs of other non-market
production (though they could be regarded as major costs of production in some
cases, e.g. in case of housing corporations). The costs of other non-market
production also do not include an imputation for the rental value of the
non-residential buildings owned and used in other non-market production.
3.54
The total output of an institutional unit is the sum of the total output of
its constituent local KAUs. This applies also to institutional units that are
other non-market producers.
3.55
In the absence of secondary market output by other non-market producers (local
KAUs), other non-market output is to be valued at the costs of production. In
the case of secondary market output by other non-market producers, other
non-market output is valued as a residual item, i.e. as the difference between the
total costs of production of other non-market producer minus their revenues from
market output.
3.56
In principle, market output by other non-market producers is to be valued at
basic prices. However, even though an other non-market local KAU may have sales
receipts, its total output covering both its market and its other non-market
output (and possibly also output for own final use), is still valued by the
production costs. The value of its market output is given by its receipts from sales
of market products, the value of its other non-market output being obtained
residually as the differences between on the one hand the values of its total
output and, on the other hand, its market output and output for own final use. The
value of its receipts from the sale of other non-market goods or services at
prices that are not economically significant remain as part of the value of its
other non-market output.
3.57
For some specific types of output, the times of recording and the valuation of
output are subject to the following clarifications and exceptions, given in
order of CPA sections.
3.58
A. Products of agriculture, hunting and forestry; B. Fish.
The output of agricultural products should be recorded as being produced
continuously over the entire period of production (and not simply when the crops are
harvested or animals slaughtered).
Growing crops, standing timber and stocks of fish or animals reared for
purposes of food should be treated as inventories of work-in-progress during the
process, and transformed into inventories of finished products when the process is
completed.
3.59
D. Manufactured products; F. Construction work.
When a contract of sale is agreed in advance for the construction of a
building or other structure extending over several accounting periods, the output
produced each period is treated as being sold to the purchaser at the end of the
period: i.e. in the purchaser's fixed capital formation rather than work-in-progress in the construction
industry. In effect, the output produced is treated as being sold to the purchaser
in stages as the latter takes legal possession of the output. When the
contract calls for stage payments, the value of the output may often be approximated
by the value of stage payments made each period. In the absence of a contract of
sale, however, the incomplete output produced each period is recorded as
work-in-progress.
3.60
G. Wholesale and retail trade services; repair services of motor vehicles,
motorcycles and personal and household goods.
The output of wholesale and retail services is measured by the trade margins
realised on the goods they purchase for resale.
Definition:
3.52
For buildings and structures acquired in an incomplete state, a value is
estimated based on costs to date, including a mark up for operating surplus or mixed
income. This mark-up results when the value can be estimated on the basis of
the prices of similar buildings and structure. The amounts of stage payments may
be used to approximate the values of gross fixed capital formation undertaken
by the purchaser at each stage (assuming no advance payments or arrears).
Other subsidies on production should be deducted. However, it should be
realised that other subsidies on production to other non-market producers will often
be absent in practice or only involve very small amounts (see paragraph 4.36.).
A trade margin is the difference between the actual or imputed price realised on a good purchased for resale and the price that would have to be paid by the distributor to replace the good at the time it is sold or otherwise disposed of.
By convention, holding gains and losses are not included in the trade margin.
However, in practice, data sources may not allow to separate out all the
holding gains and losses.
3.61
H. Hotel and restaurant services.
The value of the output of the services of hotels, restaurants and cafes
includes the value of the food, beverages, etc. consumed.
3.62
I. Transport, storage and communication services.
The output of transport services is measured by the value of the amounts
receivable for transporting goods or persons. Transportation for own use within the
local KAU is considered ancillary activity and is not separately identified and
recorded.
The output of storage services is measured as the value of an addition to
work-in-progress, either additional output in the sense of transportation over time
(e.g. storage on behalf of other local KAUs) or a physical change (e.g. in
case of the maturing of wine).
The output of travel agency services is measured as the value of service
charges of agencies (fees or commission charges) and not by the full expenditures
made by travellers to the travel agency. The latter may e.g. also include charges
for transport by third parties.
The output of tour operator services is measured by the full expenditure made
by travellers to the tour operator.
The distinction between travel agency services and tour operator services is
that travel agency services amount only to intermediation on behalf of the
traveller, while tour operator services create a new product, i.e. a tour is
arranged of which the prices of its various components (e.g. travel, accommodation and
entertainment) are not recognisable as such for the traveller.
3.63
J. Financial intermediation services (this includes insurance services and
pension funds services).
Financial intermediation services (excluded insurance services and pension
funding services) consist in: (a) financial intermediation
services directly charged by financial intermediaries to their clients and
measured as the sum of fees and commission charged. Financial intermediaries can charge explicitly for the
intermediation services which they provide. The output of such services is
valued on the basis of fees and commissions charged; (b) financial intermediation services indirectly charged and
indirectly measured (FISIM). Financial intermediaries provide services for which they do not
charge explicitly fees and commissions. They pay lower rates of interest than
would otherwise be the case to those who lend them money and charge higher rates
of interest to those who borrow from them. Consequently, FISIM output is generated by the management by
financial intermediaries of loans and deposits whose rates they control; in
contrast, there is no intermediation service for securities other than shares. The output of the subsectors S122 (other financial institutions)
and S123 (other financial intermediaries excluding insurance corporations and
pension funds), except investment funds is valued on the basis of the difference
between the actual rates of interest payable and receivable and a "reference"
rate of interest. For those to whom the intermediaries lend funds, both resident
and non-resident, it is measured by the difference between the effective
interest charged on loans and the amount that would be paid if a reference rate
were used. For those from whom the intermediaries borrow funds, both resident
and non-resident, it is measured by the difference between the interest they
would receive if a reference rate were used and the effective interest they
actually receive; (c) financial intermediation services provided by the central
bank. The central bank must not be included in the calculation of
FISIM: its output is measured as the sum of costs.
Output of insurance services (service charge) is measured as:
total actual premiums earned
plus total premium supplements
minus the total claims due
minus the change in the actuarial reserves and reserves for with-profits insurance.
Holding gains and losses are to be ignored in the measurement of the output of
insurance services: they are not to be regarded as income from investment of
the insurance technical reserves and they are not to be considered as changes in
the actuarial reserves and reserves for with-profits insurance.
Notice that insurance technical reserves may be invested in secondary
activities of the insurance company, e.g. the letting of dwellings or offices. In that
case, the net operating surplus on these secondary activities is income from
the investment of insurance technical reserves.
Similarly, the output of pension funding services is measured as:
total actual pension contributions
plus total supplementary contributions
(equal to the income from investment of the pension funds technical reserves)
minus the benefits due
minus the change in the actuarial reserves.
3.64
K. Real estate, renting and business services.
The output of services of owner-occupied dwellings should be valued at the
estimated value of rental that a tenant would pay for the same accommodation,
taking into account factors such as location, neighbourhood amenities, etc. as well
as the size and quality of the dwelling itself. For garages located separately
from dwellings, which are used by the owner for final consumption purposes in
connection with using the dwelling, a similar imputation is to be made. No
imputation is to be made for garages used by their private owner only for the
purpose of parking near the workplace. The rental value of owner-occupied dwellings
abroad, e.g. holiday homes, should not be recorded as part of domestic
production, but as imports of services and the corresponding net operating surplus as
primary income received from the Rest of the World. For owner-occupied dwellings
owned by non-residents, analogous entries should be made. In case of
time-sharing apartments, a proportion of the service charge should be recorded as such.
The output of real estate services of non-residential buildings is measured by
the value of the rentals due.
The output of operating leasing services (renting out machinery or equipment,
etc.) is measured by the value of rental which the lessee pays to the lessor.
It is clearly distinguished from financial leasing which is a method of
financing the acquisition of fixed assets, i.e. by making a loan from the lessor to the
lessee. In the case of financial leasing rentals consist (mainly) of
repayments and interest payments, and the value of services is very small compared with
the total rentals paid (see Annex
When possible, a separate local KAU should be distinguished for research and
development activities (R&D). When this is not possible, all R&D of a
significant size (compared to the principal activity) should be recorded as a secondary
activity of the local KAU.
The output of R&D services is measured as follows:
3.65
L. Public administration and defence services, compulsory social security
services.
Public administration, defence services and compulsory social security
services are always provided as other non-market services and should thus be valued
accordingly.
3.66
M. Education services; N. Health and social services.
For education services and health services it may often be necessary to draw
precise borderlines between market and other non-market producers and between
their market and other non-market output. For example, for some types of
education and medical treatment nominal fees can be levied by government institutions
(or by other institutions due to specific subsidies), but for other education
and special medical treatments they may charge commercial tariffs. Another common
case in point is that the same type of service (e.g. higher education) is
provided by, on the one hand, the government (or its intermediation) and, on the
other hand, commercial institutes. Then, often large differences exist between
the prices charged and the quality of the services.
Education and health services exclude R&D activities; health services exclude
education in health care, e.g. by academic hospitals.
3.67
O. Other community, social and personal services.
The production of books, recordings, films, software, tapes, disks, etc. is a
two stage process and measured accordingly:
(1) The output from the production of originals (an intangible fixed asset) is
measured by the price paid if sold, or, if not sold, by the basic price paid for
similar originals, its production costs or the discounted value of the future
receipts expected from using it in production;
(2) The owner of this asset may use it directly or to produce copies in subsequent
periods. If the owner has licensed other producers to make use of the original
in production, the fees, commissions, royalties, etc. he receives from the
licenses are his output of his services. However, the sale of the intangible asset
is negative fixed capital formation.
3.68
P. Private households with employed persons
The output of household services produced by employing paid staff is by
convention valued by the compensation of employees paid; this includes any
compensation in kind such as food or accommodation.
(equal to the income from the investment of the insurance technical reserves)
Expenditure on R&D should be distinguished from that on education and
training. Expenditure on R&D does not include the costs of developing software as a
principal or secondary activity. However, their accounting treatment is nearly the
same; the only difference is that software is regarded as a produced
intangible asset and is not patented.