1. consumption of fixed capital (which includes anticipated normal accidental damage);
2. exceptional losses, such as those due to drought or other natural disasters (recorded as an other change in the volume of assets).

3.105 The following types of gross fixed capital formation may be distinguished:

1. acquisitions, less disposals, of tangible fixed assets:
   1. dwellings;
   2. other buildings and structures;
   3. machinery and equipment;
   4. and cultivated assets, e.g. trees and livestock.
   6. acquisitions, less disposals, of intangible fixed assets:
      1. mineral exploration;
      2. computer software;
      3. entertainment, literary or artistic originals;
      4. other intangible fixed assets.
   7. major improvements to tangible non-produced assets, in particular those pertaining to land (though the acquisition of non-produced assets is not included);
   8. costs associated with the transfers of ownership of non-produced assets, like land and patented assets (though the acquisition of these assets themselves is not included).
   3.106 Major improvements to land include:
   1. reclamation of land from sea by the construction of dikes, sea walls or dams for this purpose;
   2. clearance of forests, rocks, etc. to enable land to be used in production for the first time;
   3. draining of marshes or the irrigation of deserts by the construction of dikes, ditches and irrigation channels;
   4. prevention of flooding or erosion by the sea or rivers by the construction of breakwaters, sea walls or flood barriers.
   These activities may lead to the creation of substantial new structures such as sea walls, flood barriers and dams but these are not themselves used directly to produce other goods and services in the way that most structures are. Their construction is undertaken to obtain more or better land, and it is the land, a non-produced asset, that is needed for production. For example, a dam built to produce electricity serves quite a different purpose from a dam built to keep out the sea. Only building the latter type of dam should be classified as an improvement to land.

   3.107 Gross fixed capital formation includes borderline cases like:

   1. acquisitions of houseboats, barges, mobile homes and caravans used as residences of households and any associated structures such as garages;
   2. structures and equipment used by the military (similar to those utilised by civilian producers) such as airfields, docks, roads and hospitals;
   3. light weapons and armoured vehicles used by non-military units;
   4. changes in livestock used in production year after year, such as breeding stock, dairy cattle, sheep reared for wool and draught animals;
   5. changes in trees that are cultivated year after year, such as fruit trees, vines, rubber trees, palm trees, etc.;
   6. improvements to existing fixed assets that go well beyond the requirements of ordinary maintenance and repairs;
   7. the acquisition of fixed assets by financial leasing.

   3.108 Gross fixed capital formation excludes:

   1. transactions included in intermediate consumption, like:
      1. purchase of small tools for production purposes (see paragraph 3.70e);
      2. ordinary maintenance and repairs;
      3. purchase of military weapons and their supporting systems;
      4. the purchase of fixed assets to be used under an operational leasing contract (see also Annex II 'Leasing and hire purchase of durable goods').
   2. transactions recorded as changes in inventories;
      1. animals raised for slaughter, including poultry;
      2. trees grown for timber (work-in-progress).
   3. machinery and equipment acquired by households for purposes of final consumption (final consumption expenditure);
   4. holding gains and losses on fixed assets (other changes in assets);
   5. catastrophic losses on fixed assets (other changes in assets), e.g. destruction of cultivated assets and livestock by outbreaks of disease (and not normally covered by insurance) or damage due to abnormal flooding, wind damage or forest fires (see chapter 6).

   3.109 Gross fixed capital formation in the form of improvements to existing fixed assets is to be classified with acquisitions of new fixed assets of the same kind.

   3.110 Intangible fixed assets typically consist of new information, specialised knowledge, etc. and comprise:

   1. mineral exploration comprising costs of actual test drilling, aerial or other surveys, transportation costs, etc.;
   2. computer software and large data bases to be used in production for more than one year;
   3. literary and artistic originals of manuscripts, renderings, models, films, sound recordings, etc.
   3.111 For both fixed assets and non-produced non-financial assets, the costs of ownership transfer incurred by their new owner consist of:
   1. charges incurred in taking delivery of the asset (new or existing asset) at the required location and time, such as transport charges, installation charges, erection charges, etc.;
   2. professional charges or commissions incurred, such as fees paid to surveyors, engineers, lawyers, valuers, etc., and commissions paid to estate agents, auctioneers, etc.;
   3. taxes payable by the new owner on the transfer of ownership of the asset.
   All these costs are to be recorded as gross fixed capital formation by the new owner. Note that the taxes are to be treated as taxes on the services of intermediaries and not as taxes on the asset bought.