Classification of components of Income-based Gross Domestic Product

• 2 - Gross operating surplus

23 - Consumption of fixed capital: general governments and non-profit institutions serving households

'Consumption of fixed capital' refers to the decline, during the course of the accounting period, in the current value of the stock of fixed assets owned and used by a producer as a result of physical deterioration, normal obsolescence or normal accidental damage. The terms depreciation, capital consumption allowance, and capital cost allowance are often used in place of consumption of fixed capital but are avoided in the System of National Accounts since the term depreciation is often used in commercial accounting in the context of writing off historic costs, whereas in the System of National Accounts consumption of fixed capital is dependent on the current value of the asset. Consumption of fixed capital is calculated for all fixed assets owned by producers, but not for valuables (precious metals, precious stones, etc.) that are acquired precisely because their value, in real terms, is not expected to decline over time. Fixed assets must have been produced as outputs from processes of production as defined in the System of National Accounts. Consumption of fixed capital does not, therefore, cover the depletion or degradation of natural assets such as land, mineral or other deposits, coal, oil, or natural gas, or contracts, leases and licences. Consumption of fixed capital: general governments and non-profit institutions serving households represents consumption of fixed capital of general governments and non-profit institutions serving households.