What Is Consumption of Fixed Capital?
Consumption of fixed capital is also called fixed capital depreciation. In China, it is generally called fixed asset depreciation. Generally defined as the decline in the current value of fixed asset stocks owned and used by producers due to normal use, natural degradation or general accidental damage during the accounting period. In China, it is defined as the compensation value drawn by the production unit for the fixed assets consumed in production within a certain period (accounting period), which reflects the value of the loss and transfer of the fixed asset stock in the production process. It does not include the value of fixed assets destroyed as a result of war or abnormal events, such as more severe natural disasters. In order to be consistent with other items in the same production account, fixed capital consumption must be valued with reference to the same set of current prices used in the valuation of output and intermediate consumption. The actual or estimated current fixed asset prices and rents should be used to calculate the consumption of fixed capital instead of the original purchase price. The 1993 version of the SNA recommended that independent estimates of fixed capital consumption should be prepared together with estimates of capital stock. The above estimates can be calculated based on past total fixed capital formation data combined with estimates of the rate of decrease in the efficiency of fixed assets over their useful life. [1]
Consumption of fixed capital
Right!
- Chinese name
- Consumption of fixed capital
- Foreign name
- Consumption of fixed capital
- Explanation
- Consumption in the current production process
- Category
- Input value of the production process
- Consumption of fixed capital is also called fixed capital depreciation. In China, it is generally called fixed asset depreciation. Generally defined as the decline in the current value of fixed asset stocks owned and used by producers due to normal use, natural degradation or general accidental damage during the accounting period. In China, it is defined as the compensation value drawn by the production unit for the fixed assets consumed in production within a certain period (accounting period), which reflects the value of the loss and transfer of the fixed asset stock in the production process. It does not include the value of fixed assets destroyed as a result of war or abnormal events, such as more severe natural disasters. In order to be consistent with other items in the same production account, fixed capital consumption must be valued with reference to the same set of current prices used in the valuation of output and intermediate consumption. The actual or estimated current fixed asset prices and rents should be used to calculate the consumption of fixed capital instead of the original purchase price. The 1993 version of the SNA recommended that independent estimates of fixed capital consumption should be prepared together with estimates of capital stock. The above estimates can be calculated based on past total fixed capital formation data combined with estimates of the rate of decrease in the efficiency of fixed assets over their useful life. [1]
- Consumption of fixed capital refers to the consumption of fixed assets in the current production process. It is the input value of the production process. From the perspective of asset inventory, it represents the decrease in the value of fixed assets due to normal obsolescence and damage during the accounting period. Therefore, it is expressed as a negative increase in the value of fixed assets, that is, a negative formation of fixed capital.