The Effect of Ownership Relations On Operating Surplus in UNSNA
The size of total operating surplus is in theory not affected by whether the assets used in production are owned or rented by the enterprise, or whether assets owned by the enterprise and used in production are financed out of its own funds (or equity capital) or out of borrowed funds (or loan capital).
But if buildings, other structures, machinery or equipment are rented by an enterprise, the payments of rentals under an operating lease or similar lease are recorded as purchases of services (Intermediate consumption). Thus, the payment of a rental on a fixed asset reduces its gross value added, below what it would be, if the producer owned the asset.
The impact of this on net value added is offset to some extent by the fact that a tenant, or lessee, incurs no asset depreciation, whereas an owner would. But net value added will be lower when a fixed asset is rented, because the rental has to cover the lessor's operating and interest costs as well as asset depreciation. Thus, the size of net operating surplus will vary according to whether fixed assets are rented, or purchased.
Enterprises may furthermore invest surplus capital in financial assets or real estate assets, especially in times of uncertainty or high interest rates. Considerable property income may be received from such investments. In UNSNA, this property income does not constitute part of value added in production, and is therefore excluded from operating surplus (except for what is called the services of the financial, insurance and real estate industry).
If therefore an increasing amount of business income consists of property income rather than income from production, this will lower value added, and lower operating surplus.
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