Normally, for the purpose of accounting, fixed investment refers to physical assets held for one year or more. The investment capital is therefore fixed, in the precise sense that the capital is tied up in physical assets for a longer time, and thus cannot be used for other purposes. This contrasts with, for example, investment capital in the form of liquid bank deposits earning interest, or investment in raw materials completely used up for example five weeks to produce products which, upon sale, earn income the following month. The term fixed investment may be somewhat ambiguous, because it could refer to the value of a stock of fixed assets being held at a balance date, or to the value of a flow of expenditures on fixed assets across an accounting interval, such as a year. The distinction is not always clearly stated in statistical tabulations - they might refer either to the stock of capital tied up in fixed assets at a balance date, or to how much was spent on fixed equipment during a quarter or year.
Posted on: Thu, 20 Mar 2014 17:55:18 +0000
Trending Topics
Recently Viewed Topics
© 2015