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THE MEASUREMENT OF CAPITAL THROUGH A FIXED ASSET ACCOUNTING SIMULATION MODEL (FAASM)
Author(s) -
Jaffey Michael
Publication year - 1990
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.1990.tb00264.x
Subject(s) - consumption of fixed capital , fixed asset , economics , fixed capital , depreciation (economics) , national accounts , econometrics , perpetual inventory , stock (firearms) , capital asset , accounting method , accounting , financial economics , macroeconomics , microeconomics , capital formation , financial capital , production (economics) , operations management , inventory control , engineering , profit (economics) , mechanical engineering , inventory theory
In this article the author describes a method of estimating the capital stock of the corporate sector which is being developed at Statistics Canada. The method uses a “Fixed Asset Accounting Simulation Model” or FAASM. FAASM provides estimates of the capital stock by inferring the actual service lives of fixed assets, and using these with price indexes to revalue assets on a constant price basis. FAASM is thus an alternative to the widely used Perpetual Inventory Method. By also inferring accounting lives using the depreciation accounts, it has other important outputs. These latter get only passing mention here. Since FAASM exploits the available data in a comprehensive, systematic way, its service life and capital stock estimates may eventually, after system development and improvement in operation, approach the limits of attainable accuracy.