SNA Accounting Rule 4: Valuation Principle

Another implication of the quadruple entry principle is that a transaction has to be recorded at the same value through all the accounts by both sectors involved.

Transactions are valued at the actual price agreed upon by the transactors. Market prices are thus the basic reference for valuation in the system. In the absence of a market price, other valuation methods have to used. In the case of non-market services provided by government or non-profit institutions the valuation are made according to costs incurred; the sum of intermediate consumption, wages and salaries and consumption of fixed capital. Goods and services produced for own final consumption or own capital formation, e.g., services of owner occupied dwellings or own production of vegetables, are valued at the same prices as similar goods and services sold in the market.

Assets and liabilities are valued at current prices at the time to which the balance sheets relates, and not at their original prices. The appropriate valuation basis is the price at which they might be sold or bought in the market at the time of valuation.

Various methods of treating net taxes (taxes less subsidies) on products, as well as trade and transport margins exist when valuing transactions in goods and services.

The preferred method to value output is at basic prices. Basic price is the value of a product before taxes on products are added and subsidies on products are subtracted. The basic price measures the amount retained by the producer and, thus, is the price most relevant for the producer's decision taking.

Producers’ prices might be used when basic prices are not available, or feasible. Producers prices includes, in addition to basic prices, net taxes on products paid by the producers. Thus, excluded is sales - and value added type taxes.

All use of goods and services for intermediate or final consumption, as well as for capital formation are valued at purchasers prices. Purchasers price is the amount paid by the purchaser, excluding deductible value added taxes. Purchasers price is the actual cost for the user. The purchasers price equals the producer prices plus sales taxes or nondeductible value added type taxes, in addition to trade - and transport margins.

Factor cost was according to 68SNA the preferred method of value production and value added. Factor cost equals basic price less 'other taxes on production, net.' 93 SNA do not refer to the concept of factor cost but recommends to value production and value added at basic price, however, many countries are still on 68SNA, using 68 terminology, thus, it might be useful to see the link;