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As a non-cash item, depreciation cannot determine net lending/borrowing, which measures the public sector’s net requirement for finance 2.166. Depreciation is recorded as an expense and as a negative component of net acquisition of non-financial assets. This ensures its exclusion from GFS net lending(+)/borrowing(-), which is derived as the GFS net operating result plus net acquisition of non-financial assets. 2.167. Changes in inventories refers to the change in the value of inventories arising from transactions over the accounting period. It is recorded as part of net acquisition of non-financial assets because it represents a change to the public sector’s assets during the accounting period. As previously discussed, usage rather than purchases of inventories is included as a...
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