Valuation Principles
Conceptually, intermediate goods or services should be valued at purchaser's market prices (including transaction costs and tax), at the point in time when the good or service enters the process of production, not when they were acquired by the producer.
In practice, the two times will coincide for inputs of services, but often not for goods, because these can be bought and stored some time as inventories, before they are actually used in production.
Read more about this topic: Intermediate Consumption
Famous quotes containing the word principles:
“The machines that are first invented to perform any particular movement are always the most complex, and succeeding artists generally discover that, with fewer wheels, with fewer principles of motion, than had originally been employed, the same effects may be more easily produced. The first systems, in the same manner, are always the most complex.”
—Adam Smith (1723–1790)