Background Notes

Introduction 

This release belongs to the series which are now published annually providing estimates of the values of the stocks of fixed assets.  Following a break in the series with the implementation of ESA 2010 (European System of Accounts) in Ireland in July 2014 this release contains the first set of estimates for 2013 and 2014.  The capital stocks are estimated using a Perpetual Inventory Method.  In this system the level of stocks are derived from the investment amounts which were made over the preceding years. The annual investments are depreciated by a depreciation function to obtain “net” values (i.e. net of depreciation).  The investments are also revalued in the process to update them from their prices in the historical year in which they were purchased to the year for which estimates are being made.

Fixed assets

The assets covered in these tables relate to Produced Fixed Assets as defined in ESA2010.  Produced fixed assets are assets which result from human effort.  They exclude natural assets such as land, mineral deposits etc. Produced fixed assets comprise;

• Dwellings and other buildings and structures (excluding the land on which they are built)
• Machinery and equipment (including transport equipment)
• Cultivated assets (e.g. Livestock for breeding such as dairy cattle etc.)
• Intangible fixed assets (Research and development, Computer software, Original works of art including musical and literary works, Mineral exploration).

Revisions

Revisions arise as amendments are made to the investment amounts i.e. to Gross Fixed Capital Formation (GFCF) in the national accounts.  Revisions also arise from improved sources or estimation methods.  Data relating to the most recent year are also added to the series.  

Gross/Net 

The two most common valuation methods for fixed capital assets are Gross and Net.  The gross capital stock represents the value of the stock still in use (i.e. not retired or scrapped) and valued at the price of new capital goods.  The term Gross means gross of consumption of fixed capital (the national accounts term for depreciation).  Thus the gross stock of assets ignores decay of assets and considers past investments as new – only retirement is taken into account.  In practice fixed assets normally decline in value over time due to factors such as wear and tear and obsolescence.  Taking this declining value into account together with retirements give rise to the Net value of the stock of assets. Estimates are provided in this release using both valuation concepts.

Prices

The stock of assets is generally valued in current and constant prices. Valuation in current prices implies that all the assets accumulated over the years are valued at the prices obtaining in the year for which the estimates are given.  In the case of the gross stock this is the price of new assets.  In the case of the net stock it is the written down price of assets.  Valuation at constant prices represents the stock of capital assets in the price of the stated reference year (2013 in these tables).

Catastrophic losses

Catastrophic losses arise, generally infrequently, due to exceptional events such as acts of war or unusually severe weather conditions.  Some of the severest weather conditions ever experienced in Ireland in living memory occurred towards the end of 2009 and early in 2010.  Considerable flooding took place in 2009 and estimates have been made by which the stock of assets were reduced in 2009 and 2010 to take account of these disasters.

Depreciation

Consumption of Fixed capital (also known as depreciation) automatically becomes available as a by-product of the calculation of the stock of fixed assets in net and gross terms.  Estimates of the consumption of fixed capital are provided in the release in current and constant terms.

Additional Data

All tables are available from the year 1985 in the CSO databank.

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