If, for example, an enterprise buys services from other enterprises, instead of producing them in-house, its own value added will be reduced, and its intermediate consumption will be increased.
12.
In general, when items are used by employees in their own time and at their own discretion for their own use, they are regarded as remuneration in kind, not intermediate consumption.
13.
Intermediate consumption ( unlike fixed assets ) is not normally classified in national accounts by type of good or service, because the accounts will show net output by sector of activity.
14.
Consequently, if businesses decide for economic reasons to rent more physical assets, or alternatively buy more physical assets, this can independently affect the size of GDP components and the size of intermediate consumption.
15.
Conceptually, the aggregate " intermediate consumption " is equal to the amount of the difference between Gross Output ( roughly, the total sales value ) and Net output ( gross value added or GDP ).
16.
Thus, the sizes of total value added and intermediate consumption are affected by the degree to which ancillary activities are either produced in-house by an enterprise, or bought from other enterprises within the domestic economy.
17.
But because in-house production itself has intermediate inputs, the value of the increase in intermediate consumption that results from in-house production is likely to be less than the value of equivalent services purchased from another enterprise.
18.
But if buildings, other structures, machinery or equipment are " rented " by an enterprise, the payments of rentals under an operating lease or similar lease are recorded as purchases of services ( Intermediate consumption ).
19.
Ultimately, the distinction drawn between that portion of business operating expenditure included in CFC beyond depreciation, in contrast to that portion of operating expenditure included in Intermediate consumption may appear rather capricious, rather than theoretically justified.
20.
Different schools of economists define services by individuals constitutes consumption, while other types of expenditure in particular, fixed investment, intermediate consumption, and government spending are placed in separate categories ( See consumer choice ).
