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2.12. To be useful in analysis, and to provide meaningful indicators of cross-border economic activity, it is important that the balance of payments and international investment position statistics carry values that have economic meaning. It is also important, given the double-entry accounting system used, that a uniform valuation is adopted. This means that the credit and debit entries of each transaction - which in practice may be derived from independent sources - should be valued at the same price. In addition, a uniform valuation is essential to sum different types of transactions on a consistent and comparable basis. The use of a uniform valuation principle aids understanding by users. Moreover, statistics for different countries will not be comparable unless both parties to a transaction adopt the same valuation principle. It is also important to use a principle which is consistent with national accounting principles. For all these reasons, market price is used in Australian economic statistics for valuing transactions.
Assets and liabilities
2.15. As with all international investment position statistics, foreign financial assets and liabilities should, in principle, be valued at their current market price at the reference date. In practice this is not always possible and valuation guidelines are adopted in order to approximate market valuation, particularly for those financial assets and liabilities that are only rarely transacted. For example, in measuring the value of direct investment in equity capital, much of which is never traded or is traded infrequently, market value is approximated by one of the following methods: a recent transaction price; directors’ value; or net asset value.
Unit of account and conversion
2.16. Transactions and stock positions originally denominated in foreign currencies need to be converted to Australian dollars using market rates of exchange prevailing at the time of the transaction (balance of payments) or at the reference date (international investment position). Transactions should be converted at the mid-point of the buying and selling exchange rates applying at the time of transaction. Stocks should be converted at the mid-point of the buying and selling exchange rates applying at the beginning or end of the period. In practice, the actual rate used varies according to the source of the transaction or stock data.