Definition: Major renovations or enlargements (of fixed assets)

SNA

Major renovations or enlargements to fixed assets are distinguished by the following features:

a. The decision to renovate, reconstruct or enlarge a fixed asset is a deliberate investment decision that may be undertaken at any time and is not dictated by the condition of the asset. Major renovations of ships, buildings or other structures are frequently undertaken well before the end of their normal service lives; 

b. Major renovations or enlargements increase the performance or capacity of existing fixed assets or significantly extend their previously expected service lives. Enlarging or extending an existing building or structure obviously constitutes a major change in this sense, but a complete refitting or restructuring of the interior of a building, or ship, also qualifies (SNA 2008, § 6.229).

Major renovations or enlargements of fixed assets are activities which increase the performance or capacity of existing fixed assets or significantly extend their previously expected service lives and so are classified as part of gross fixed capital formation; the decision to renovate, reconstruct or enlarge a fixed asset is a deliberate investment decision which may be undertaken at any time and is not dictated by the condition of the asset (note the contrast between this item and "maintenance and repairs") (SNA 1993, § 6.162).
Source:
European Commission (Eurostat), International Monetary Fund (IMF), Organisation for Economic Co-operation and Development (OECD), United Nations (Statistics Division), World Bank, "System of National Accounts 2008", United Nations, New York, 2009
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