Definition: Abnormal obsolescence

Category: OECD terminology

Loss in value on an asset due to a fall in demand for that type of asset that could not have been foreseen when the asset was acquired. Abnormal obsolescence may occur because of a new invention or discovery which destroys the market for the asset or because a shift in relative prices makes it uneconomical to continue using the asset. It is not included in consumption of fixed capital but in "other changes in nonfinancial asset n.e.c." in the "Other changes in assets account". Abnormal obsolescence is a synonym for "unforeseen obsolescence".
Organisation for Economic Co-operation and Development (OECD), "Measuring Capital - OECD Manual: Measurement of Capital Stocks, Consumption of Fixed Capital and Capital Services", Annex 1: Glossary of technical terms used in the Manual, Paris, 2001