Giving reasons, explain the treatment of the following while estimating national income:
(i) Expenditure on maintenance of an office building
(ii) Expenditure on adding a floor to the office building
(iii) Contribution to the provident fund by the employees
Giving reasons, explain the treatment of the following while estimating national income:
(i) Expenditure on maintenance of an office building
(ii) Expenditure on adding a floor to the office building
(iii) Contribution to the provident fund by the employees
(i) Expenditure on maintenance of an office building is not included in national income as it is a part of intermediate consumption. An office building is an income generating asset.
(ii) Expenditure on adding a floor to the office building is included in national income because it is a part of investment expenditure or capital formation.
(iii) Social security contribution by the employee is not separately included in the estimation of national income as these are paid out of compensation of employees.
(i) Expenditure on maintenance of an office building is not included in national income as it is a part of intermediate consumption. An office building is an income generating asset.
(ii) Expenditure on adding a floor to the office building is included in national income because it is a part of investment expenditure or capital formation.
(iii) Social security contribution by the employee is not separately included in the estimation of national income as these are paid out of compensation of employees.
