Depreciation rate

The depreciation rate describes how much of the capital stock is used up during the year. In productivity surveys, consumption rates are specific for industries and capital good types. Consumption of fixed capital represents the amount of fixed assets used up during the period under consideration. Consumption is the result of normal wear and tear and foreseeable obsolescence, including a provision for losses of fixed assets as a result of accidental damage, which can be insured against.

Consumption of fixed capital should be distinguished from the depreciation shown in business accounts. It refers to the amount of fixed assets used up during the period under consideration. It should be estimated on the basis of the stock of fixed assets and the probable average economic life of the different capital goods.