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Why international sale and purchase of …

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Why international sale and purchase of real assest is recorded in capital account of bop when it is given that it will not record export and imports of goods

Posted by Khushi Singhal 5 years, 10 months ago

CBSE > Class 12 > Economics

1 answers

Canada'S ?? Julliet Anu 5 years, 10 months ago

We know very properly that export and import of goods ( merchandise) comes in current account of BOP. But ,in some and very rare cases international sale and purchase of real assets comes under capital account of BOP. This thing happens when we purchase such asset in rest of the world which gives full control over the asset to the buyer. Ex: acquisition of a foreign firm by ITC limited. It is a type of investment that comes in capital account of BOP. REMEMBER if this question comes in exam you can give a proper note for this. Simply it's answer should be current account of BOP.

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