Explain the difficulty in accounting for service trade versus tangible Essay

Explain the difficulty in accounting for service trade versus tangible goods in the Balance of Payments (BOP) framework - Essay Example Therefore, such transactions may not be reported, recorded, or even traced. As opposed to physical goods, the valuation of services is considered to be a difficult task as there may not be a single basis for measuring them and different companies within a single country may be using different approaches to recording of financial data. It is also impossible to deliver the same service or standard of service to customers which may create an argument that services may not recorded on a standardized manner (Arnold, 2011). It is also understood that the valuation of financial services including derivatives can have varying effects on balance of payments of different countries as they are based on different bases of measurement. Furthermore, there may be lacking of benchmarks which can be used for recording and measuring of services. Therefore, it is impossible to include all items of services in the current