About gross domestic product at factor cost

GDP at factor cost= Net value added + Depreciation. Here my question is why depreciation added to Net value added? I am confused here: Net value added = Gross value added - depreciation; so the above formula becomes GDP at factor cost= Gross value added - depreciation + Depreciation. Here depreciation get cancelled and finally becomes GDP at factor cost= Gross value added. Source: http://www.economicsdiscussion.net/national-income/components-national-income/top-17-components-of-national-income/18793

• Hi @Nandy, welcome! Where do your definitions come from? – emeryville Aug 17 '19 at 7:48
• economicsdiscussion.net/national-income/… – Nandy Aug 17 '19 at 8:04
• It's in Component # 2. GDP at Factor Cost – Nandy Aug 17 '19 at 8:05
• ok, I edited my answer. Note that this source gives GDP at Factor Cost = GDP at Market Price – Indirect Taxes + Subsidies, which is consistent with my answer – emeryville Aug 17 '19 at 8:25
• If you found the answer helpful, please consider accepting it using the check-mark. – emeryville Aug 17 '19 at 8:36

As an example, GDP at market prices for the United States in 1992 was US\$6,234 billion. As GDP at factor cost removes all net taxes on production, it would equal \$6,234 billion less \$506 billion or \$5,728 billion.