Factor income on the use of land is called rent, income generated from labor is called wages, and income generated from capital is divided between profit for equity owner and interest for creditor.
[1] In contemporary national accounting, Indirect taxes minus subsidies are treated like factor income despite not meeting the definition.
Factor cost measured have being abandoned by the SNA.
Factor income is used to analyze macroeconomic situations and to find out the difference between gross domestic product and gross national income : difference between the total value of the goods and services produced in a country and the income of the citizens of the country.
The applicability of the concept of factor income can be seen in developing countries where large portion of their income is from foreign direct investment which creates a massive gap between gross domestic product (GDP) and gross national income (GNI), with GDP being higher than GNI.