Accounting for assets

• assets are things of value owned by the business
• future economic benefits are expected to flow from assets
• current assets are assets that are expected to be consumed or converted into cash during a 12 month period
• non current assets are assets acquired for the purposes of facilitating production and earning of revenue. they do not change substantially in value during a 12 month period of farm operations and are normally for resale in the ordinary course of business
• fixed improvements can be listed separately or added to the value of land except in terms of tax - they are always separated as over time the value of fixed improvements decreases or depreciates which generates a tax deduction
• breeding livestock are considered non current assets
• long term fibre production livestock are considered non current assets
• trading livestock are considered current assets
• replacement livestock are considered current assets
• replacement livestock are considered to be current assets because it is not until such time the livestock are actually placed within the breeding livestock that you can be certain this is where they will end up
• the conservative market approach is regarded as being a value at the lower end of the current day market value range for the particular item e.g. current lamb prices are within the range of $90-$140 and I decide that a conservative market value would be $100/lamb
• the conservative market approach is used to value produce
• the conservative estimate of the market value is used to value land (as based on district sales recorded)
• the depreciation schedule is used to value plant and machinery
• values may differ for a depreciation schedule used for taxation purposes where a higher or lower depreciation rate is used
• management depreciation reflects the useful life to management of the machine
• in management accounting it is useful to list land at a conservative realistic estimate