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The Ostrich Farm

The Ostrich Farm. Basic Information. commercial ostrich industry began about 150 years ago in South Africa especially good for their meat eggs are edible but they are mainly used for breeding and art purposes one pair of mature ostrich is worth about 8 ostrich eggs

stacey-reyes
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The Ostrich Farm

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  1. The Ostrich Farm Financial Accounting

  2. Basic Information • commercial ostrich industry began about 150 years ago in South Africa • especially good for their meat • eggs are edible but they are mainly used for breeding and art purposes • one pair of mature ostrich is worth about 8 ostrich eggs • one adult ostrich yields around 100 kg of meat • 100 kg meat is worth about 9 eggs • One adult ostrich consumes about 35 kg of feed per day Financial Accounting

  3. Beginning-1 • father divided his ostrich farm of 30 squared kilometers that is worth ninety ostrich eggs between his two daughters • total of thirty ostriches • the daughters did not own the land or the ostriches but were responsible from running the operations • older daughter received a land of 20 squared kilometers with 20 ostriches, and the younger the remaining land with its ostriches Financial Accounting

  4. Beginning-2 • In each piece of land there is one egg incubator that is expected to last eight years with good use, and a portable shelter for the animals which can usually be used for two years. • Each egg incubator is worth two pairs of ostriches and the shelter about two eggs. • The father also gave each daughter bird feed that would be enough for the first half of the year. 1000 kg of feed is worth one egg. Financial Accounting

  5. Decision • Which daughter is doing better? • Criteria? Financial Accounting

  6. What do we need to answer? • “performance” • ownership • common denominator or measurement unit Financial Accounting

  7. Solution • Common denominator – eggs or birds? • Father or daughters? • Wealth increase? How to measure? Financial Accounting

  8. Measurement Unit -Eggs Financial Accounting

  9. Older Sister Capital –whose? Financial Accounting

  10. During the year- Older • slaughtered 9 ostriches at midyear (assume one year is 360 days) and exchanged the meat for another portable shelter and bird feed • The hens laid a total of 300 eggs of which 2 were broken • She gave 45 eggs to her helpers and 3 eggs to the veterinarian • the egg incubator broke down and she promised to give the fixer 2 eggs during the next season • Her father took 25 eggs Financial Accounting

  11. End of the year- Older • At the end of the year, she received 25 pairs of ostriches of a different breed in exchange for 9 eggs a pair. These ostriches are expected to be ready for processing when they are 18 months old, at almost half the age of the other breed. Financial Accounting

  12. During the year: Older *126 eggs plus 69.3 eggs Financial Accounting

  13. Financial Accounting

  14. During the year – Older –2 Financial Accounting

  15. End of the year Older Financial Accounting

  16. Younger sister Capital –whose? Financial Accounting

  17. During the year- Younger • hatched 10 eggs and exchanged the chicks for 20,000 kg of feed and one small used incubator that is worth 5 eggs and that could be used for 5 more years at the beginning of the year • slaughtered 1ostrich mid-year and exchanged for bird feed • hens laid 277 eggs during the year. She used 45 eggs to purchase more bird feed, gave 25 eggs to the helpers, 2 eggs to the veterinarian, and 50 eggs to her father • Her portable shelter became unusable due to a very active animal. She got a new shelter, and gave one egg and promised to give one more egg next season Financial Accounting

  18. End of the year-Younger At the end of the year, she exchanged her remaining eggs for 18 pairs of ostriches of the same breed as hers Financial Accounting

  19. During the year: Younger *63 eggs +56.7 eggs Financial Accounting

  20. Financial Accounting

  21. During the year: Younger-2 Financial Accounting

  22. End of the year- Younger Financial Accounting

  23. Comparison- Beginning of the year: total egs Older Younger ostrich 80 40 land 60 30 incubator 16 16 feed 126 63 shelter 2 2 284 151 Financial Accounting

  24. Comparison – End of the year Owes: 2 eggs 1 egg total eggs older younger ostrich 269 180 feed 9.7 17.3 land 60 30 Incubator 16 16 Shelter 4 2 358.7250.3 Financial Accounting

  25. Which one is doing better? • What about the eggs given to the father? • Which daughter is using the resources more efficiently? • Who has increased the wealth more? Financial Accounting

  26. Wealth • Older Beginning 284 eggs End 356.7 eggs (owe 2 eggs) • Younger Beginning 151 eggs End 249.3 eggs (owe 1 egg) • How much is the net worth or capital or owners’ equity? Financial Accounting

  27. Increase in wealth • Difference between the beginning and the ending capital • Older: 72.7 • Younger 98.3 • Now let’s see what caused the capital increase…. Financial Accounting

  28. Older –Annual Performance meat produced 81 eggs 300 total revenue 381 eggs cost ostrich 9x4 36 feed 195.3 Cost 231.3 gross margin 149.7 help 45 vet 3 broke 2 fix 2 total expenses 52 income 97.7 gave to father 25 Increase 72.7 eggs Financial Accounting

  29. Younger-Annual Performance shelter eggs hatched eggs 20 5 25 meat 9 eggs 277 total revenue 311 ostrich 4 feed 119.7 hatched eggs 10 Cost 133.7 gross margin 177.3 help 25 vet 2 shelter unusable 2 total expenses 29 income 148.3 gave to father 50 Increase 98.3 Financial Accounting

  30. Moral of the Story • We need a common measurement – money • Period is important – a year from now older might be better • Entity is different than the owner • Each financial statement answer a different question • Balance sheet: how resources are allocated • Income Statement : how efficiently the resources are used. Financial Accounting

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