Working with the AgFFA Record Book A Resource for Online Users Developed by Kristie Weller, Undergraduate Technician, IMS-TAMU Reviewed by Larry Ermis, Curriculum Specialist, IMS-TAMU Inventories of Non-Current Assets Page 20
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A Resource for Online Users
Developed by Kristie Weller,
Undergraduate Technician, IMS-TAMU
Reviewed by Larry Ermis,
Curriculum Specialist, IMS-TAMU
Any item you own that has value is an asset.
For your record book, an asset is any part of the business necessary to conduct the SAEP.
Any asset on hand at the end of the year AND placed in the closing inventory is considered PRODUCTIVELY INVESTED.
-Beef cow for calf production.
-A tractor used for crop production
Depreciation is the decline in the value of a non-current item because of time and/or wear and tear.
An example of a DEPRECIABLE item is a tractor. A tractor loses value with each year that passes and with the wear from use. After 10 years, the tractor is no longer worth its acquisition cost (amount initially paid for it). Here’s an easy way to make sense of why non-current items depreciate. You don’t want to buy something used because it isn’t as good as something brand new. The same applies to agricultural equipment, buildings, and breeding animals. After you use them, they no longer are as valuable as they were when new.
Example: You own a herd of Brangus cattle for breeding purposes. The cattle are often let out to graze. Your horses are used to bring the cattle in from the pasture daily. The horses are for draft or work purposes. The cost of upkeep of the horses is added to the beginning value of the horses for an Ending value.
NOTE: In this case, the horses were not purchased. They are non-depreciable because you raised them as offspring from your other horses.
Example: If you bought the horses used to bring the herd of cattle in from the pasture, then the horses would be depreciable. They are still draft horses, but you did not raise them as offspring from your other horses.
Example: You purchased a tractor for planting and harvesting the corn crop in the SAEP. The tractor cost $10,000.00. However, after being used for a year, the tractor is no longer worth its acquisition cost. You calculate the tractor’s worth on the Ending Date by determining how much it depreciated during the record book year.
Example: You wanted to keep your herd of cattle out of your corn field. You purchased 10 rolls of barbed wire to repair a fence. Because the wire will not last forever, it is a depreciable asset.
Example: You own 50 acres of land used to grow corn. The value of the land is entered on the beginning date and ending date for each year. Land does not lose its value; only those improvements on the land do. Therefore, the land value on the Ending Date will be the same as the land value on the Beginning Date.