In the long version, the following steps occur:
* The change in value due to age progression is calculated by determining the number of animals that were born or transferred into the next age category and then valuing that change.
* The number of head at the beginning of the year minus the number that were sold or died is the number that transferred to the next category.
* The number at the end of the year is calculated as the number at the beginning of the year minus the number sold and died minus the number transferred out (to the next age level) plus the number transferred in from the previous age level.
* The number born is the number transferred in to the youngest age category.
* The change in value from the previous category is the difference between the per head base value at the beginning of the year and the per head base value of the category that the animals transferred into.
These formulas are depicted as follows:
Number transferred in = Number transferred out from previous group
Number at beginning of year
- Number sold/died
- Number transferred out
+ Number transferred in
= Number at end of year
Beginning of year base value
- Base value of category transferred into
= Change in base value from previous category
* The change in value from previous category is calculated for each age category and multiplied by the number of head transferred into each age category to yield the change in value for each category.
* These values are then added to calculate the change in value due to age progression (excluding gains and losses from the sale of breeding livestock).
At the end of the second year, the number of Calves is two, the number of Bred Heifers is zero, and the number of Cows is ten. In the third year, eight new calves were born and the two calves that were born the previous year became bred heifers. The Farmers sold one of the bred heifers and two of the cows in the third year.
A valuation table indicating the changes in the third year is as follows: Group Approach/Multiple Transfer Points/Long Version/Year 3/Base Values Unchanged: No. at end Transferred Category of 2nd year No. sold No. died out Calves 2 1 0 1 Bred Heifers 0 0 0 0 Cows 10 2 0 Total 12 Transferred No. at end Category Born in of 3rd year Calves 8 8 8 Bred Heifers 1 1 Cows 0 8 Total 17 No. of new Change in Total Category animals Base Value Change Calves 8 $400 $3,200 Bred Heifers 1 400 400 Cows 0 200 0 Total $3,600
"Transferred out" refers to the number that transferred to the next age group.
"Transferred in" refers to the number that transferred from the previous age group.
The following calculations are performed:
Calves: Number transferred out = Number at beginning of year - Number sold/died = 2 - 1 = 1
Bred Heifers: Number transferred out = 0
Calves: Number transferred in = Number born = 8
Bred Heifers: Number transferred in = Number transferred out from calves = 1
Cows: Number transferred in = Number transferred out from bred heifers = 0
Calves: Number at end of year = Number at beginning of year - Number sold/died - Number transferred out + Number transferred in = 2 - 1 - 1 + 8 = 8
Bred Heifers: Number at end of year = 0 - 0 - 0 + 1 = 1
Cows: Number at end of year = 10 - 2 - 0 + 0 = 8
Calves: Change in Base Value ??Base value of category transferred into - beginning of year base value = $400 - 0 = $400
Bred Heifers: Change in value from previous category = $800 - 400 = $400
Cows: Change in value from previous category = $1,000 - 800 = $200
Change in value for categories ??Number of new animals x Change in base value
Calves: 8 x $400 = $3,200 Bred Heifers: 1 x $400 = 400 Cows: 0 x $200 = 0 Change in value due to age progression: $3,600 The income statement reports the following: Loss from Sale of Culled Breeding Livestock (1,200) Change in Value Due to Change in Quantity of Raised Breeding Livestock 3,600 Gross Revenue $ Operating Expenses +/- Accrual Adjustments $ Interest Expense +/- Accrual Adjustments $ Net Farm Income from Operations $ Gain Due to Changes in General Base Values of Breeding Livestock $ Net Farm Income, Accrual Adjusted $
The net effect of the loss on the sale of culled animals and the change in value due to age progression ($3,600 ??1,200) is the same net effect shown on the income statement prepared under the shortcut version ($1,200 ??1,200).
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|Publication:||Introduction to Agricultural Accounting|
|Date:||Jan 1, 2008|
|Previous Article:||Appendix H.|
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