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Appendix I.

Long Version of Valuing Raised Breeding Livestock When Animals Are Sold or Have Died

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
Article Type:Table
Geographic Code:1USA
Date:Jan 1, 2008
Words:772
Previous Article:Appendix H.
Next Article:Appendix J.
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