Term
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Definition
- statement of financial position
- Assets = Liabilities + Owner Equity |
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Term
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Definition
- Current & Non Current
- include everything owned that has value
- represents the total capital invested in the business |
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Term
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Definition
- most liquid
- cash or near cash items
- can be converted to cash without disrupting the ongoing business |
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Term
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Definition
- working assets that yeild services to the business over time
- sale would disrupt the business |
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Term
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Definition
| - the residual claim by the owners against the assets |
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Term
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Definition
- Current & Non-Current
- the debt capital or claims by others against the assets
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Term
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Definition
| - Existing obligations taht are payable within one year or accounting period |
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Term
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Definition
| - debt with original maturity over one year, exceeding the current portion of principle due |
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Term
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Definition
| - Cost Basis & Market Basis |
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Term
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Definition
| - cost less accumulated depreciation |
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Term
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Definition
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Term
| Valuation of Raised Breeding Livestock |
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Definition
- Full Cost Absorption Method
- Base Value Method |
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Term
| Full Cost Absorption Method |
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Definition
- all cost to bring animals into breeding herd allocated and capitalized
- animals are then depreciated just like purchased breeding livestock |
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Term
| Advantages of Full Cost Absorption |
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Definition
-consistent with Generally Accepted Accounting Principles(GAAP)
- expense associated with breeding animals is recognized during the time the animal is being "used up" throughout its productive life |
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Term
| Disadvantages of Full Cost Absorption |
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Definition
- additional, complex record keeping is required
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Term
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Definition
- established for various categories of raised breeding animals
- base value is established for various categories of raised breeding animals |
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Term
| Advantages of Base Value Approach |
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Definition
- base value can be selected which approximates the full cost of raising that breeding animal to each life stage
- valuation is assigned similar to the cost of other assets
- culled animal sales are treated as normal on-going part of business |
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Term
| Disadvantages of Base Value Approach |
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Definition
- net farm income is influenced by the changes in the base value(changes usually kept to 3-5 years)
- the approximated cost basis is not exactly comparable to costs of other assets |
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Term
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Definition
- treated like any other asset
- have both cost and market value- that may differ
- cost basis is the present calue of all future lease payments, then depreciated
- "buy out" amount may be determined each year |
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Term
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Definition
- Not marketable securities, listed as non-current assets
- cost basis is the book credit value listed by co-op
- market value is shown as the cost basis |
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Term
| Personal Assets and Liabilities |
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Definition
- most ag operations are sole proprietor, family operated business
- business and personal assets are often combined |
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Term
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Definition
- notes due within 12 months
- current portion of principal due for term notes |
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Term
| Accrued Interest and Taxes |
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Definition
Taxes: Property and Income
Interest on current and term loans |
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Term
| Deferred Taxes on Current Assets |
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Definition
| - with cash tax reporting, taxes on current assets such as inventories held from one tax year to the next should be accounted for as a current liability. |
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Term
| Deferred Tax on Non-Current Assets |
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Definition
- sale of liquidation of capital assets often results in tax liability
- if market value exceeds the cost basis, a capital gain exist and will be taxed
- a potential tax liability exist and should be accounted for as non-current liability |
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Term
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Definition
- a direct substitute for a purchase of an asset
- should be capitalized and amortized over the term of the lease |
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Term
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Definition
| - recognizes revenues and expenses as they occur |
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Term
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Definition
| - recognizes revenues and expenses when cash changes hands |
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