are hens considered inventory

Hi shersbooks,

I am not knowledgeable in farm accounting, and am trying to be.

But, pending not knowing farm accounting practices, I would go strictly by the definition of inventory – an item held for sale.

So, not know more, I would enter the hens not as inventory but to another asset account.

Richard

based on international accounting standard the hens would form part of your inventory. their value will increase as they mature.

Hi ceap,

I do not understand the logic of placing the hens on the balance sheet as inventory, since the hens are not being sold.

Maybe you could explain.

Thanks, Richard
 

There is some great ag QB assistance at this web site:

http://agebb.missouri.edu/commag/dairy/tools.htm

It is old but still applicable. The example is a dairy, so you have animals that aren't themselves being sold, it's their production that is the end product. This is comparable to egg production. There are lesson files and an older QB start up file.

If this answers your issue, please click on Solved and that will close your topic. Otherwise, let us know if you have more questions.
 

Hi qbteachmt,

The publication that is referred to on the page that you link to “Using QuickBooks to Manage Your Diary Farm” clearly states that dairy cows are fixed assets, therefore they are not inventory.

You can read this in Chapter 6 of “Using QuickBooks to Manage Your Dairy Farm”, provided here on this pdf file,

http://agebb.missouri.edu/comm...

Other than hens lay eggs and dairy cows give milk, I do not see why there would be a difference in accounting for hens and dairy cows (or in other works hens would be considered fixed assets).

Perhaps, you can explain why there might be a difference (why hens would accounted for as inventory) and your statement “The example is a dairy, so you have animals that aren't themselves being sold, it's their production that is the end product. This is comparable to egg production.”

I hope this helps,

Richard

p.s. Unless you really know (believe) your answer solves the question asked, why do you use this statement “If this answers your issue, please click on Solved and that will close your topic.” on your answers?

I didn't state the hens are inventory. Quite the opposite. I stated that milk production is "comparable" (synonymous with "similar," "akin," "equivalent" and "like") to egg production. I never stated there was a difference, because these aren't different.

The link I provided, as I reiterated, explains how the livestock is production stock, and the animals are not the inventory. I live in Montana, this is an agricultural area. I've found it useful even though it is dated. Richard, you mention in your post that you are "not knowledgeable in farm accounting and am trying to be." I thought you would find this link a good resource. I see you read the topic and also see how these are similar ag operations.

I felt the link answered the question, or perhaps there are follow up questions. That's why I ended with:

If this answers your issue, please click on Solved and that will close your topic. Otherwise, let us know if you have more questions.

Hi qbteachmt,

Thanks for the clarification that you would not account for the hens as inventory.

Richard
 

I follow that hens are not 'inventory' but are they a fixed asset?  The life of a milking cow (8 years?) is different than a laying hen (18 months?).  I have beehives: colony life about 2 or 3 years, but the boxes about 10 years, (a fixed depreciable asset)  The colonies are rented for pollination, they produce honey (inventory!), some perish, and some are sold to other beekeepers.   How would my bees be best classified?

The boxes are an asset separate from the bees, which are your stock (assets) and not inventory.

Hi honeybeeStewart,

What do you mean by the colonies are rented for pollination? Do you pay rent for the bees, or do you own them?

If you pay rent, the bees would not be recorded as an asset. You would record the rent expense.

Richard
 

Thanks Richard for the above replies.

Our accountant suggested that we expense our hens. I asked her about the fixed asset that you suggested and she replied that they would not be considered a long term asset.

Either way, since they produce a product that we sell I don't understand expensing them or using them as an asset.

To me they would be an inventory item. Sort of  like a bill of materials that produced a product that you sell.

Inventory is something you sell.

If you are not producing hens to sell, but rather you have layers, then the laying hens are not your inventory. The Eggs are your "inventory."

Think of the hens as machines and the eggs as a product: "widgets" that are produced. The machines are fixed assets that have a useful life (eventually break down or wear out and get replaced) but the widgets are produced, boxed, and sold.

What is the life time of a hen? If the hen’s life is short, e.g. less than a year, then expensing the cost of the hen rather than capitalizing (adding to an asset account) could make sense.

Richard
 

Thanks, everyone, for your responses.  After reading all of them, I believe I should show the hens as fixed assets.  I believe they have about a 3 year laying life.