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farm stock taking valuations - Coggle Diagram
farm stock taking valuations
resons for doing it
use to assess the closing stock value and thereby the proper profits and losses and balance sheet
to id and carry forwards costs which have incurred but will not give rise to income until a later period. if carried forward then can be matched with income at a later date
principles
setout within the financial reporting standards 100 to 102 and 105
known as the UK GAAP
can find guidance's on help sheet HS232
under VPGA .... of the red book, val of real property, plant and equipment for financial statements
red book
comply with VPS1, terms of engagement
should send out draft TOE and ask for the accounts name, then ask them what basis of valuation needs to be done under
VPS 3, Valuation reports
PS2, conflicts on interest
valuation date is normily the balance sheet date (tax year end)
fair value for stocktaking
Fair value- the amount for which an asset could be exchanged, a liability settled, or an equity instrument granted could be exchanged, between knowledgeable, willing parties in an arms length transaction
use the most recent market transaction or market price for similar assets
can carry crops at cost of production to date as rarely sold on valuation date
Net realisable value
sale proceeds of the stock in the condition in which the farmer intended it to eventually be marked, less costs in getting it to that condition, also include marketing. for breeding animals, ancillary income from sale of offspring included
Deemed cost
percentage of the market value at the valuation date
75% for harvested crops, sheep and pigs
60% for cattle