An inventory is a list of property owned at the beginning and end of the year. The inventory includes an estimated value of each item. Inventories are helpful in determining financial progress of the business. Inventories tell us whether or not we are accumulating wealth. They are needed to calculate net earnings. A good inventory also shows quality and condition of the firm or individuals property. The ending inventory of the years business can generally be used as the beginning inventory for the next year.
It is advisable to keep two lists of assets to deal sufficiently with farm inventories.
One list will include both depreciable and non-depreciable assets. This list will be used mainly in determining total capital investments and net worth. The second is used in preparing income tax returns. It will include only those assets on which depreciation may be claimed as a deduction. All machinery, buildings, fences, etc., not fully depreciated, will be a part of the second inventory as well as all breeding and dairy animals purchased throughout the year will be part of this second inventory if they have not been entirely depreciated.
This spreadsheet is to help you identify your assets. Good management starts with knowing what you have and what it is worth.