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Farm accounts - Stock valuation

  • Fellow
  • Practice Licence
  • 9 posts
  • # 119618

Hi All

 

Just about to pick up a new client, a farm.  Just wondered if any of you have that have farm clients, what is the way you value the herds at period ends.  My client has cows, sheep, pigs etc and buys some in and breeds on the farm as well.

If bought in obviously lower of cost or NRV but how do you create the costs for farm bred stock?

 

Hope you can enlighten me.

Neil

  • 5 posts
  • # 119628

Neil Holden said:

Hi All

 

Just about to pick up a new client, a farm.  Just wondered if any of you have that have farm clients, what is the way you value the herds at period ends.  My client has cows, sheep, pigs etc and buys some in and breeds on the farm as well.

If bought in obviously lower of cost or NRV but how do you create the costs for farm bred stock?

 

Hope you can enlighten me.

Neil


 Hi Neil

We normally follow the basis used in the past this is normally based around cost of production or somewhere between cost of production and market value but cows sometimes come under the "herd basis" which would take too long to explain.  The majority of my farm clients have always used one of the local Land Agents to carry out a stock valuation at the end of the financial year, this also less likely to cause an issue if HMRC query a tax return.

Sandra

  • Member PM.Dip
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  • 29 posts
  • # 119634

Hi Neil,

 

I agree.  I have worked on farm bookkkeeping and the local land agent would do the valuation each year.

  • Member PM.Dip
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  • # 119639

Hi Neil

As the other replies have indicated, I would suggest a local land agent carries out the end of year valuation.

Fluctuations in livestock valuations can have large tax implications - upwards and downwards and livestock markets can be pretty volatile.

By the sounds of it you have a very diverse farm with distinct livestock enterprises and each will be at a different point in the youngstock lifecycle at your year end. For example your cattle could be finishing on farm for 18 months or more with a gestation of 11 months, pigs potentially 3 litters over 2 years so several different ages of youngstock and sheep lambing just once a year and depending when lambing season is for that farm you may or may not have lambs at foot or in store.  I am an agricultural bookkeeper of thirty years and I would not attempt to value this stock myself, its one for the professionals I would suggest. A single suckler herd or a flock of sheep, yes, but not this.

Perhaps the farm accountant can advise you of the history?

Good luck with your new client!

Caroline

 

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  • # 119648

Thanks for the helpful replies.

I have had the convesration with the Farmer and he has decided to continue to value the stock himself, using his semi-Deemed herd valuation method.

I am also setting him up on Xero and came up with a GL code and tracking code system that would give him what he wanted, GM on herd, meat & shop etc, only for him to decide that it looked like to much work for him to understand/keep on top of it.  I actually did say to him before that it would be complicated and time consuming for him when he first came to me!

Clients don't you just love them ;)

Caroline  looks like a lovely office space you have.

 

Cheers

Neil

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