1. Ag Business Management Spring 1999
INVENTORIES
Ag Business Management
Spring 1999
Original PowerPoint Created by Mike White
Modified by Georgia Agricultural Education Curriculum Office June, 2002

2. Objectives Explain the importance of an accurate inventory.
Determine when to inventory assets.
Identify assets to be included in an inventory.
Describe the method used to determine value.

3. Glossary ACRS Acquisitions Asset Cash accounting Capital Capital gains
Collateral
Consumable supplies
Contingent liabilities
Credit
Depreciable assets
Depreciation

4. Glossary Depreciation methods Depreciation system Estate tax
Financial statement
Fiscal year
Gift tax
Income statement
Inheritance tax
Inventory
MACRS
Non-depreciable asset

5. Glossary Owner-equity statement Salvage value Straight line method
Useful life

6. Why Inventories are Important
Owner Equity Statements
Income Statements
Obtaining Credit
Insurance
Estate Planning
Tax Management

7. Owner Equity Statements
Show an accurate account of financial standing at a specific point in time.
Cannot develop balance sheet without completed inventory.

8. Income Statements Inventory needed to calculate income statement.
Changes in inventory affect income.

9. Obtaining Credit
Financial institutions need accurate inventories before granting credit.
Assets may be used as collateral to secure loan.

10. Insurance Inventories needed to determine premium cost & coverage.
Inventories needed to determine payment in event of loss or damage.

11. Estate Planning Needed to plan an estate.
Always necessary in settlement situations.

12. Tax Management Inventory management key in tax management strategies.
Especially important with property tax valuation & capital gains tax.

13. Items to be Inventoried
Items for resale
Consumable supplies
Capital Assets

14. Inventories

15. Inventories

16. Inventories

17. How to Determine Inventory Values
Cost Minus Depreciation
Current Market Value
Straight Line Depreciation
Accelerated Cost Recovery System (ACRS)
Modified Accelerated Cost Recovery System (MACRS)