INVENTORIES

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INVENTORIES

• Ag Business Management
• Spring 1999

Original PowerPoint Created byMike
White Modified by Georgia Agricultural Education
Curriculum OfficeJune, 2002
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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.

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Glossary

• ACRS
• Acquisitions
• Asset
• Cash accounting
• Capital
• Capital gains
• Collateral

• Consumable supplies
• Contingent liabilities
• Credit
• Depreciable assets
• Depreciation

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Glossary

• Depreciation methods
• Depreciation system
• Estate tax
• Financial statement
• Fiscal year

• Gift tax
• Income statement
• Inheritance tax
• Inventory
• MACRS
• Non-depreciable asset

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Glossary

• Owner-equity statement
• Salvage value
• Straight line method
• Useful life

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Why Inventories are Important

• Owner Equity Statements
• Income Statements
• Obtaining Credit
• Insurance
• Estate Planning
• Tax Management

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Owner Equity Statements

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

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Income Statements

• Inventory needed to calculate income statement.
• Changes in inventory affect income.

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Obtaining Credit

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

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Insurance

• Inventories needed to determine premium cost
  coverage.
• Inventories needed to determine payment in event
  of loss or damage.

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Estate Planning

• Needed to plan an estate.
• Always necessary in settlement situations.

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Tax Management

• Inventory management key in tax management
  strategies.
• Especially important with property tax valuation
  capital gains tax.

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Items to be Inventoried

• Items for resale
• Consumable supplies
• Capital Assets

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Inventories
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Inventories
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Inventories
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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)