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  #1  
Old 05-18-2016, 02:17 PM
mjdvt mjdvt is offline
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donated asset? inventory? appreciation in farming operations

I am using QB Professional Nonprofit 2016. I would like to know how I should account for cords of wood donated for our use. Is it inventory? if so how do I account for using it as we go along. Same if it is current assets? I deposit it to a clearing account to maintain the donor link. We buy breeding animals. These animals have offspring. What are the offspring when they are born? What happens when they grow and increase in value? What do I do when they are turned into meat inventory for sale. What happens when we sell or otherwise dispose of the breeding animal? Are crops handled the same as animals?
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  #2  
Old 05-18-2016, 07:36 PM
Lorin Browning Lorin Browning is offline
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Whether the donated wood is inventory or not depends upon what you want to do with it: If it is for sale, it is inventory; otherwise it is not. In either case it is recorded as a donation, but you probably need to add a new category to your chart of accounts for Gift-in-Kind Donation. The value you would assign to it would be a reasonable estimate of its fair market value.

Since donations are credit entries, the corresponding debit entries would be either to gift-in-kind inventory or gift-in-kind materials. You could also have sub-accounts for each of these categories also.

The offspring of your breeding animals have no value for accounting purposes. When they are sold, you have zero basis and the entire selling price is all gain, less any costs of sales (or, in this special case, the costs involved in turning the living animals into dead meat.) Crops are treated in a similar manner.

You may want to add additional lines to your chart of accounts to account for the overhead costs involved in the total production of your finished products for sale. Examples would be veterinary costs, feed costs, fertilizer, etc. Use your own judgments to determine what fits your special circumstances. [Looking at a basic cost accounting book may give you some additional hints.]

I strongly recommend not trying to tie overhead to specific animals or harvests.

See the discussion four or five posts below about gift-in-kind inventory.

The above is intended just as a general overview that should be polished to reflect your particular circumstances.
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Last edited by Lorin Browning; 05-18-2016 at 07:38 PM.
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  #3  
Old 05-19-2016, 05:28 AM
Rustler Rustler is offline
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I would suggest you find a local tax accountant familiar with ranching and farming tax accounting, y'all have special rules and until you are familiar with it all, a little expert help is a good thing.

see IRS pub 225
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  #4  
Old 05-19-2016, 09:32 AM
Lorin Browning Lorin Browning is offline
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. . . and make sure that tax accountant understands not-for-profit financial reporting.
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