Agribusiness
Library
LESSON L060090: MAINTAINING AN INVENTORY OF ASSETS
Objectives
1. Explain why it is important to maintain an
accurate inventory of assets, and analyze
logistic strategies.
2. Identify and describe the types of items that
are included in inventories.
3. Compare and contrast current nondepreciable assets and non-current nondepreciable assets, and list examples of each.
Terms
•Capital assets
•Consumable supplies
•Current assets
•Current non-depreciable assets
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
Maintaining an accurate
inventory of assets is important
for every business for multiple
reasons, such as loans,
insurance, taxes, and logistic
strategies.
A. When applying for a loan, most banks and
lending institutions will require all assets to be listed
on a financial statement to be used as collateral.

All current and non-current assets should be listed on the
financial statements.

B. Insurance companies require businesses to
provide a list of assets to insure.



1. A current inventory list will save
time and ensure that all items are
insured in the event of a natural
disaster.
2. Insurance companies require
individuals and businesses to list
all assets to receive insurance
payment.
C. Tax accountants use inventory lists to calculate
depreciation on non-current assets and to calculate tax
payments each year.

D. Inventory lists are important to analyze logistic
strategies and to maintain a constant evaluation of
the age and quality of assets.


1. Logistically, assets should be
repaired and used to the point
where it costs more to repair
them than what they are worth.
2. Inventory lists of products,
crops, or livestock are important
to determine a logistic strategy regarding how many, if
any, products are remaining to sell.


Inventory lists can include three major categories of
items: current assets, consumable supplies, and capital
assets.
A. Current assets are nondepreciable inventory items that
will be sold during the current
year or that can be sold quickly
to generate cash.

1. Examples of current assets include actual cash on hand, a
checking account, or a savings account value.
 Other examples of current assets are marketable livestock or
harvested grain that will be sold during the current year.

2. Non-depreciable business supplies (e.g., inexpensive
equipment for an animal, plant, horticulture, or ag mechanics
business) are also current assets.

B. Consumable supplies are non-depreciable
inventory items that will be used and need to be
replaced.


1. Potting soil, seed, fertilizer,
and chemical supplies are all
consumable items.
2. In a livestock operation,
consumable items would
include veterinary medicine supplies, feed, hay, straw, and
disposable materials like plastic gloves.

C. Capital assets include all non-current depreciable
items (e.g., breeding livestock, machinery and
equipment, real
estate, or investments).

Any land, buildings,
barns, sheds, machinery,
equipment, or livestock
purchased for breeding
purposes will be classified
as a capital asset.


Non-depreciable assets can be divided into current
or non-current inventory items.
A. Current non-depreciable assets are inventory
items that can be sold to generate cash quickly or
are consumable for a business.




1. Inexpensive equipment
2. Consumable items (e.g., feed,
fertilizer, seed, machine oil, and
welding rods)
3. Marketable livestock
4. Products for resale


B. Capital assets are usually depreciable items.
However, some capital assets are classified as noncurrent, non-depreciable.

1. Machinery, equipment, and buildings that have
maximized their depreciable value could be considered
capital assets.
 Sometimes, these items are older or unusable due to a variety
of conditions.

2. Some assets appreciate in value over time.
 Pleasure horses and land values often appreciate in value
over time because of factors affected by supply and demand.
 Some antique equipment, even though it has maximized its
depreciable life, can appreciate in value as restored or
antique collector items.
REVIEW
•Why is it important to maintain an accurate
inventory of assets and to analyze logistic
strategies?
•What types of items are included in
inventories?
•What are the similarities and differences
between current non-depreciable assets and
non-current non-depreciable assets? What
are some examples of each?