Inventory and Sales

[R. Victor Klassen]

Actually it’s different in farming.  In our jurisdiction we have a fair amount of flexibility in how we value inventory - it’s supposed to be "fair market value” which can only be truly established at the time of sale.  For products we bought it's easy and generally correct to use the purchase price.  However for products we grew it’s more like what the (estimated) selling price will be times the (possibly estimated) amount of the product, less the cost that stands between now and selling it.   

In the US there are four ways of valuing farm inventory,  and which one makes sense will depend on the farming operation.  Only one of them is cost.  

On Mar 11, 2015, at 8:25 PM, John Ralls <jralls at ceridwen.us> wrote:

> 
>> On Mar 12, 2015, at 1:08 AM, ssmusoke <ssmusoke at gmail.com> wrote:
>> 
>> I am using GnuCash for a farming enterprise so the common stock has a
>> quantity but not a price, as the price is only determined at point of sale
>> to a customer. 
> 
> That's OK. You value your inventory at cost until sale; the difference between cost and price is your gross margin.