Inventory and Sales

[Mike or Penny Novack]

On 3/12/2015 9:38 PM, R. Victor Klassen wrote:
> 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.
Yes, I did know that (the range of methods allowed for valuing inventory).

But check, because I think you are misinterpreting the "fair market 
value" method. I do not believe that requires you to treat every basket 
of peaches (or whatever) individually depending on what it eventually 
sells for (potentially different for every basket, etc.).  You 
presumably have "experience" as to the average price you might expect 
and that would be the initial estimate value. At the end of the selling 
season "sales" may be more than this or less than this leading to an 
adjustment entry.

You shouldn't have to be adjusting every day. You don't report on a 
daily basis. Let alone every basket of peaches (or whatever).

Some people using gnucash (or whatever) and dealing with securities 
holdings are choosing to adjust "real time" for fluctuations in market 
value. Others (IMHO, more sensibly) doing so only monthly, quarterly, or 
annually. My 401K money makes available a daily quote (from THEIR books, 
not mine) which I can access, but also sends out a quarterly report. 
Quarterly reports make sense for those filing tax estimates quarterly. 
Similarly quarterly adjustments of inventory value.

Take a case like mine. IF I were filing "agricultural", in my case the 
biggie would be "wood inventory". But valuations of standing trees are 
only rough estimates in between cruising by the forester (and even that 
is an estimate, only a better one). Not going to be known for sure until 
there is a cut, and those could be many years apart.

Michael D Novack