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Accounting methods
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<blockquote data-quote="Douglas" data-source="post: 631652" data-attributes="member: 8840"><p>No reason why you can't do both and use them for different purposes. You could then show your banker the differences and include estimated inventory as part of your balance sheet. Any of us that produce a personal financial statement for the bank will list estimated cattle inventory values as part of our net worth. If you are a large enterprise accrual will be more accurate.</p><p></p><p>I once audited a large chicken producer with millions in revenue. They had computerized accounting records on the accrual basis. However when we prepared the corporate tax return we converted it to the cash basis which was allowed back then for large farm corps. The reason we did that was in years with potential large tax liabilities they would prepay a large chunk (like half a year) of their grain bills in December to defer the tax liability to another year. Not sure if you can do that anymore</p></blockquote><p></p>
[QUOTE="Douglas, post: 631652, member: 8840"] No reason why you can't do both and use them for different purposes. You could then show your banker the differences and include estimated inventory as part of your balance sheet. Any of us that produce a personal financial statement for the bank will list estimated cattle inventory values as part of our net worth. If you are a large enterprise accrual will be more accurate. I once audited a large chicken producer with millions in revenue. They had computerized accounting records on the accrual basis. However when we prepared the corporate tax return we converted it to the cash basis which was allowed back then for large farm corps. The reason we did that was in years with potential large tax liabilities they would prepay a large chunk (like half a year) of their grain bills in December to defer the tax liability to another year. Not sure if you can do that anymore [/QUOTE]
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