Cow Depreciation ?

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How can you figure depreciation when the market changes?

I have 12 year old cows now that are worth far more than when they were 4 year olds.
 
Depreciation is calculated using your cost of the animal when purchased. Cows that are born and raised on your place are not depreciated.
 
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Depreciation is calculated using your cost of the animal when purchased. Cows that are born and raised on your place are not depreciated.
 
So you bought a bred heifer 12 years ago, in many cases she's still worth more today than she was back then.

Around here you don't depreciate any animals, They are 100% expense at the time of purchase, their calves are 100% income when you sell them, as is cow. If the cow goes tits up on you, you've already expensed her when you purchased her.
 
Nesikep":2wf20j5e said:
So you bought a bred heifer 12 years ago, in many cases she's still worth more today than she was back then.

Around here you don't depreciate any animals, They are 100% expense at the time of purchase, their calves are 100% income when you sell them, as is cow. If the cow goes tits up on you, you've already expensed her when you purchased her.
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You can do it that way too but IF you depreciate them it's based on cost. Any other associated expense is simply expensed. Any appreciation of the same animal will be recognized when sold. As mentioned, animals born on the farm have no basis so are valued at zero. When sold it's all profit less whatever expenses you recognize.
 
Nesikep":3n32bjam said:
How can you figure depreciation when the market changes?
I have 12 year old cows now that are worth far more than when they were 4 year olds.
Click to expand...

That was my question too. My cows appreciated from 2009 to 2014, now they are going the other way... :(

Simple averages can be misleading. A complicated approach would be to do some kind of price cycle projection by year of birth - - so heifers born in 2014 would probably be the big losers for this time around.
 
Texasbred explained it well. Not sure how the law reads in Canada. Don't try to confuse yourself with averages. You depreciate cost. Any appreciation later is taxable. Also, if an animal dies and you want to write it off, you have to recoup prior depreciation taken. Usually not worth it, and remember an animal you raised has no value if it dies. You just don't pay taxes because there is no income.
Kinda like going to the casino isn't it. :bang:
 
Our accounting counts every sale as income, and fully expenses every purchase. This may be possible because it is seed stock.

In our world, a heifer is worth $1200, keep her another year and get her bred, her value is north of 3k. This is the most valuable year from a building wealth standpoint. She is gaining weight and having a calf. A cow calves only, a steer gains only.

Her value stays high, for seed stock and grass finished beef until she passes 5 years of age, and then it is back to commodity pricing.

A younger herd has more value in real life, and to the banker.

In short, we do not mess with depreciation from a tax standpoint. However, we manage the cattle herd to have appreciating animals, and avoid depreciating animals.
 
james coffelt":3kpieu0c said:
In our world, a heifer is worth $1200, keep her another year and get her bred, her value is north of 3k. This is the most valuable year from a building wealth standpoint. She is gaining weight and having a calf. A cow calves only, a steer gains only.

Her value stays high, for seed stock and grass finished beef until she passes 5 years of age, and then it is back to commodity pricing.
Click to expand...

What market is still selling breds for north of $3K ?

Do you routinely sell 5 year old cows ?
 
james coffelt said:
Our accounting counts every sale as income, and fully expenses every purchase. This may be possible because it is seed stock.

In our world, a heifer is worth $1200, keep her another year and get her bred, her value is north of 3k. This is the most valuable year from a building wealth standpoint. She is gaining weight and having a calf. A cow calves only, a steer gains only.

Her value stays high, for seed stock and grass finished beef until she passes 5 years of age, and then it is back to commodity pricing.

A younger herd has more value in real life, and to the banker.

In short, we do not mess with depreciation from a tax standpoint. However, we manage the cattle herd to have appreciating animals, and avoid depreciating animals.[/quote]
And that would simply be an "opinion" of worth since she hasn't sold.
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TexasBred":3c7sv372 said:
james coffelt":3c7sv372 said:
In short, we do not mess with depreciation from a tax standpoint. However, we manage the cattle herd to have appreciating animals, and avoid depreciating animals.[/quote]
And that would simply be an "opinion" of worth since she hasn't sold.
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Click to expand...

Good point on opinions and estimating.
My 2014 culls sold for + U$S 54 more than I paid for them as breds. So the culls actually appreciated. :nod:
I don't care how much funny money people choose to to pay to Caeser which year. I care about balance sheets.
 
One additional thought:

Our limiting factor is forage production.

How do we convert our forage into the highest protein/dollar production? We are in the forage production business.

Chickens are top
Sheep/pork, next
Low input, moderate, registered, black, cattle, with the increased stocking rate. Grass finished and commodity.
The same as above is next, non registered. (I am no cheerleader for the associations, they sell for more, outside the commodity market)
The larger, high maintenance, high milking, are restricted to commodity, absent big money in marketing.
 
Stocker Steve":2zcflc35 said:
james coffelt":2zcflc35 said:
In our world, a heifer is worth $1200, keep her another year and get her bred, her value is north of 3k. This is the most valuable year from a building wealth standpoint. She is gaining weight and having a calf. A cow calves only, a steer gains only.

Her value stays high, for seed stock and grass finished beef until she passes 5 years of age, and then it is back to commodity pricing.
Click to expand...

What market is still selling breds for north of $3K ?

Do you routinely sell 5 year old cows ?
Click to expand...

Give me a couple weeks, and I will report the results. Low input, moderate cattle, are in very high demand.

Additionally, cows thru 5, are tender enough, with additional flavor, and sell all day long. About 1 of 20 customers have a complaint about tenderness, and we give them a Jaccard: $20,

http://store.thestoreforhealthyliving.c ... y_Code=EWK
 

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