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How many cows to be full-time Rancher?
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<blockquote data-quote="OklaBrangusBreeder" data-source="post: 176509" data-attributes="member: 2672"><p>You know, not to beat the dead the cat here, but...</p><p></p><p>* I have a Masters Degree in accounting which I use on my "day" job. So I can number crunch with the best of them.</p><p></p><p>* I don't necessarily agree with the whole "amortize future expenses as part of your current costs approach." Case in point, fencing around the 80 acre farm I use of my Dads. We fenced that property when we bought it back in 1981 or so. Don't recall what it cost back then to fence, but lets say it cost mabye $1,900? That was roughly 25 years ago, so the cost of my "fencing" to date is roughly $75 per year, and going down every year? In the grand scale, that is insignificant and not worth accruing for...</p><p></p><p>* Likewise, my dad owns another 80 acres that is cleared with a good fence and water that he rents to a neighbor for $900 per year. That farm is probably worth $80,000. So the rent is generating a rate of return of a little over 1%. Again, pretty insignificant. In terms of "opportunity costs" of renting verses running cows, not much "opportunity" there.</p><p></p><p>* So should I "accrue" some land amount in my cost calculations that is not cash out of my pocket for the land I use? I just don't see how that makes sense by ANY accounting method. I know the IRS would not go for it.</p><p></p><p>* In my opinion, land is valued based on its fair market value. As an investment, the farm we bought for $400 per acre in 1981 is worth easily double that (or better) today. I allow for that investment to be valued on its own, not based on what little rent it could generate running cows.</p><p></p><p>* My cost approach is pretty simple. Cash I receive minus expenses that I incur. That's how I calculate it... Based on that approach, my little cattle operation is doing OK.</p><p></p><p>I'm not trying to argue the point here, just providing some food for thought...</p></blockquote><p></p>
[QUOTE="OklaBrangusBreeder, post: 176509, member: 2672"] You know, not to beat the dead the cat here, but... * I have a Masters Degree in accounting which I use on my "day" job. So I can number crunch with the best of them. * I don't necessarily agree with the whole "amortize future expenses as part of your current costs approach." Case in point, fencing around the 80 acre farm I use of my Dads. We fenced that property when we bought it back in 1981 or so. Don't recall what it cost back then to fence, but lets say it cost mabye $1,900? That was roughly 25 years ago, so the cost of my "fencing" to date is roughly $75 per year, and going down every year? In the grand scale, that is insignificant and not worth accruing for... * Likewise, my dad owns another 80 acres that is cleared with a good fence and water that he rents to a neighbor for $900 per year. That farm is probably worth $80,000. So the rent is generating a rate of return of a little over 1%. Again, pretty insignificant. In terms of "opportunity costs" of renting verses running cows, not much "opportunity" there. * So should I "accrue" some land amount in my cost calculations that is not cash out of my pocket for the land I use? I just don't see how that makes sense by ANY accounting method. I know the IRS would not go for it. * In my opinion, land is valued based on its fair market value. As an investment, the farm we bought for $400 per acre in 1981 is worth easily double that (or better) today. I allow for that investment to be valued on its own, not based on what little rent it could generate running cows. * My cost approach is pretty simple. Cash I receive minus expenses that I incur. That's how I calculate it... Based on that approach, my little cattle operation is doing OK. I'm not trying to argue the point here, just providing some food for thought... [/QUOTE]
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How many cows to be full-time Rancher?
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