Other Intermediate Assets includes all intermediate assets that did not fit into the previous categories. Stock on intermediate term Farm Credit/Ag Credit loans could be included here. Other Intermediate Assets Description Value Long Term Farm Assets Long Term Farm Assets are assets with a useful life of greater than 10 years. Farm land and buildings are examples of long term assets. The value of farm land needs to be separated into a value for the land and a value for the buildings and improvements on that land. Each year, a 5% depreciation charge is made to buildings and improvements. A portion of this charge is allocated to each enterprise that shares in its use. The cost of land would be what was paid for it. The market value is its current value if it was sold today. If the land and buildings were purchased so long ago that you do not know what the purchase price was, then assign a reasonable value reflecting long-term agricultural use. The cost value for buildings and improvements will be a share of the original farm’s cost, plus the cost of subsequent buildings and improvements. When calculating the cost value for new buildings and improvements, start with the actual total cost of construction. Because you can’t the site prep, concrete, “sell” construction, etc. and recover all of those costs, the actual costs should be reduced by about 30%. If your lender uses a higher discount, then use the higher discount. Accumulated depreciation should be calculated at 5% per year. Unless you have a good reason to do otherwise, use the same value for cost and market.
Other Intermediate Assets includes all intermediate assets that did not fit into the previous categories. Stock on intermediate term Farm Credit/Ag Credit loans could be included here. Other Intermediate Assets Description Value Long Term Farm Assets Long Term Farm Assets are assets with a useful life of greater than 10 years. Farm land and buildings are examples of long term assets. The value of farm land needs to be separated into a value for the land and a value for the buildings and improvements on that land. Each year, a 5% depreciation charge is made to buildings and improvements. A portion of this charge is allocated to each enterprise that shares in its use. The cost of land would be what was paid for it. The market value is its current value if it was sold today. If the land and buildings were purchased so long ago that you do not know what the purchase price was, then assign a reasonable value reflecting long-term agricultural use. The cost value for buildings and improvements will be a share of the original farm’s cost, plus the cost of subsequent buildings and improvements. When calculating the cost value for new buildings and improvements, start with the actual total cost of construction. Because you can’t “sell” the site prep, concrete, construction, etc. and recover all of those costs, the actual costs should be reduced by about 30%. If your lender uses a higher discount, then use the higher discount. Accumulated depreciation should be calculated at 5% per year. Unless you have a good reason to do otherwise, use the same value for cost and market.
2016-BBS1-22yjnxq.docx