After reading this article you will learn about the valuation of assets and liabilities a farm.
Valuation of Assets:
1. Plant and Machinery:
In case of agri-business activities processing is an important function for which plants and machinery are installed. The valuation of these assets should be done by an engineer who checks the cost and additions and alternations, expenditures on repairs and renewals.
2. Verifying the Legal Existence of Farm:
It becomes all the more important in corporate farming to verify the legal existence of farm in question: the name of the farmer, title of deeds, purchase agreement etc. if mortgaged the certificate of mortgage.
3. Goods and Consignments:
There are purchases of inputs and sales of outputs. The invoices, receipts, other expenses, the account of sales and the stock in hand are verified and valued either at the market price or the cost of production, (in case of farm produces).
Their basic principles and their valuation need to be examined and verification of agreements.
Schedule given to auditors showing nominal amounts, full title of each investment’s book value, paid up value, and market value thereof at the date of the balance sheet prepared.
6. Trade Mark:
The certification of registration.
7. Loose Tools:
These are from the plants and machinery in the processing section and on the farm used in daily operations. These are revalued at the current prices.
8. Book Debts:
First examine the system of internal check in force and check the debtor’s ledger
9. Lease Hold Property:
Lease deeds be examined by the auditor. The auditor must ascertain that all conditions like payments of ground rent, maintenance of firm insurance have been duly complied with. For the sub-let property agreement of tenant be examined.
10. Endowment Policy:
Policies should be examined by inspection and see that premium are paid.
11. Bill Receivable:
Before the balance sheet is prepared examine the bill receivable book and check the bills receivable have got matured. The auditor should see that the bills are properly drawn and stamped and they are not overdue.
12. The Cash in Hand:
It should be verified by actually counting at the date of preparation of balanced sheet in the presence of responsible officer of the concern.
Valuation of Liabilities:
The auditor should examine that all outstanding liabilities have been included. A certificate from the responsible officer be obtained that there is no undue expenses or unearned income which has not been included.
Consignment liabilities is a possible future debt which is the result of a past or future act. The auditor should examine purchases, contracts, lease agreements, minutes of the meeting of the board of directors to ascertain the existence of continent liability.
In the end we can conclude that like other businesses the agri-business management is also runs her business activities by strictly following the business principles and, therefore, fulfill all the formalities of keeping records and accounts, preparation of cost accounts and get the books of business audited.