QUESTIONS OF PRINCIPLE 43 



account and in the Pedigree- value account, the amount of 

 the deficiency should also be written off in the year's 

 Profit and Loss account, and similarly, if a higher price 

 than the combined costs were realized the difference would 

 be treated as profit. If by disease or accident the value of 

 purchased pedigree stock is reduced, the Pedigree-value 

 account should be reduced to correspond, or should be 

 entirely written off if necessary. 1 



Valuation of Intermediate Products. The need for accurate 

 analytical accounting is evidenced in nothing, perhaps, so 

 much as in the confusion of thought which prevails on the 

 question of the valuation of the raw materials grown on the 

 farm, the hay, straw, roots, pasturage, &c., produced for home 

 consumption in the process of manufacturing milk and meat. 

 There is only one possible basis of value, namely, the cost 

 to the farmer, but, just as happens in other valuations, the 

 fact of there being no records of cost drives the farmer too 

 often to use other figures, and the market value, or in rare 

 cases figures got by a scientific calculation, such as the 

 application of the starch equivalent method, are substituted 

 for the sum which the farmer has actually paid. 2 As 

 a matter of fact, the bulky feeding-stuffs usually produced 

 and consumed at home rarely have any market value at all. 

 A market value is one that can be realized in the market. 

 Thus, corn, meat, and certain other commodities have clearly 

 market value because they are always saleable, but if all 

 the farmers in the country decided to sell their mangolds 

 they would find that the market for mangolds is non- 

 existent, and that the prices quoted in market reports repre- 



1 A Pedigree- value account has some analogy to Goodwill account, though it 

 is suggested that a closer comparison could be established with Patent Rights 

 account as being exposed to greater vicissitude than Goodwill. 



2 The almost continuous newspaper controversy of the past few years upon 

 the increased cost of food-production has shown how universal is this miscon- 

 ception of facts. All the writers make such assertions as that their horse labour 

 costs them double what it did, because oats are selling for twice as much as they 

 used to do, or that as hay has doubled in price the milk their cows produce is so 

 much the more costly. This is as much as to say that if a man secures an 8 per 

 cent, investment by buying a 4 per cent, stock at 50, he is only getting 4 per cent, 

 on his money if the stock rises subsequently to par. 



