METHODS OF STUDYING AGRICULTURAL QUESTIONS 413 



The inventory may be taken for either or both of two pur- 

 poses : To ascertain the farmer's present worth, or to balance 

 his accounts and ascertain the profit of his annual operations. 

 Where the object is to ascertain the profits of operation during 

 the past year, each animal in the herd should be valued on the 

 basis of the previous inventory and marking down or up accord- 

 ing to the depreciation or appreciation which has taken place 

 during the year. Where the farmer is keeping his herd year 

 after year without expectation of using up the cows in the dairy 

 business, this would seem to be a satisfactory basis of making 

 the inventory. If it is possible, however, to use both bases, 

 place two values after each animal, one based upon last year's 

 inventory plus depreciation or appreciation, which will give a 

 basis of showing the results of the year's operation ; the other is 

 to place a value upon the basis of present market prices. The 

 difference between the sums of these two sets of values will show 

 the gain or loss during the year due to fluctuation in prices. 



Valuation of machinery. Machinery which has just been 

 purchased may be valued at the cost price. The value of a 

 machine which has been used for one year should be reduced 

 from the cost price by the amount of its normal depreciation. 

 To value a machine at the end of the first year at the price at 

 which it would sell if put up at auction would hardly seem 

 fair to the year's business, and yet if the farmer could have 

 purchased a machine equally good at public auction instead 

 of buying the new machine, it would seem reasonable to mark 

 the new machine down to the sale price, assuming that the 

 farmer had paid the difference for the privilege of breaking in 

 the new machine and that this should be charged to his annual 

 expense. 



One method of valuing machinery is to deduct a certain 

 percentage of the first cost each year. This is a very abstract 

 method of inventorying and does not get at the real truth of 

 the situation. Each machine should be looked over carefully 

 with a view to ascertaining the extent to which it had been worn 

 or broken during the year so that any extraordinary deprecia- 

 tion may be taken into account. Notice should also be taken if 



