122 FARM ACCOUNTING 



Expense, except that in cost accounting, tile repairs are 

 charged to the field. However, if the new fence is more 

 substantial and valuable than the original, or if the new til- 

 ing is larger, replacing an inadequate size, Land account 

 may be charged with part of the cost. It may be charged 

 with that part represented by the excess cost of the new 

 fence or tiling over the present cost to construct a fence 

 or lay tile of the type of the old ones. The remainder of 

 the cost is charged to General Expense, unless a general 

 repair account is kept, or cost records enable a specific 

 field to be char<r 



Land account should not be charged with any amount 

 to represent increase in value, commonly called apprecia- 

 tion. To do so would be figuring something as a profit that 

 had not been earned. Land, except through crops, does 

 not make a profit until it is sold. If it were debited with 

 the increase in value the Loss and Gain account would be 

 credited. This would inflate the profits for the year. If 

 fluctuations in land are to be recorded on the books, de- 

 creases in value should be recorded also. If bad crops 

 caused land to decrease in value, the next year, an entry 

 should be made, debiting Loss and Gain and crediting 

 Land to show the decrease in value of property. This 

 would be a fictitious loss for the year in addition to the 

 actual loss incurred because of poor crops. 



As long as land is held primarily for agricultural pur- 

 poses, no loss or gain should be recorded in the books until 

 it is sold. If it is sold for more than the book value, the 

 result is a gain; if for less, it is a loss. For illustration, 

 if the book value of a piece of land is $8000 and it is sold 

 for $10,000 cash, the entry for the sale is: 



Cash $10,000 



Land $8,000 



Loss and Gain 2,000 



