COST ACCOUNTING 275 



In this process of closing, expense on the house is charged 

 to the Household ; expense 011 a hog house, to the Swine ; 

 expense on a horse barn to the Horses; expense on a silo 

 to Silage; expense on an implement shed to Equipment 

 Expense ; and other charges in accordance with these prin- 

 ciples. All of these charges except Swine and Household 

 are ultimately distributed over the productive elements 

 Silage being charged out to the livestock, Equipment Ex- 

 pense to the crops, through the field accounts and so on. 



Rent versus Interest. T^he tenant farmer does not con- 

 sider interest on land and buildings in his accounts. The 

 rent paid by a tenant and charged to the various farm 

 elements, as explained under Rent Distribution, takes the 

 place to a certain extent of interest as charged by the 

 landlord operator. 



Rent in the accounts of a tenant takes the place of In- 

 terest on Investment, Building Expense including insur- 

 ance and depreciation, taxes (on Real Estate), and a few 

 General Expense items (as fence repairs) in the accounts 

 of the landlord operator. 



Interest on Mortgaged Property. The statements made 

 above concerning interest on land and buildings apply 

 to such properties when free from mortgage obligations. 

 When the property is mortgaged, interest paid on such 

 mortgage constitutes a charge against the operations of 

 the business. Accordingly the procedure in the case of 

 mortgaged real estate or equipment is modified so as to 

 avoid charging interest twice over the farm elements. 



In the case of mortgaged property, the same procedure 

 is followed as in the case of unmortgaged property, "but 

 there is also one additional point to be considered. The 

 additional point relates to the method of handling pay- 

 ments of interest on the mortgage. Interest paid on a 

 mortgage is debited to Interest on Investment account 

 either at the time of payment or by transfer entry from 



