20 BULLETIN" 904, TJ. S. DEPARTMENT OF AGRICULTURE. 
relatively unimportant, as other factors, such as shelter, adjustment, 
care, and obsolescence, often affect depreciation far more than its 
actual use. 
The high prices of farm machinery at the present time (1921) com- 
pared with those of the prewar period (1916) make a considerable 
difference in the results obtained by the two methods suggested 
above. Over a ten-year period, under normal conditions, there 
would not be a great deal of difference, but during the last year this 
has been a much discussed question. 
The same advantages and disadvantages are apparent in valuing 
farm equipment as mentioned under farm buildings, namely, that the 
discrepancy between the two price levels, the original cost and the 
present cost of machinery, is so great as to be very noticeable in esti- 
mating the enterprise costs of machinery by the two methods. If 
prices should show a slow decline from their present level over a 
number of years, the use of replacement cost in estimating present 
values of machinery consumed would prove more satisfactory than 
if the price level should drop suddenly to its former level. Inasmuch 
as most of the machinery now on the farm will be replaced by new 
machinery at new prices within a five to eight year period, the orig- 
inal cost basis will soon be reestablished. Herein the equipment 
differs from farm buildings, as it will be a long time before the 
present farm buildings are replaced, as compared with the replace- 
ment of equipment. 
LIVE STOCK. 
In farm cost-accounting practice the farm live stock is divided into 
two general classes, productive and indirectly productive or non- 
productive, according to whether the stock under consideration is 
directly income producing. Ordinarily the work horses are con- 
sidered in the indirectly productive or nonproducing class, and as 
such are classed in the fixed capital assets of the farm. 
The most common basis of valuation for all live stock, including 
work horses, is that of the ready sale value, regardless of the cost of 
production. This sale value is presumed to take into account the age, 
fitness for duty, weight, size, condition, and other factors relating to 
the values of live stock. 
A characteristic difference between live stock and other equipment 
is that of appreciation of animals, not only while growing to work or 
producing age, but for a certain period after that time. A ready 
example is the increase in value of horses up to 6 years of age and of 
cows to 5 or 6 years of age, before they have reached what is ordinarily 
termed " their prime." Thus it is that many farmers plan on meet- 
ing the depreciation of producing herds and working units by the 
raising of young stock. In cost accounting practice, however, the 
