METHODS OF CONDUCTING COST STUDIES. 17 
value of the land in the closing farm inventory at the end of the year 
the same as at the beginning of the year if the object is to learn the 
net income from operation. If the land has increased in value, in 
the opinion of the operator, this increase should be kept separate 
from the current farm earnings. 
The common basis of land valuation for farm organization and 
cost studies has been the conservative, going sale value of land. 
This appears at the present time to be the most practical basis, 
though numerous attempts have been made to apply various theories 
in arriving at land values. 
The site value of the farm as a home has an important bearing on 
the selling price of a farm as well as on a valuation for loan or for 
investigational purposes. We can not ignore the fact that a farm 
is a home site as well as a business plant, and that a certain portion 
of its value may be due to location and the personal desire of the 
occupant to live in that particular spot. It would doubtless be 
advantageous to studies in farm economics to express the farm value 
both as site value and productive value, each of which would be 
useful, depending on the nature of the study and the use to be made 
of the resultant figures. 
It is best to assign separate values to each of the buildings entirely 
distinct from the value of the land and its improvements. The 
separate values of the buildings are necessary to the proper alloca- 
tion and distribution of the building charges. A common method 
of arriving at the value of the bare farm is to set what is considered 
a fair valuation for the farm as it stands, including the land, improve- 
ments, and buildings, and then deduct the value of the buildings, 
estimated separately. 
For some purposes it is advisable to go further and to evaluate 
different parts of the farm at varying prices. For example, some 
crop land is more valuable than other crop land, and very often more 
valuable than permanent pasture, woods, and land too rough for 
tillage purposes. 
In placing a value on a building, it is worth while to note its size 
and jot down a brief description, along with the valuation. There 
are two methods which may be used in arriving at the present value 
of farm buildings. One is the common accounting practice of 
basing the present value on the basis of the original cost and the 
number of years it is estimated that it will be in use on the farm. 
This is known as the " original cost basis. " The other method is that 
of estimating the present replaceable value, depreciated on the basis 
of the number of years the building has been used and the number of 
years it is estimated it will last. 
56389°— 21— Bull. 994 3 
