DEPRECIATION OF ANIMALS AND ECONOMIC RETURN: CASE STUDY

Abstract

Purpose of the research - to assess the impact of the accounting of animals at their acquisition (production) cost less depreciation to the financial results and financial position of agricultural businesses. It is a pilot study based on analytical data from agricultural businesses, that specialises in animal breeding and value the animals at the acquisition cost, however do not calculate depreciation. The pilot study revealed the problems associated with the calculation of depreciation for biological assets. The gradual write-off of the cost of livestock in the form of depreciation did not take into account the changes in the economic value of the animals. Additionally, in order to improve the solvency (i.e. liquidity and stability) and reduce the financial risk, the most attractive alternative from the financial perspective was to measure the livestock at the acquisition (production) cost and to waive the depreciation accounting.

Keywords: animal classification, animal measuring, measuring at cost, depreciation, financial standing, results of the activity.

JEL Codes: D24, M41, Q14