Production animals definition
/What are Production Animals?
Production animals provide something that can be sold, other than their progeny. An example is sheep, which can be used to sell wool and meat.
Accounting for Production Animals
The accumulated cost of production animals begins to be charged to expense through depreciation once the animals reach maturity. The depreciation period is the estimated productive lives of the animals. When a production animal is eventually sold, the accountant compares the price received to the net book value of the animal, and recognizes a gain or loss on the sale. If a production animal dies before its estimated productive life has been completed, then the remaining carrying amount of the animal asset is charged to expense.
Presentation of Production Animals
For accounting purposes, production animals are classified as non-current assets on the balance sheet.