Livestock trading account 043-03070050

Most primary production businesses do not prepare a separate livestock trading account, but incorporate the calculation of gross profit within the profit and loss statement.

The valuation of closing stock in a livestock trading account can be made at cost, market value or replacement value and is therefore not always an accurate indication of the assessable value of this asset. The closing stock value will be the value that appears as an asset on the Balance Sheet.

Valuations of businesses that are run via a private trust or private company are done by the Complex Assessment Officer (CAO) however, in simple sole trader and partnership businesses, the Service Officer can complete the assessment. If real estate and non-current assets such as plant / machinery and office equipment need to be valued by an approved valuer, the decision is made after discussion with the CAO or the Valuation Helpdesk. Generally, the book value will be accepted, unless the value is significant or there is reason to believe that the market value will be substantially higher and bring the assets value to within $20,000 of the asset impact level, for example, where the historical cost value has been significantly depreciated but market value may have depreciated less substantially.

In most cases, Centrelink accepts the value of assets recorded on the business balance sheet and trading account. It is necessary to assess each item individually on the balance sheet and trading account and make a judgement if the asset value recorded is reasonable. Where necessary, the balance sheet must be adjusted and the value of assets owned by a business reassessed to reflect current market values.

The livestock trading account can be used to help determine whether livestock are recorded at cost or market value on the Balance Sheet. This can be done by using the total sale proceeds and dividing by number of stock sold to determine the average sale price per head and comparing this with the average value of the closing stock on hand. The Resources page includes an example of a Livestock trading account and how the average sale price and closing stock value are calculated. If the livestock are not recorded at market value, the customer should be asked to provide an estimate of their current market value.

Where a customer's estimate of the value of assets seems unreasonable, contact the Valuations Helpdesk to discuss if a valuation is required before the claim/update is finalised. Where valuation of plant and equipment is required by the valuer, a copy of the depreciation schedule should be provided to the valuer. If the valuation of livestock is required, the livestock trading account and details provided by the customer about the type, number and condition of stock should be provided to the valuations helpdesk.

Subsequent valuations provided by the approved valuer can be used to calculate and/or reassess the value of a business.