A business owns (purchased) cows. How should the corporation record the cows, ar

Question

A business owns (purchased) cows. How should the corporation record the cows, are they assets to the corporation ? if so, what type of assets to be classified as ? (i.e. inventory, supplies, fixed asset, investment asset, or other assets?)

Please recall definition of inventory you had learned in your /accounting 1A course you had and now we are in accounting 1B course, please compare the inventory asset to this ch.10, operating fixed asset in terms of it's purposes, nature, and management intention of "owning these assets" for their respective businesses (4 different type of businesses described below).

1. the business is a cattle farm/dairy farm, producing meats, milk, and other dairy products.

2. the business is biotech science research firm experimenting genes and stem cells.

3. the business is an investment and trading firm specializing in live stocks in an open market.

4. the business is an entertainment firm in Spain, Toro Bravo (Spain Bull fighting festival)

Please discuss what type of assets for each of the above types of business and explain why?

Explanation / Answer

1) It will be Investment asset becuase they will produce output i.e. milk,meat and other dairy product which have some market value. So investing in cows forms a part of the business.

2)It will be supplies as they would be consuming the resources for their experiment (i.e. work)

3)It can be inventory if the firm bought it with the motivation of resale. It can be other assets too.

4)IT is an Investment Asset because Business has cows its one of the resources

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