Agricultural accounting applies to your family farms or corporations runs their business in agriculture. It does not matter what kind of products you produce or sell in the market. The agricultural production cycles are so unique that the accounting methods used in other industries can not be applied in some cases. For example, some crops are annual or perennial. Some livestock is raised for sale or raised as breeding livestock. Depending on types of crops and livestock, and at which stage of the life cycle crops are in influence the selection of proper accounting methods.
Inventory valuation methods used in agricultural accounting are:
Lower of Cost or Market, LCM, usually means that the inventory is valued at its cost. Net realisable value, NRV, is used when the actual cost of the inventory is difficult to determine.
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