Comparison of balance sheets over time will show how much the business net worth is growing or decreasing. A balance sheet can be used by the owner of a business to support a request for borrowed funds. One of the most important issues in completing and using the balance sheet is the method used to value assets. The two most common are current market value and cost. Market value is the estimated amount the asset would sell for on the date of the statement less selling costs.
Cost is the original cost or basis of the asset less any accumulated depreciation.
In addition to affecting financial ratios derived from the balance sheet and the amount of deferred taxes, the biggest issue is the impact on farm equity. One of the most important issues in completing and using the balance sheet is the method used to value assets. The two most common are current market value and cost. Market value is the estimated amount the asset would sell for on the date of the statement less selling costs. Cost is the original cost or basis of the asset less any accumulated depreciation.