Say I've got seed (1 ton) that I held back from Finished Goods last year, so that I can plant next year. The std cost of the finished goods I held back was $1,000. For argument's sake, this is the same volume of seed, at the same price, that I'd originally purchased to start my farm. This year I grow the same stuff, I use the seed I held back, and at the end of the growing season I hold back the same amount of seed. How do I account for this? Do I treat the seed as a "catalyst", and not expense it? In that case, say my gross production was 11 tons, and my net production (actual finished goods) is 10 tons (after holding back the seed). Or, do I run it through finished goods and include the $1000 in my inventory cost every time I plant/ harvest?? Thanks much!
