This sounds like a joke but its not:
Client is thinking of incorporating. She owns goats and makes products using goats milk. What happens to these goats on incorporation? The company will report under FRS105.
Goats are biological assets so will be held as stock at cost? As stock is used up it it released through the P&L normally and hence becomes tax deductible. How does this work with biological assets? The behave more like fixed assets - live for more than one year and are not so much used up like stock, but used in the business to generate milk. FRS105 does not have accounting policies so there are no options really. Does the stock get "depreciated" and if so, how does that depreciation get treated for tax purposes?
Does the tax follow the accounting as normal, or is there some special rules that I am missing. I presume that capital allowances are not available on them but maybe I am wrong.
If there is someone knowledgable and kind out there who could point me in the right direction that would great. Happy to do the research but I know that farming type businesses can get quite specialist and would really benefit from a pointer.