(Determining cost, LO 2) Mr. Bogan operates a dairy farm in Qubec. Recently one of his cows...

(Determining cost, LO 2) Mr. Bogan operates a dairy farm in Québec. Recently one of his cows gave birth to a female calf. The calf will eventually join the dairy herd that produces the milk that Mr. Bogan sells to dairies. When the calf was born, Mr. Bogan had the veterinarian check the calf. For the first while after its birth, the calf drinks its mother’s milk. As the calf gets older, it will graze in the pasture, eating the grass that grows there. During the winter the calf will eat hay that Mr. Bogan grows on another part of his farm. Eventually the calf will mature and join the herd as a milk-producing cow.

Required:

a. How would you report the dairy herd on Mr. Bogan’s farm’s balance sheet? Explain.

b. What cost will appear on the farm’s balance sheet for the new calf when she is old enough to produce milk? Explain.

c. Explain any limitations you see with the reporting you described above for the new calf.