In an rgg selling business, is the chicken a fixed asset or a current asset?

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Solution

Hey Karan, it is a nice logic-based question. Good to see such questions from you :-)

Anyway, in the above context, chicken should be categorised as fixed assets. Now, let's evaluate the reason behind this by recalling the definitions of fixed assets and current assets. While the former is used for those things (living or non-living, tangible or intangible) whose benefits can be enjoyed by a firm for a longer period of time. On the other hand, current assets are those whose benefits are basically of short-life. The point that made me categorise chicken as fixed asset is one chicken reproducing many chickens (hens or roosters) during its active reproduction cycle. It has two-fold benefits to the firm. The first is increase in the number of chickens over a period of time due to reproduction and the second one is more number of eggs and more volume of meat for sale in future. Hence, I believe that chicken should be considered as fixed asset especially for an egg-selling business.

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