The prepayment must be for the purchase of feed, not just a deposit. The prepayment must be for a business purpose, not just to reduce tax liability. The deduction resulting from the prepayment must not materially distort income. Rent or lease payments for equipment and buildings are deductible farm expenses.
Work in process, work in progress, (WIP) goods in process, or in-process inventory are a company's partially finished goods waiting for completion and eventual sale or the value of these items. These items are either just being fabricated or waiting for further processing in a queue or a buffer storage.
Setting up the Work In Process (WIP) structure. Work in process (WIP) is the value accumulated in the balance sheet throughout a project. WIP calculation applies to fixed-price projects, time and material projects, internal projects, and investment projects. The method that you use to calculate WIP depends on the project type. On external projects (fixed-price and time and material projects), the WIP system ensures that the cost and revenue entered on projects are recognized and matched on the profit and loss account within the same account period.