# ASC 325-905-25: Investments—Other — Agriculture — 25 Recognition

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/325/905/#25-recognition)

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## ASC 325-905-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/325/905/#25-recognition)

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### Cooperatives—Patrons

##### [325-905-25-1](https://asc.understandingaccounting.org/asc/325/905/#325-905-25-1)

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Long-term investments, such as nonmarketable investments in [agricultural cooperatives](https://asc.understandingaccounting.org/glossary/a/#agricultural-cooperative "The Agricultural Marketing Act of 1929 defines a cooperative association as any association in which farmers act together in processing, preparing for market, handling, and/or marketing the farm products of persons so engaged, and also means any association in which farmers act together in purchasing, testing, grading, processing, distributing, and/or furnishing farm supplies and/or farm business services. Provided, however, that such associations are operated for producers or purchasers and conform to one or both of the following requirements: No member of an agricultural cooperative association is allowed more than one vote because of the amount of stock or membership capital he may own therein. The association does not pay dividends on stock or membership capital in excess of 8 percent per year. In addition to meeting either of the requirements in this paragraph, the association shall not deal in farm products, farm supplies, and farm business services with or for nonmembers of an agricultural cooperative in an amount greater in value than the total amount of such business transacted by it with or for members. All business transacted by any cooperative association for or on behalf of the United States or any agency or instrumentality thereof shall be disregarded in determining the volume of member and nonmember business transacted by such association."), shall be carried at cost if the value of the investments is not impaired. Subtopic 323-10 requires the equity method of accounting for investments in which the investor has significant influence over an investee's operating and financial policies.

##### [325-905-25-2](https://asc.understandingaccounting.org/asc/325/905/#325-905-25-2)

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When a cooperative allocates all earnings to [patrons](https://asc.understandingaccounting.org/glossary/p/#patrons "Any individual, trust, estate, partnership, corporation, or agricultural cooperative with or for whom a cooperative does business on a cooperative basis, whether a member of an agricultural cooperative or nonmember of an agricultural cooperative.") (on a tax or book basis) and there are no unallocated earnings (on a book basis), the principles set forth in Subtopic 323-10 are not applicable. In those infrequent instances when the investor's share of unallocated retained earnings of an investee cooperative is material to the investor, the equity method of accounting shall be applied in a manner that gives consideration to the voting rules or statutory rights applicable to the cooperative.

##### [325-905-25-3](https://asc.understandingaccounting.org/asc/325/905/#325-905-25-3)

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See also paragraphs

[905-605-25-2 through 25-3](https://asc.understandingaccounting.org/asc/605/905/#605-905-25-2)

concerning cooperative accounting for losses.