# ASC 405-905-30: Liabilities — Agriculture — 30 Initial Measurement

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/405/905/#30-initial-measurement)

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## ASC 405-905-30: 30 Initial Measurement

[Read section](https://asc.understandingaccounting.org/asc/405/905/#30-initial-measurement)

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### Cooperatives

##### [405-905-30-1](https://asc.understandingaccounting.org/asc/405/905/#405-905-30-1)

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Many marketing cooperatives commingle patrons' fungible products in [pools](https://asc.understandingaccounting.org/glossary/p/#pools "Pools are accounting control centers used for determining earnings and patronage refunds due to particular patrons, including the following: An open pool is an accounting control center that is not closed at the end of each accounting period. Open pools are sometimes used by marketing cooperatives for crops that may not be sold for two or more years after their receipt from patrons. A single pool cooperative determines net proceeds or patronage refunds on the basis of overall operating results for all commodities marketed during an accounting period. A multiple pool cooperative determines net proceeds or patronage refunds on the basis of separate commodities, departments, or accounting periods."). The excess of revenues over costs for each pool is allocated 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 the basis of their pro rata contributions to the pool, which may be determined by the number of units delivered, the volume of product delivered, or another equitable method.

#### Retains

##### [405-905-30-2](https://asc.understandingaccounting.org/asc/405/905/#405-905-30-2)

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Marketing cooperatives often deduct per-unit [retains](https://asc.understandingaccounting.org/glossary/r/#retains "Amounts determined on a per-unit basis or as a percentage of patronage earnings that are withheld by cooperatives from distributions and allocated to patrons' capital accounts.") from the estimated proceeds due producers. Per-unit retains are based on the quantity of product delivered by the producer and are a method of financing for the cooperative. See the [Cooperatives—Patrons Subsection](https://asc.understandingaccounting.org/updates/page-2147482381/) of Section 905-325-30 for treatment of retains by cooperative patrons.

##### [405-905-30-3](https://asc.understandingaccounting.org/asc/405/905/#405-905-30-3)

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When [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.") have retained allocated equities, they are usually repaid to cooperative patrons over a specific number of years. These retained allocated equities may meet the definition of mandatorily redeemable financial instruments under Subtopic 480-10 and as such may have to be classified as liabilities.