# ASC 405-905: Liabilities — Agriculture Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/405/905/) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T00:15:44.426Z to 2026-09-10T00:16:03.076Z Record version: sha256:be12a2d8b6222b506ebeb6bd44f6c4dfd39882b08de5b1301e350fb07c537b82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-905: Liabilities — Agriculture ### Machine-generated study aids ```json { "summary": "ASC 405-905 governs liabilities of agricultural entities, with Cooperatives Subsections addressing how agricultural cooperatives account for product deliveries from patrons. When a pooling marketing cooperative's board assigns amounts to unprocessed products received from patrons, those assigned amounts must approximate estimated net realizable value and are credited to amounts due patrons, creating a short-term liability. Excess of pool revenues over assigned amounts and operating costs is paid or allocated to patrons pro rata, and retained allocated equities may be mandatorily redeemable instruments requiring liability classification under Subtopic 480-10.", "key_points": [ "Pooling cooperatives (marketing cooperatives operating on a pooling basis with no obligation to pay patrons fixed prices) that assign amounts to unprocessed products received from patrons must credit those assigned amounts to amounts due patrons, and the assigned amounts should approximate estimated net realizable value (405-905-25-1).", "The cooperative estimates a liability to patrons equal to the assigned amount for delivered product and usually pays it on a short-term basis (405-905-25-2).", "At the end of a pool period (a week, month, year, or longer), the excess of revenues over assigned amounts and operating costs is paid or allocated to patrons, and assets equal to that excess may be distributed or retained by the cooperative (405-905-25-2).", "Where patrons' fungible products are commingled in pools, the excess of revenues over costs for each pool is allocated to patrons pro rata based on units delivered, volume delivered, or another equitable method (405-905-30-1).", "Per-unit retains, deducted from estimated proceeds due producers and based on quantity delivered, are a financing method for the cooperative; patron-side treatment is in the Cooperatives—Patrons Subsection of Section 905-325-30 (405-905-30-2).", "Retained allocated equities, usually repaid to patrons over a specified number of years, may meet the definition of mandatorily redeemable financial instruments under Subtopic 480-10 and may have to be classified as liabilities (405-905-30-3).", "Scope follows the General and Cooperatives Subsections of Section 905-10-15 (405-905-15-1 and 15-2)." ], "categories": [ "Recognition", "Initial measurement", "Industry-specific", "Debt and equity" ], "audience_level": "intermediate", "student_note": "Tested rarely but a clean illustration of substance-over-form: a cooperative's obligation to its patron-owners is a liability measured at assigned amounts approximating NRV, not equity. The common misunderstanding is assuming all patron equities are equity — retained allocated equities repayable over a set number of years may be mandatorily redeemable and thus liabilities under ASC 480-10.", "related_topics": [ "905-10", "905-330", "905-325", "480-10", "905-505" ], "key_concepts": [ "agricultural cooperative", "pooling cooperative", "amounts due patrons", "assigned amounts", "estimated net realizable value", "per-unit retains", "retained allocated equities", "mandatorily redeemable financial instruments" ] } ``` Source downloaded (UTC): 2026-09-10T00:15:44.426Z to 2026-09-10T00:15:44.426Z Record version: sha256:89cbba220ea8e4fa73ee5d81a0326b1404e8737630a67bd07cc69bc286757175 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-905-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/905/#00-status) SEC content: no ##### [405-905-00-1](https://asc.understandingaccounting.org/asc/405/905/#405-905-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:44.426Z to 2026-09-10T00:15:44.426Z Record version: sha256:ed944bee768284b52ec8cbc98595b53714afcd2463eaedbb3af2457de5b32712 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Agricultural CooperativeAddedAccounting Standards Update No. 2014-0603/14/2014
CooperativesSupersededAccounting Standards Update No. 2014-0603/14/2014
Member of an Agricultural CooperativeAddedAccounting Standards Update No. 2014-0603/14/2014
Net Realizable ValueAddedAccounting Standards Update No. 2015-1107/22/2015
Nonmember of an Agricultural CooperativeAddedAccounting Standards Update No. 2014-0603/14/2014
PatronsAmendedAccounting Standards Update No. 2014-0603/14/2014
905-405-05-1AmendedAccounting Standards Update No. 2014-0603/14/2014
905-405-05-2AmendedAccounting Standards Update No. 2014-0603/14/2014
905-405-15-2AmendedAccounting Standards Update No. 2014-0603/14/2014
905-405-25-1AmendedAccounting Standards Update No. 2015-1107/22/2015
905-405-25-1AmendedAccounting Standards Update No. 2014-0603/14/2014
905-405-30-1AmendedAccounting Standards Update No. 2014-0603/14/2014
905-405-30-3AmendedAccounting Standards Update No. 2014-0603/14/2014
Source downloaded (UTC): 2026-09-10T00:15:48.487Z to 2026-09-10T00:15:48.487Z Record version: sha256:e031e8af48ed8a4d43540421eaf659fbf02c3423e0a6aafcd4c84004e40bfb05 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-905-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/905/#05-overview-and-background) SEC content: no ##### [405-905-05-1](https://asc.understandingaccounting.org/asc/405/905/#405-905-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:48.487Z to 2026-09-10T00:15:48.487Z Record version: sha256:352a6e7e9bfab7366a47d7c4b8024e9d091b585ae78f90f91ea200489fb2bd55 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses liabilities for entities in the agricultural industry. The guidance for accounting by [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.") is presented in the Cooperatives Subsections. ### Cooperatives ##### [405-905-05-2](https://asc.understandingaccounting.org/asc/405/905/#405-905-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:48.487Z to 2026-09-10T00:15:48.487Z Record version: sha256:631219c7c4cfa55af328348629dd333dd86a43efdff151f4699bca96ad5f5996 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Cooperatives Subsections provide guidance for [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.") accounting for product deliveries from [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."). Source downloaded (UTC): 2026-09-10T00:15:52.537Z to 2026-09-10T00:15:52.537Z Record version: sha256:2bf9b84c9ff1cdab0367ec016e29ba2a6e66c9da47b9b98ddaeab2835411e35a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-905-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/905/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-905-15-1](https://asc.understandingaccounting.org/asc/405/905/#405-905-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:52.537Z to 2026-09-10T00:15:52.537Z Record version: sha256:324ab2388b9011d318bbf394a689f40b16a4fd06554c0de93a5ab91863189406 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see the [General Subsection](https://asc.understandingaccounting.org/asc/905/10/#15-scope-and-scope-exceptions) of Section 905-10-15. ### Cooperatives ##### [405-905-15-2](https://asc.understandingaccounting.org/asc/405/905/#405-905-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:52.537Z to 2026-09-10T00:15:52.537Z Record version: sha256:b9f52696c82dc7ecbd6b27733419a1a499eee0e85ea227e70393c006b1fda984 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Cooperatives Subsections follow the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see the [Cooperatives Subsection](https://asc.understandingaccounting.org/asc/905/10/#15-scope-and-scope-exceptions) of Section 905-10-15. Source downloaded (UTC): 2026-09-10T00:15:59.322Z to 2026-09-10T00:15:59.322Z Record version: sha256:0e131a9efd3086750bfdf265ab7c352919d1ca5ff46a1c928f235e37ac54f3e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-905-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/905/#25-recognition) SEC content: no ### Cooperatives #### Pooling Cooperatives ##### [405-905-25-1](https://asc.understandingaccounting.org/asc/405/905/#405-905-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:59.322Z to 2026-09-10T00:15:59.322Z Record version: sha256:ba7664809340d0d7aa2a12f25e351fe55378fcf655f0034ef98cceb90bf8f014 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the boards of directors of agricultural marketing cooperatives operating on a pooling basis with no obligation to pay [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.") fixed prices (pooling cooperatives) assign amounts that approximate estimated [net realizable value](https://asc.understandingaccounting.org/glossary/n/#net-realizable-value "Estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.") to unprocessed products received from patrons, the [assigned amounts](https://asc.understandingaccounting.org/glossary/a/#assigned-amounts "Amounts used to record products delivered by patrons of a marketing cooperative operating on a pooling basis, and the related liability to patrons if the ultimate amounts to be paid to patrons are determined when the pool is closed. These amounts may be established on the basis of current prices paid by other buyers (sometimes referred to as field prices), or they may be established by the cooperative's board of directors. The assigned amounts are sometimes referred to as established values.") shall be credited to amounts due patrons. When assigned amounts are used, they should approximate estimated net realizable value of unprocessed products delivered by patrons (an example of inventories at lower of cost and net realizable value is provided in Example 1 (see paragraph [905-330-55-1](https://asc.understandingaccounting.org/asc/330/905/#330-905-55-1))). #### Marketing Cooperatives ##### [405-905-25-2](https://asc.understandingaccounting.org/asc/405/905/#405-905-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:59.322Z to 2026-09-10T00:15:59.322Z Record version: sha256:3a56870ab6cafa53ad699f5b43c5841b293a2bf5b5c41863ac673b2af1583f33 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The cooperative estimates a liability to patrons equal to the assigned amount for the delivered product, and it usually pays this liability on a short-term basis. The excess of revenues over the assigned amounts and operating costs at the end of a pool period, which may be a week, a month, a year, or longer, is paid or allocated to patrons. Assets equal to that excess may be distributed to the patrons or retained by the cooperative. Source downloaded (UTC): 2026-09-10T00:16:03.076Z to 2026-09-10T00:16:03.076Z Record version: sha256:a314f60d1bf2c3c6f28883f7a06999ffa6fce6981d195669f7beaab9c654aec3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-905-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/405/905/#30-initial-measurement) SEC content: no ### Cooperatives ##### [405-905-30-1](https://asc.understandingaccounting.org/asc/405/905/#405-905-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:03.076Z to 2026-09-10T00:16:03.076Z Record version: sha256:6dd67bd28b7c8f646e38019ca9940ca9a6c72849992d06fcc71ae341f003bb49 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:03.076Z to 2026-09-10T00:16:03.076Z Record version: sha256:11c8be9c0d3e86cab402d4a39f0b39654fc92285e9a9983570f616f6ea84947a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:03.076Z to 2026-09-10T00:16:03.076Z Record version: sha256:9db89eeca1cd7c9a369843f4b45e8ee5328340e856a0e5856ac728644aee825b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.