# ASC 505-905-45: Equity — Agriculture — 45 Other Presentation Matters Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/505/905/#45-other-presentation-matters) 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): 2026-09-10T00:40:06.141Z to 2026-09-10T00:40:06.141Z Record version: sha256:5a89732c190dc5cbd047b43637afbbeaee30f8911b0bc3413a0e7b07135ca80f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-905-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/505/905/#45-other-presentation-matters) SEC content: no ### Cooperatives ##### [505-905-45-1](https://asc.understandingaccounting.org/asc/505/905/#505-905-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:40:06.141Z to 2026-09-10T00:40:06.141Z Record version: sha256:6a102bc526022b0c25c18da12e4233e2d00262a81fedb44d371adf9e1340929f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Generally, the earnings of [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.") are classified as either [patronage](https://asc.understandingaccounting.org/glossary/p/#patronage "The amount of business done with a cooperative by one of its patrons. Patronage is measured by either the quantity or value of commodities received from patrons by a marketing cooperative and the quantity or value of the goods and services sold to patrons by a supply cooperative.") or nonpatronage. The excess of revenues over costs resulting from transactions for or with [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.") shall be classified as patronage source earnings. Nonpatronage earnings result from transactions other than those with or for patrons. Examples are nonpatronage income from investments in securities, rental income from nonpatronage activities, and income earned on sales or purchases made on a nonpatronage basis. ##### [505-905-45-2](https://asc.understandingaccounting.org/asc/505/905/#505-905-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:40:06.141Z to 2026-09-10T00:40:06.141Z Record version: sha256:de8fc8c621b9f63ea158f1af89f235f2feb01994ef6dfee72425a588081e1b4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The composition of the equity section of a cooperative's balance sheet distinguishes it from other balance sheets. Generally, its equities arise from investments by members and nonmembers and from patronage allocations. In addition, cooperatives may accumulate unallocated retained earnings arising from after-tax earnings on nonpatronage business. ##### [505-905-45-3](https://asc.understandingaccounting.org/asc/505/905/#505-905-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:40:06.141Z to 2026-09-10T00:40:06.141Z Record version: sha256:5d4f9f802d85eea8008bdbd4a27cca9debc73e27c8d4d39d09528743d5639798 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Various forms of allocated equities arising from patronage are used by cooperatives. Two of the most commonly used forms are the following: 1. a Retained patronage allocations. Retaining [patronage earnings](https://asc.understandingaccounting.org/glossary/p/#patronage-earnings "The excess of a cooperative's revenues over its costs arising from transactions done with or for its patrons. Generally a significant portion of those earnings is allocated to the cooperative's patrons in the form of cash, allocated equities, or both.") through methods such as the issuance of qualified or nonqualified [written notices of allocation](https://asc.understandingaccounting.org/glossary/w/#written-notice-of-allocation "Any capital stock, revolving fund certificate, retain certificate, certificate of indebtedness, letter of advice, or other written notice to the recipient that states the dollar amount allocated to the patron by the cooperative and the portion that constitutes a patronage dividend.") is a major form of financing by cooperatives. 2. b 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."). Per-unit retains are used in marketing cooperatives in accordance with debt agreements, bylaws, or board of directors' authorizations. These amounts are determined without regard to earnings and may be based on a rate per ton or on a percentage of the dollar amount of raw product delivered. Amounts are withheld from payments to patrons for deliveries of raw products and are credited to the account of each [patron](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."). ##### [505-905-45-4](https://asc.understandingaccounting.org/asc/505/905/#505-905-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:40:06.141Z to 2026-09-10T00:40:06.141Z Record version: sha256:4bf8ca4b52ff61a26a5c262c73b1bea6505ab55701b1970bf27f531a7780fbee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the retained patronage allocations and per-unit retains have no fixed maturity dates and are subordinated to all debt instruments, they shall be treated as equity with appropriate disclosure of face value, dividend rate, negotiability, subordination agreements, and any revolving or retirement plan. ##### [505-905-45-5](https://asc.understandingaccounting.org/asc/505/905/#505-905-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:40:06.141Z to 2026-09-10T00:40:06.141Z Record version: sha256:30d8c4ed8322c0efc12d67e30ab4a2c2989be9734a305925a266437cfc8bd90c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Allocated equities are usually paid, or revolved, over a number of years. The timing may be specified in the cooperative's bylaws, but it is usually at the discretion of its board of directors. The amounts shall not be classified as current liabilities until the board has formally acted to revolve the equities. ##### [505-905-45-6](https://asc.understandingaccounting.org/asc/505/905/#505-905-45-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:40:06.141Z to 2026-09-10T00:40:06.141Z Record version: sha256:c9187003d34583ed66389127ed9a69cdf23b59ee4805ecf3f04131f4cada6161 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain transactions of cooperatives may result in unallocated equities. For example, cooperatives may derive earnings from nonpatronage business and account for these earnings as other entities do. Nonpatronage earnings are frequently not allocated and shall be classified as retained earnings in the equity section. In addition, a cooperative may elect at times not to allocate patronage earnings or losses. ##### [505-905-45-7](https://asc.understandingaccounting.org/asc/505/905/#505-905-45-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:40:06.141Z to 2026-09-10T00:40:06.141Z Record version: sha256:b36431f254e880059cbc891f5d8004377338422ce98aa01361dd9b8a21bfede3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition to allocated equities, cooperatives may issue common and preferred stock. Common stock is often issued to establish members' voting rights, whereas preferred stock may be sold to members and nonmembers on a nonpatronage basis. Cooperatives may also issue preferred stock as a form of earnings distribution. Limited amounts of dividends on preferred stock are tax deductible by exempt cooperatives, but they are not tax deductible by nonexempt cooperatives.