# ASC 605-905-25: Revenue Recognition — Agriculture — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/605/905/#25-recognition) 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): 2026-09-10T00:45:53.183Z to 2026-09-10T00:45:53.183Z Record version: sha256:8e2da7e2fdbe6b1579de85f70317dcfec1c64bfee8154f4b7d028fcc1226e82a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 605-905-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/605/905/#25-recognition) SEC content: no #### Income Replacement and Subsidy Programs ##### [605-905-25-1](https://asc.understandingaccounting.org/asc/605/905/#605-905-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:45:53.183Z to 2026-09-10T00:45:53.183Z Record version: sha256:7d429f2fc5b004b3bb8a1b3289f36135fd843cd6130b3a511216419793031d3e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Income replacement and subsidy programs are designed to bring income from commodities to certain predetermined levels and include: 1. a Deficiency payments, which are subsidy payments resulting from low prices for designated commodities. 2. b Disaster payments, which may be made to producers when disasters prevent planting or reduce yields on [crops](https://asc.understandingaccounting.org/glossary/c/#crops "Grains, vegetables, fruits, berries, nuts, and fibers grown by agricultural producers."). 3. c Other programs, which are available to producers to encourage production, provide indemnity for certain types of losses, and reimburse producers for withholding land from production. All of the above payments, while different in nature, constitute additional income and should be recorded when the amount of and right to receive the payment can be reasonably determined. ### Cooperatives ##### [605-905-25-2](https://asc.understandingaccounting.org/asc/605/905/#605-905-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:45:53.183Z to 2026-09-10T00:45:53.183Z Record version: sha256:b39bf55078d33126e86edd7dd3a421d65a6ab629737e5d8bac9203c96cac6eac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A cooperative may incur an overall loss in a given year. The disposition of losses may be made based on bylaws or the board of directors' action. [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.") use a number of different methods for disposing of an overall loss, including the following: 1. a Allocating the loss 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 current [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."). The loss may offset the patrons' equities, future patronage allocations, or future cash contributions. 2. b Allocating the loss to all equities without considering current patronage. However, patrons with substantial equities and decreasing patronage may be treated inequitably if this method is used. 3. c Charging the loss to unallocated retained earnings. This method is equitable when the loss is attributable to nonpatronage business. 4. d Offsetting the loss against amounts available for [patronage allocation](https://asc.understandingaccounting.org/glossary/p/#patronage-allocation "Patronage earnings distributed, or allocated, to individual patrons on the basis of each patron's proportionate share of total patronage. Such allocations, which include notification to the patron, may be made on a qualified or nonqualified basis.") in subsequent years before making any such allocation to patrons. This method may be acceptable if the patrons are substantially the same from year to year. #### Departmental and Functional Accounting ##### [605-905-25-3](https://asc.understandingaccounting.org/asc/605/905/#605-905-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:45:53.183Z to 2026-09-10T00:45:53.183Z Record version: sha256:e0db98b36b754e908e7e6a8fd5985f0c6f7ddf13a4343065d31a51327ff8487c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cooperatives operating on a functional or departmental basis may have net earnings from one function or department and operating losses from another. It is a common practice for losses from one function or department to be absorbed by profits from another function or department before earnings to patrons are allocated. Some cooperatives distribute departmental earnings to patrons and charge departmental losses to unallocated retained earnings. ##### [605-905-25-4](https://asc.understandingaccounting.org/asc/605/905/#605-905-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:45:53.183Z to 2026-09-10T00:45:53.183Z Record version: sha256:e0f80222a5f77b919e5b8a4f14939687dbf9f36fb68c70bed9dc0049b4719b59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To allocate earnings to patrons equitably, cooperatives usually account for revenues and costs by function (supply or marketing) or departments within the function. Expenses common to one or more functions or departments shall be allocated on a reasonable and consistent basis. In addition, one department of a cooperative may handle several commodities, and departmental revenues and expenses may have to be allocated among them. Cooperatives may incur a loss in one department or function and realize earnings in another. Methods of accounting for these departmental and functional losses include the following: 1. a Offsetting the losses of unprofitable departments against profitable ones, and allocating the remaining profit to the patrons of the profitable departments by using the allocation method adopted by the cooperative. 2. b Recovering the loss from the patrons of that department or function on the basis of bylaw provisions or a marketing agreement. 3. c Subtracting the loss from net nonpatronage income. Offsetting patronage losses against nonpatronage income may not eliminate the income tax due on the nonpatronage income of a nonexempt cooperative. 4. d Charging the loss to unallocated retained earnings, and allocating income from profitable departments or functions to patrons on the basis of the cooperative's allocation methods. 5. e Offsetting the losses against patronage allocation for subsequent years before making departmental and functional allocations to patrons. ### Cooperatives—Patrons ##### [605-905-25-5](https://asc.understandingaccounting.org/asc/605/905/#605-905-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:45:53.183Z to 2026-09-10T00:45:53.183Z Record version: sha256:df36b822d6040e56cd98b4d857d9836bfea9a20a78347c8b7d22a161b001d501 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [605-905-25-6](https://asc.understandingaccounting.org/asc/605/905/#605-905-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:45:53.183Z to 2026-09-10T00:45:53.183Z Record version: sha256:2056cbeab77856aa74fd44528950f05256a0eb5c59cb3c3233fa66cddd5ade67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. \[Not used\] ##### [605-905-25-7](https://asc.understandingaccounting.org/asc/605/905/#605-905-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:45:53.183Z to 2026-09-10T00:45:53.183Z Record version: sha256:adbbb6cdedf46a7c74d9f9ad045393775e0cef3b119a7d3ccf3dfc39ae8482dd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [605-905-25-8](https://asc.understandingaccounting.org/asc/605/905/#605-905-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:45:53.183Z to 2026-09-10T00:45:53.183Z Record version: sha256:30f077d162e75e967b2b05ad3619c1e26e78939493d2ab768e8dea8bc679d1ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [605-905-25-9](https://asc.understandingaccounting.org/asc/605/905/#605-905-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:45:53.183Z to 2026-09-10T00:45:53.183Z Record version: sha256:9615418d924e1528ed8f2a89a85fa5f767502f033ce5615c1e351534ea8f077f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).