Agriculture

ASC 905 provides incremental, industry-specific accounting guidance for agricultural producers, agricultural cooperatives, and patrons of cooperatives; entities in scope must still apply all other applicable GAAP (905-10-15-1). Its guidance is organized into three Subsections—General, Cooperatives, and Cooperatives—Patrons (905-10-05-2; 905-10-05-3)—and covers inventories of agricultural producers and development costs of land, trees and vines, intermediate-life plants, and animals (905-10-15-5), while excluding timber growers, tropical pineapple and sugarcane growers, raisers of animals for competitive sports, and merchants/noncooperative processors (905-10-15-4). The most important idea is the cooperative "price adjustment theory": a cooperative agrees to do business at cost and must return excess amounts to patrons, so patronage distributions are price adjustments rather than dividends (905-10-05-7; 905-10-05-8), a characterization that also supports the Internal Revenue Code deduction for earnings allocated to patrons (905-10-05-9).

Subtopics

1. 10Overall25 ¶

   ASC 905-10 is the Overall subtopic of the Agriculture Topic, setting out the background and scope for industry-specific accounting by agricultural producers, agricultural cooperatives, and patrons of those cooperatives. The Topic's guidance is organized into three Subsections—General, Cooperatives, and Cooperatives—Patrons—and provides only incremental industry guidance, so entities must also apply all other applicable GAAP (905-10-15-1). It covers inventories of agricultural producers and development costs of land, trees and vines, intermediate-life plants, and animals (905-10-15-5), but excludes timber growers, tropical pineapple and sugarcane growers, raisers of animals for competitive sports, and merchants/noncooperative processors (905-10-15-4).

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