The Agriculture Topic includes the following Subtopics relating to
agricultural producers,
agricultural cooperatives, and
patrons of such cooperatives:
- a
Overall
- b
Presentation of Financial Statements
- c
Receivables
- d
Investments—Other
- e
Inventory
- f
Property, Plant, and Equipment
- g
Liabilities
- h
Equity
- i
Revenue Recognition—Cooperatives
- j
Cost of Sales and Services.
Each Subtopic provides background on the guidance provided.
The guidance throughout this Topic for accounting for different entities in the agricultural industry is presented in the following three Subsections:
- a
General
- b
Cooperatives
- c
Cooperatives—Patrons.
The General Subsections provide guidance for all entities operating in the agricultural industry, except those noted in paragraph
905-10-15-4.
Agricultural producers use every form of business organization, from sole proprietorship to a large publicly held entity. They engage in numerous activities, for example: - a
Growing wheat, milo, corn, and other grains
- b
Growing soybeans, vegetables, sugar beets, and sugarcane
- c
Growing citrus fruits, other fruits, grapes, berries, and nuts
- d
Growing cotton and other vegetable fibers
- e
Operating plant nurseries
- f
Breeding and feeding cattle, hogs, and sheep, including animals for wool production
- g
Operating dairies
- h
Operating poultry and egg production facilities
- i
Breeding horses
- j
Raising mink, chinchilla, and similar small animals
- k
Raising fish and shellfish.
In addition, the operations of agricultural producers often involve various combinations of those activities. Agricultural practices and products may vary still further because of differences in temperature, soil, rainfall, and regional economics. Farm products may be used in related activities, such as the feeding of hay and grain to livestock, or they may be marketed directly by the producer. Producers often sell products in accordance with government programs or through agricultural cooperatives. Marketing strategies may include forward contracts or commodity futures contracts to reduce the risks of fluctuations in market prices. Another difference between cooperatives and other business corporations is that the cooperative's bylaws usually require it to distribute assets to patrons, or allocate to patrons' accounts amounts equal to its earnings, on the basis of their patronage. Distributions to patrons are different from dividend payments to stockholders in other entities.
Cooperatives generally try to buy or sell at the current market price. Periodically, they determine total costs and make distributions to patrons in the form of cash, certificates, or other notices of allocation based on the excess of revenues over costs.
For an overview and background of cooperative members and
patrons of
agricultural cooperatives, see the
Cooperatives Subsection of Section 905-10-05.