Balance sheet and income statement issues in ARMS
AbstractPurpose – The purpose of this research is to analyze possible implications of the economic measures presented in the balance sheet and income statement of the farm firm. Design/methodology/approach – Accounting principles and the users of accounting information are studied. From a review of the Agricultural Resource Management Survey (ARMS) questionnaire, several items are identified that limit ARMS information from fully measuring economic and financial conditions. Findings – ARMS limitations include issues related to asset valuation, income and expense recognition, and extraordinary income reporting. In particular, data limitations on deferred taxes associated with market values exceeding cost, capital leases, prepaid rents, accrued items, Section 179 and accelerated depreciation methods, and extraordinary items may result in understatement of leverage, overstatement of liquidity, and under reporting of year-to-year farm income variability measures. Originality/value – By identifying these limitations, changes can be made that may result in improved measures of farm financial condition and farm household well-being.
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Bibliographic InfoArticle provided by Emerald Group Publishing in its journal Agricultural Finance Review.
Volume (Year): 72 (2012)
Issue (Month): 2 (July)
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Web page: http://www.emeraldinsight.com
Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bruce L. Ahrendsen & Ani L. Katchova, 2012. "Financial ratio analysis using ARMS data," Agricultural Finance Review, Emerald Group Publishing, vol. 72(2), pages 262-272, July.
- Charles B. Moss & Danny A. Klinefelter, 2012. "Accounting for complex entities: implications for ARMS," Agricultural Finance Review, Emerald Group Publishing, vol. 72(2), pages 201-209, July.
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