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Balance sheet and income statement issues in ARMS


  • Paul N. Ellinger
  • Bruce L. Ahrendsen
  • Charles B. Moss


Purpose - 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.

Suggested Citation

  • Paul N. Ellinger & Bruce L. Ahrendsen & Charles B. Moss, 2012. "Balance sheet and income statement issues in ARMS," Agricultural Finance Review, Emerald Group Publishing, vol. 72(2), pages 247-253, July.
  • Handle: RePEc:eme:afrpps:v:72:y:2012:i:2:p:247-253

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    References listed on IDEAS

    1. 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.
    2. Barnard, Freddie L. & Ellinger, Paul N. & Wilson, Christine A., 2010. "Measurement Issues in Assessing Farm Profitability through Cash Tax Returns," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers.
    3. Charles B. Moss & Danny A. Klinefelter & Michael A. Gunderson, 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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