Handling Fluctuating Values of Ag Co-op Stock

Our FINPACK support team recently received this question:

“What is the proper way to handle Ag Co-op stock in a balance sheet in which the stock, such as sugar beets, changes in value from year-to-year?”

With harvest underway and the 2019 analysis soon to follow, we feel it is a good time to clarify the proper way to handle this unique situation. The problem is that this change in market values can have an effect on the analysis in FINAN, especially the net farm income since the accrual adjustments take the value change into account. To avoid this problem, you can do one of the following two options:

Preferred:

  1. Add cost (or base) values to your balance sheets and keep the cost value constant from year-to-year. All accrual adjustments work from the cost values so you can change market values without impacting earnings. It is a simple process:
    • Edit + Copy Market to Cost – copies the market values to the cost column in the balance sheet.
    • Enter the original cost (or a constant base value) of the co-op stock in the Cost column and then you can change the Market value as needed every year (it is suggested that this occurs in the ‘Other Intermediate Assets’ detail).
    • Repeat this change in the other balance sheets used in your analysis.

Alternative method:

  1. If you do not want to add cost values to your balance sheets, use this alternative method to update FINAN, which will reflect the change in the value of the stock:
    • Enter the amount of the valuation change as a Capital Purchase (or Sale), which takes the change out of the Income Statement.
    • Enter the same amount as Gifts Received (or Gifts Given) to make the cash balance.

As always, feel free to contact FINPACK Tech Support at 1-800-234-1111 x11 if you have questions on this procedure.

[ This information is always available in the FINPACK Knowledge Base ]