FFSC Appendix


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November, 1997 A – 1 APPENDIX A: EXAMPLE FINANCIAL STATEMENTS This Appendix contains an example of financial statement formats that are intended to assist the reader in the interpretation of the Report. It is impossible for the FFSC to offer example financial statements that would be directly usable by many of the diverse enterprises and operations in American agriculture. Therefore, we have tried to illustrate in this set of statements one way in which the reporting standards included in this document can be implemented. The first set of financial statements included in this Appendix illustrates a business-only set of financial statements in which the preparer has chosen to reflect the business portion of current and deferred income taxes on the financial statements. The second, partial set of financial statements illustrates one format for a “combined” set of financial statements for the same entity. Since most of the balance sheet schedules as well as the income statement would not change, only those pages of the financial statements that are different are reproduced. While GAAP-based financial statements may be preferable, when such information is not available, alternative financial statement formats can be used. The FFSC expects numerous formats of financial statements will comply with the intent of the standards and, in practice, the exact appearance of any given format may be different from the statements here. For example, balance sheet presentation of cost basis values of capital assets can be disclosed in a supporting schedule (as shown here) or in a double column format or in parenthetical disclosure on the face of the financial statement. Certain preparers may choose to continue to utilize a three category balance sheet in the near term. The level of detail shown on the face of the financial statements may also vary based on the type of enterprise and overall complexity of the operation. However, we do feel that the attached statements represent, in most cases, an example of the amount of detail that would be acceptable. The FFSC has included supporting schedules for the balance sheet — expecting that users would also utilize this type of format in some cases to provide additional detail on the income statement. The absence of such schedules for the income statement in this example is not meant to imply that they are not appropriate. Finally, sample text for key notes to the financial statements have not been included. However, such notes are a critical component of the overall package and, at a minimum, should include: 1. Description of basic accounting policies, including practices for revenue and expense recognition procedures and depreciation/amortization methods. 2. Disclosure of the source for determination of market values for capital assets.
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