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Balance sheet and income statement issues in ARMS

Paul N. Ellinger (Department of Agricultural and Consumer Economics, University of Illinois at Urbana‐Champaign, Urbana, Illionsis, USA)
Bruce L. Ahrendsen (Department of Agricultural Economics and Agribusiness, University of Arkansas, Division of Agriculture, Fayetteville, Arkansas, USA)
Charles B. Moss (Department of Food and Resource Economics, University of Florida, Gainesville, Florida, USA)

Agricultural Finance Review

ISSN: 0002-1466

Article publication date: 27 July 2012




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.


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.


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.


By identifying these limitations, changes can be made that may result in improved measures of farm financial condition and farm household well‐being.



Ellinger, P.N., Ahrendsen, B.L. and Moss, C.B. (2012), "Balance sheet and income statement issues in ARMS", Agricultural Finance Review, Vol. 72 No. 2, pp. 247-253.



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