Professional Documents
Culture Documents
Introduction: The primary purpose of this template is to demonstrate the interaction of financial statements and take
feasibility of an operation. The user must complete some very simple information about each enterprise within an op
assests and liabilities are necessary to provide a complete financial picture.
Use the Enterprise tab and Statements tab at the bottom of the screen to enter requested data. This template is not c
Spreadsheets that are capable of detailed financial analysis are located at http://www.montana.edu/extensionecon/f
Financial statements used are very condensed versions of the basic statements used for financial analysis (balance sh
statement of owner equity). These statements are both simplfied and some data entry has been restricted to assure in
statement. While simplified statesments, the interaction of the statements and financial analysis concepts remain the
financial analysis ratio values (see Ratio_Calc tab) and dollar amount calcualtions identical to detailed financial state
The statements in this template are distributed "in balance" (fully reconciled). To help learn about the relationship am
information flows from one to another, change a number (only those in blue text) in one of the statements or on the E
Equity indicates whether the statements are still reconciled. This provides an opportunity to discuss how financial st
one number must be "offset" with changes somewhere else in the same system of financial statements. In many insta
automatically computed and put on the right statement. If the Statement of Owner Equity showns a Discrepancy figu
statements" are out of balance. The user must make one or more additional entries somewhere to make the statement
This program uses only business assets and liabilities in the reconciliation process. Personal (Non-Bus
However, non-business cash inflows and outflows are considered for correct Cash Flow calculations. (
Written by Duane Griffith
eraction of financial statements and take a "quicka and dirty" look at the financial Montana State University
mation about each enterprise within an operation. Additional information about 210 Linfield Hall
Bozeman, MT 59717
griffith@montana.edu
requested data. This template is not capable of detailed financial analysis. 406-994-2580
tp://www.montana.edu/extensionecon/farmmgt/software.html
To check for updates of this software, click
s used for financial analysis (balance sheet, cash flow, income statement, http://www.montana.edu/extensioneco
ata entry has been restricted to assure information flows to the correct financial
d financial analysis concepts remain the same. In fact, these statements produce Loof for the RDFinancial file and check
ltions identical to detailed financial statements. date this file was last updated.
. To help learn about the relationship among the financial statements and how
text) in one of the statements or on the Enterprise tab. The Statement of Owner
n opportunity to discuss how financial statements are linked together. Changes in
m of financial statements. In many instances, in this spreadsheet, this offset in
Owner Equity showns a Discrepancy figure that is not equal to zero the "set of
ntries somewhere to make the statements reconcile.
liation process. Personal (Non-Business Assets and Liabilities) items are ignored.
r correct Cash Flow calculations. (Off Farm wages, family living expenditures, etc.)
e Griffith Last update
niversity Septemeber 11, 2003
Click button to print all input, statements, and ratios in this file>>
Crop Production/Sales Estimates:
Crop and Forage Enterprises (MUST use a yield of 1 for summer fallow, price = zero)
Crop/Forage Name WinterWheat Barley Hay Sum. Fallow Recrop Bar. Recrop WW SpringWheat Flax Canola
Yield Per Unit 30.0 48.0 2.00 1 43.2 27.0 34.0 14.5 1200.0
Number of Acres Per Enterprise 1000 500 300 1000 200 300 500 0 0 3,800
Sales Price Per Unit $3.30 $2.15 $0.00 $0.00 $2.15 $3.30 $3.50 $5.65 $0.12
Percent Acres Leased 20.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Help Tenant Share Lease Percentage 66.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Totals
Total Enterprise Crop Revenue $99,000 $51,600 $0 $0 $18,576 $26,730 $59,500 $0 $0 $255,406
Lease Payments going To Others $6,732 $0 $0 $0 $0 $0 $0 $0 $0 $6,732
Units (Bu, tons, lbs) Produced 30,000 24,000 600 1,000 8,640 8,100 17,000 0 0
$248,674
Total Owner/Tenant Revenue Received $248,674
Effective Price calculation WinterWheat Barley Hay Sum. Fallow Recrop Bar. Recrop WW SpringWheat Flax Canola
Direct Payment Rate for this Commodity (Enter from table above) $0.52
National Average Market Price Received During the Marketing Year $3.75
National Average Loan Price for This Commodity $3.00
Counter Cyclical Payment Yields
LDP Payments:
Expenses by Enterprise
Warning: When entering the enterprise expenses below, do not include expenses for depreciation, interest (opportunity costs) or family
living. Depreciation expenses are included at the whole farm/ranch level and are entered below on this tab. Interest is included on the
whole farm/ranch level and is calculated below on this tab. Family living is entered on the Statements page. If included in the enterprise
costs for crops or livestock, these expenses will be double counted.
Purchase/Contribute/Distribute Section
Purchase Depreciation
Capital Asset Purchase Price or on Assets
or Contribution Value Purchased
or Distribution of Asset This Year
Machinery & Equipment $0 $0
Real Estate (Land & Buildings) $0 $0
Breeding Livestock $0 $0
$0 $0
Liability Calculations for the Balance Sheet, Cash Flow and Income Statement
Enter a Y f
Crop Qualifites for MPCI Coverage (Y or N) >> Y Y
WinterWheat Barley
Total Number of Planted Acres in This Enterprise 1000 500
Acres of each crop in Basic Unit # 1 800 500
Help APH Yield History 30 48
Help APH Yield Coverage Election-by Crop 75% 75.00%
Help Ownership Level This Basic Unit 100% 100.00%
Help FCIC Establish Market Price $3.25 $2.00
Help Market Price Election 100% 100.00%
Enter a Y f
Crop Qualifites for MPCI Coverage (Y or N) >> Y Y
WinterWheat Barley
Acres of each crop in Basic Unit # 2 200
Help APH Yield History 30
Help APH Yield Coverage Election-by Crop 75%
Help Ownership Level This Basic Unit 66%
Help FCIC Establish Market Price $3.25
Help Market Price Election 100%
Calculated Yield Coveage Level 22.5 0
Actual Harvested Yield 30.2 35
Quantiity Indemnity Payment Level 0 0
Calculated Market Price Coverage Level $3.25 $0.00
Maximum Possible Indemnity Payment by Crop $14,625 $0
Estimated Indemnity Based on Acutal Yields $0 $0
Total Potential Indemnity Payment This Basic Unit $14,625
Esttimated Total Indemnity This Basic Unit $0
Enter a Y f
Crop Qualifites for MPCI Coverage (Y or N) >> Y Y
WinterWheat Barley
Acres of each crop in Basic Unit # 3
Help APH Yield History
Help APH Yield Coverage Election-by Crop
Help Ownership Level This Basic Unit
Help FCIC Establish Market Price
Help Market Price Election
n
Basic Unit 1 of 3
Enter a Y for each crop covered crop that you would like to insure.
N N Y Y N N
Hay Sum. Fallow Recrop Bar. Recrop WW SpringWheat Flax
300 1000 200 300 500 0
200 300 500
40 25 30
75.00% 75.00% 75.00%
100.00% 100.00% 100.00%
$2.00 $3.25 $3.50
100.00% 100.00% 100.00%
0 0 30 18.75 22.5 0
2 1 31.5 27.2 24.5 14.8
0 0 0 0 0 0
$0.00 $0.00 $2.00 $3.25 $3.50 $0.00
$0 $0 $12,000 $18,281 $39,375 $0
$0 $0 $0 $0 $0 $0
0 0 0 0 0 0
2 1 31.5 27.2 24.5 14.8
0 0 0 0 0 0
$0.00 $0.00 $0.00 $0.00 $0.00 $0.00
$0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0
ter allocation to ALL Posible Basic Units Insured (In This Example, only 3 units available)
300 1000 0 0 0 0
Hay Sum. Fallow Recrop Bar. Recrop WW SpringWheat Flax
$0 $0 $12,000 $18,281 $39,375 $0
0% 5% 6% 6% 6% 0%
$0 $0 $720 $1,097 $2,363 $0
55% 55% 55% 55% 55% 55%
$0 $0 $396 $603 $1,299 $0
Insurance Premium Subsidy
Factors (Feb. 2005)
Premium
Coverage Subsidy
Level Factor
50% 67.00%
55% 64.00%
60% 64.00%
65% 59.00%
70% 59.00%
75% 55.00%
80% 48.00%
85% 38.00%
N
Canola
0
0
1077
0
$0.00
$0
$0
N
Canola
0
1077
0
$0.00
$0
$0
N
Canola
0
1077
0
$0.00
$0
$0
0
Canola
$0
0%
$0
55%
$0
Percent Crop Revenue 100% Percent Livestock Revenue 100% Percent Gov. Payments 100%
Assets Liabilities
Balance Sheet Beginning Ending Beginning Ending Income Statement - Accrual Adj. Income
Cash on Hand 1,500 3,893 Accounts Payable (Exp) 2,000 2,000 Cash Income (adj. for cull lvstk sales) $374,135
Crops Held for Feed (Exp) 18,000 18,000 Accrued Interest (Exp) 21,489 19,709 Non-Cash Income Adjustments 0 Quick (and Dirty) Income Tax Calculation For Cash Basis Taxpayer
Crops Held for Sale (Inc) 45,000 45,000 Current Principal 23,832 25,612 Non-Cash Income (Raised Brdg Lvstk) 18,000
Market Livestock (Inc) 0 0 Other Current Liability (Exp) 10,000 10,000 Capital Gain/Loss on Breeding Lvstk (Net) 2,640 Include Taxes In the Statements at Left (Y = Yes, N= No) N
Other Current Assets (Inc) 15,000 15,000 Short Term Notes Payable (Exp) 0 0 Gross Revenue $394,775
Cash Invt Growing Crops (Exp) 0 0 Other Current Liab. (Not Adj.) 0 0 Expense Cash Income $374,135
Supplies&Prepaid Exp. (Exp) 5,800 5,800 Def. Tax on Current Assets 0 0 Cash Expense (Excluding Interest) 294,504 Cash Expense $294,504
Total Current Assets 85,300 87,693 Operating Loan Carryover 0 0 Non-Cash Feed Inventory Adjustment 0 Depreciation $39,400
Non-Current Assets Total Current Liab. 57,321 57,321 Other Non-Cash Non-Interest Expense 0 Cash Interest $27,379
Mach. & Equipment 380,000 355,000 Non-Current Liabilities Depreciation (Land, Bldgs, Equip.) 39,400 Taxable Income $12,852
Breeding Livestock 148,000 152,667 Prin. on T.D. & C.L. 308,029 282,417 Total Operating Expense 333,904 Exemptions and Standard Deductions $6,000
Real Estate (Land, Bldgs, Impr) 1,580,000 1,567,600 Total Business Liab. 365,350 339,738 Cash Int. Exp. - T.D. & C.L. 21,489 Taxable Income After Exemptions and Standard Deductions $6,852
Total Business Assets 2,193,300 2,162,960 Business Net Worth 1,827,950 1,823,222 Cash Int. Exp. - Operating 5,890 Combined State & Fed Tax Rate 21%
Change in Equity From Beginning to End of Year (4,728) Non-Cash Interest Expense (1,780) Estimated Income Tax $1,439
Total Expense $359,503
Cash Flow Statement Inflows OutFlows
Crop Sales & Net Insurance Payments 248,674 Operating Expenses No Interest > 294,504 Net Business Income From Operations 35,272
Mrkt & Cull Livestock Sales 115,640 Other Cash Business Expense 0 Net Business Income 35,272
Government Payments 30,461 Cash Int. Exp. - T.D. & C.L.* 21,489 Income & SS Taxes (Cash & Non-Cash) 0
Other Cash business Income 0 Cash Int. Exp. - Operating 8% 5,890 Net Income $35,272
Operating Loan Proceeds 50% 147,252 Loan Prin. Payments - T.D. & C.L. 23,832
Loan Proceeds Capital Assets 0 Breeding Livestock Asset Purchases 6,667 Statement of Owner Equity
Non-Business Inflows/Revenue Mach & Equip & Real Estate Purchase 0 Beginning Net Worth (Cost/Mrkt) 1,827,950
Other Nonfarm Inflows 0 Owner withdrawals 40,000 Net Income + 35,272
Other Nonfarm Inflows 0 Cash Taxes Paid (Income & SS) 0 Non-Business Cash Inflows + 0
Total Cash Inflows $542,027 Other Cash Outflows (Not Expenses) 0 Owner Withdrawals (Cash) - 40,000
* T.D. = Term Debt, C.L. = Capital Lease Subtotal $392,382 Asset Valuation Change or Cont./Distrib. +/- $0
Operating Loan Prin. Payments $147,252 Calculated Ending Net Worth = 1,823,222
Total Cash Outflows $539,633 Reported Ending Net Worth (Cost/Mrkt) 1,823,222
Annual Net Cash Flow (never < zero) 3,893 Discrepancy 0
Percent Cost of Production - Crops 100% Percent cost of Production - Livestock 100%
Note: This program is designed to teach concepts of financial analysis and get a rough initial look at a farm/ranch operation. It is not intended and you can not use this to make detailed
analysis of an individual operation. It does not have the capability to analyze detailed information.
Liquidity
Current Ratio Beginning Ending
Current Assets 85,300 87,693
divided by Current Liabilities 57,321 1.49 57,321 1.53
Working Capital
Current Assets 85,300 87,693
- Current Liabilities 57,321 $27,979 57,321 $30,372
Solvency
Debt/Asset Ratio Beginning Ending
Total Business Liabilities 365,350 339,738
divided by Total Business Assets 2,193,300 16.66% 2,162,960 15.71%
Equity/Asset Ratio
Total Business Equity 1,827,950 1,823,222
divided by Total Business Assets 2,193,300 83.34% 2,162,960 84.29%
Debt/Equity Ratio
Total Business Liabilities 365,350 339,738
divided by Total Business Equity 1,827,950 0.20 1,823,222 0.19
Profitability
Rate of Return on Business Assets
Net Business Income From Operations 35,272
+ Business Interest Expense 25,599
- Value of Operator and Unpaid Family Labor & Manageme 25,000
Divided by Average Total Business Assets 2,178,130 1.65%
Repayment Capacity
Term Debt and Capital Lease Coverage Ratio
Net Business Income From Operations 35,272
+ Total Non-Business Income 0
+ Depreciation/Amortization Expense 39,400
+ Interest on Term Debt 21,489
+ Interest on Capital Leases
- Total Income Tax Expense 0
- Owner Withdrawals 40,000 $56,161.18
Divided by
Scheduled Prin. & Int. on Term Debt & Cap. Lease 45,321
Ratio Value 1.24
Capital Replacement and Term Debt Repayment Margin
Net Business Income From Operations 35,272
+ Total Non-Business Income* 0
+ Depreciation/Amortization Expense 39,400
- Total Income Tax Expense 0
- Owner Withdrawals 40,000
= Capital Replacement and Term Debt Repayment Capacit 34,672
- Payment on Unpaid Operating Debt From Prior Year 0
- Principal Pymnts-Current Portions of Term Debt & Cap. L 23,832
- Total Annual Payments on Personal Liabilities (if Not in 0
= Capital Replacement and Term Debt Repayment Margin $10,840.12
* To evaluate for the business only, do not include items marked with an *
Financial Efficiency
Asset Turnover Ratio
Gross Revenues 394,775
divided by Average Total Business Assets 2,178,130 0.1812
Operating Expense Ratio
Total Operating Expense 333,904
- Depreciation & Amortization Expense 39,400
Divided by Gross Revenues 394,775 74.60%
Ending Beginning
Inventory Inventory
Value From Value From
Current Current
Other Non-Cash Non-Interest Expense Assets Assets
Cash Invt Growing Crops (Exp) $0 $0
Supplies&Prepaid Exp. (Exp) $5,800 $5,800
Liabilities Liabilities
Accounts Payable (Exp) $2,000 $2,000
Other Current Liability (Exp) $10,000 $10,000
Short Term Notes Payable (Exp) $0 $0
Ending Beginning
Inventory Inventory
Value From Value From
Current Current
Non-Cash Interest Expense Liabilities Liabilities
Accrued Interest (Exp) $19,709 $21,489
Income & SS Taxes (Cash & Non-Cash) Only Accrual Adjustment Portion of Taxes
Def. Tax on Current Assets $0 $0
Other Current Liab. (Not Adj.) << This line is not adjusted on the Income Statement.
Please read the comment on the Statements page of this
This line is provided to help illustrate the Statement of O
function and reconciliation of the financial statements.
d Income Statement
$18,000
breeding livestock.
Income Statement
Accrual
Expense
(+/-) to the
Income
Statement
$0
Accrual
Expense
(+/-) to the
Income
Statement
$0
$0
$0
$0
$0
Accrual
Expense
(+/-) to the
Income
Statement
($1,780)
ustment Portion of Taxes
$0
Cost of Production for Northern Plains States for 1997 and 1998
Cost of production estimates are These cost of production estimates are located at http://ww
included for Barley, Wheat, Oats,
Corn, and Sugar Beets. Barley Wheat
1997 1998 Avg 97-98 1997
Cash cost per unit of crop produced Dollars Per Bushel Dollars Per Bushel
excluding interest $1.89 $1.62 1.76 $2.87
including interest $2.17 $1.86 2.02 $3.25
Corn
Item 1997 1998 Avg. 97-98
Supporting information:
Enterprise size (planted acres) 1/ 301 301
Production practices: 1/
Irrigated (percent) 39 39
Dryland (percent) 61 61
1/ For 1996 survey base year only. 2/ Cost of custom operations, technical services and commercial drying. 3/ Cost of p
Cash cost per unit of crop produced Dollars Per Ton Dollars Per Ton
excluding interest $28.80 $27.76 28.28 $31.77
including interest $30.51 $29.54 30.03 $34.66
1/ 1997 estimates are revised. 1998 estimates are preliminary. Sugarbeet prices are held at the 1997 level because State-le
are those reported in USDA's 1992 Farm Costs and Returns Survey of sugarbeet growers adjusted for year-over-year change
Note: Sugar beet regions defined as: Great Lakes (Michigan, Ohio), Red River Valley (Minnesota, eastern North Dakota), Grea
Northwest (Idaho, Oregon except Klamath County), and Southwest (California, Klamath County of Oregon).
s States for 1997 and 1998. Source USDA - ERS
re located at http://www.ers.usda.gov/Briefing/farmincome/data.htm
Wheat Oats
1998 Avg. 97-98 1997 1998 Avg. 97-98
20.06 19.19
Dollars per planted acre
49.88 48.79
80.66 84.34
75.77 76.50
20.36 21.57
45.41 50.27
57.88 56.89
119.13 115.56
14.34 14.01
17.20 17.51
6.24 6.34
1.38 1.70
485.49 490.06
44.07 45.07
42.63 41.99
86.70 87.05
57.00 54.99
143.70 142.04
572.19 577.11
629.19 632.10
e 1997 level because State-level prices for the 1998 season will not be available before January 2000. 2/ Yields
ed for year-over-year changes as reported by NASS/USDA in Crop Production, 1998 Summary, January 1999.
a, eastern North Dakota), Great Plains (western North Dakota, Montana, Wyoming, Nebraska, Colorado, Texas),
This sheet includes cost of production estimates for Cow-calf and dairy operations.
Goto: Dairy
Page down for additional cow-calf and dairy budgets
Dollars Per He
Gross value of production:
Steer calves 132.77 132.69 132.73 72.73
Heifer calves 82.78 82.34 82.56 50.19
Yearling steers 111.54 102.98 107.26 52.93
Yearling heifers 32.88 30.06 31.47 21.12
Other cattle 84.55 82.51 83.53 59.37
Total gross value of production 444.52 430.58 437.55 256.34
Operating costs:
Feeder cattle 15.29 13.89 14.59 106.97
Feed:
Concentrates and other feed 22.53 20.26 21.40 23.16
Supplemental feed 42.98 32.35 37.67 4.02
Harvested forages 121.75 96.27 109.01 80.04
Cropland pasture 9.16 7.31 8.24 3.78
Private pasture 124.50 111.10 117.80 194.62
Public land 5.80 4.58 5.19 1.89
Total feed costs 326.72 271.87 299.30 307.51
Other:
Veterinary and medicine 14.73 15.38 15.06 35.29
Bedding and litter 0.21 0.22 0.22 0.43
Marketing 6.37 6.63 6.50 4.54
Custom operations 29.33 31.08 30.21 55.60
Fuel, lube, and electricity 16.41 16.44 16.43 22.28
Repairs 21.62 22.69 22.16 18.67
Interest on operating inputs 10.75 10.05 10.40 13.39
Total operating costs 441.43 388.25 414.84 564.68
Allocated overhead:
Hired labor 0.64 0.65 0.65 14.24
Opportunity cost of unpaid labor 302.94 309.71 306.33 255.25
Capital recovery cost of machinery and equipme 76.71 74.76 75.74 75.19
Opportunity cost of land 2.79 2.89 2.84 0.95
Taxes and insurance 31.27 33.33 32.30 29.65
General farm overhead 57.50 54.98 56.24 57.14
Total allocated overhead 471.85 476.32 474.09 432.42
/1 Excludes Interest on operating inputs, Opportunity Cost o f unpaid labor, Capital recovery costs of machine
/2 Includes interest on operating but excluses Opportunity Cost o f unpaid labor, Capital recovery costs of m
/3 Includes all costs listed except interest on operating inputs
/4 Includes all costs listed
Cash expenses:
Feed--
Concentrates 3.17 2.94 3.06 4.53
By-products 0.48 0.47 0.48 0.12
Liquid whey 0.05 0.05 0.05 0.17
Hay 2.71 2.34 2.53 1.36
Silage 1.10 0.95 1.03 1.99
Pasture and other forage 0.20 0.12 0.16 0.12
Total, feed costs 7.71 6.87 7.29 8.29
Other--
Hauling 0.39 0.38 0.39 0.29
Artificial insemination 0.12 0.11 0.12 0.18
Veterinary and medicine 0.20 0.20 0.20 0.50
Bedding and litter 0.05 0.05 0.05 0.35
Marketing 0.45 0.44 0.45 0.29
Custom services and supplies 0.41 0.39 0.40 0.39
Fuel, lube, and electricity 0.29 0.26 0.28 0.61
Repairs 0.31 0.32 0.32 1.09
Hired labor 0.54 0.52 0.53 0.53
DHIA fees 0.07 0.07 0.07 0.08
Dairy assessment 0.00 0.00 0.00 0.00
Total, variable cash expenses 10.54 9.61 10.08 12.60
Upper Midwest
1998 Avg. 97-98
4.07 4.30
0.13 0.13
0.18 0.18
1.14 1.25
1.67 1.83
0.14 0.13
7.33 7.81
0.29 0.29
0.17 0.18
0.49 0.50
0.34 0.35
0.29 0.29
0.39 0.39
0.56 0.59
1.13 1.11
0.50 0.52
0.08 0.08
0.00 0.00
11.57 12.09
0.75 0.74
0.46 0.44
1.21
1.29 1.21
2.50 2.39
12.78 13.27
14.07 14.48
List of defaults and/or assumptions used in this spreadsheet template.
1 Bulls are assumed to have a three year life and are always fully depreciated when they are sold.
All bull revenue is treated just like "ordinary income," even though it is listed under Capital Gains/Loss on Breeding Livestock.
See the Enterprise tab of this template in cell block I21 throught L31.
2 Bulls (or other male breeding livestock, Rams for example) are the only type of purchased breeding livestock included in the initial setup.
Female breeding livestock are always raised and assigned a base value by the user. However, the user can enter any type
of purchased breeding livestock on the Enterprise tab under the Purchase/Contribute/Distribute Capital Asset section starting
in cell A81
3 No asset sales, or death loss of breeding livestock, etc. is allowed in this spreadsheet.
4 The beginning and ending values on the balance sheet for current assets and liabilities are (should) always be the same.
This eliminates accrual adjustments on the income statement prior to the user entering or changing a specific number to
show an accrual income or expense. It simplifies teaching the concepts.
5 Due to the design of this spreadsheet, interest and depreciation are handled separately from the basic cost of production figures entered
for each enterprise. This is necessary to calculate and display principle and interest for all loans on the various financial statements.
It is important that these numbers are separated out of the enterprise cost of production figures, to the best of your ability, remembering
that this template is basically designed to teach interaction of and how to interrupt financial statements.
Separate out:
Interest or opportunity costs charged on operating costs
Interest or opportunity costs charged on capital assets
Depreciation on capital assets included in the enterprise costs
6 Some basic assumptions about timing are included when making entries to illustrate assest purchases, receiving captial contributions,
or making capital distributions.
It is always assumed, in this system of financial statements, that these activities happen at the end of the
year when there is no opportunity for a purchased or contributed asset to generate any additional
revenue to be included in this analysis year.
The assumption with distributed assests is the revenue from that particular asset has already been received during the
year and no reduction in revenue occurs because of the asset's disappearance from the balance sheet during the year.
This assumptions helps to illustrate the fact that the mear purchase of an asset will not increase equity, I.e. you can
not buy equity. You must employ the asset in a manner that earns equity through increasing the revenue stream or
reducing the expense stream, hence increasing net income.
7 If using the purchase capital asset section on the Enterprise tab, the assumption is that, if financied, no P & I payment is made on the asset
during the year of purchase. Other expenses like taxes, and insurance are also not made during the year of purchase.
Breeding Livestock.
c number to
captial contributions,
ment is made on the asset