Balance sheet and income statement issues in ARMS

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

Research output: Contribution to journalArticlepeer-review


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 itemsmayresult 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.

Original languageEnglish (US)
Pages (from-to)247-253
Number of pages7
JournalAgricultural Finance Review
Issue number2
StatePublished - Jul 27 2012


  • ARMS
  • Accounting
  • Accounting principle
  • Accrued expense
  • Balance sheet
  • Capital lease
  • Farm income
  • Farms
  • Section 179

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics, Econometrics and Finance (miscellaneous)


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