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How Cooperatives Measure Earnings Affects Patronage Refunds

Published on March 23, 2016

Patronage refunds are one of the main differentiating factors between a cooperative business and a regular corporation or other business entity. One of the major parts of the statutory definition of a patronage refund is that it is determined by the net earnings of the cooperative. The statutory definition, does not, however, state whether those net earnings are determined by federal income tax or financial accounting rules.

Based on experience, the method used to determine net earnings has been based on the region of the country that the cooperative is located and size of the cooperative. In recent years, cooperatives have begun to review their method for determining net earnings in the hopes of taking full advantage of tax breaks and still providing a fair and equitable return to their members. 

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FASB Releases Lease Accounting Standard

Published on March 23, 2016

The Financial Accounting Standards Board issued its long-awaited Lease Accounting Standard, one of the major convergence projects on which it has collaborated for a decade with the International Accounting Standards Board.

The accounting standards update aims to improve financial reporting about leasing transactions and will affect all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment, in many cases putting their operating leases on the balance sheet for the first time.

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