Farm business equity is partly illusion

Eddy LaDue, Charles Cagley, James Dawson and Charles Brown

American Bankers Association, 1999, vol. 12, issue 4

Abstract: Market value balance sheets are required to appropriately assess the collateral position of a farm borrower. However, in most cases, part of the equity listed on the farmer's balance sheet is really an illusion. The balance sheet does not include the taxes the farmer would have to pay if he or she sold the farm. The Farm Financial Standards Council recommends that these taxes be shown on a market value balance and calls the taxes that would be paid deferred taxes. The equity that farmers think they have, but which would be paid in taxes if the farm were sold, is really equity illusion.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Date: 1999
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