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NOTE9-TO FINANCIAL STATEMENTS --Continued <br />FELLSMERE JOINT VENTURE (A PARTNERSHIP) <br />NOTE A --SIGNIFICANT ACCOUNTING POLICIES --Continued <br />Production costs associated with the cattle operation are allocated to the calf <br />inventory. Production costs are accumulated on an August 1 to July 31 breeding <br />year and all subsequent costs between August 1 and September 30 are recognized on <br />the balance sheet as deferred cattle costs. After an animal reaches breeding age, <br />it no longer accumulates costs, and is transfered to the breeding herd and <br />depreciated over its expected productive life. <br />Property and Equipment: Depreciation is considered to be a period expense except <br />for depreciation charged to cattle operations, which is considered a production <br />cost. Depreciation is computed using straight-line and accelerated methods over <br />the estimated useful lives as follows: <br />Description Useful Lives <br />Land improvements 5-15 years <br />Citrus trees 22-33 years <br />Buildings and structures 5-30 years <br />Breeding herd 5 years <br />Transportation equipment 3-6 years <br />Machinery and other equipment 3-15 years <br />Property under development consists of approximately $5,372,000 for citrus trees <br />that have not reached the production stage and approximately $1,527,000 for the <br />construction of structures, reservoirs and ditches. <br />Statements of Cash Flows: The Joint Venture has adopted Financial Accounting <br />Standard No. 95 which requires the presentation of a statement of cash flows. This <br />statement replaces the previously required statement of changes in financial <br />position. To enhance comparability, the accompanying 1987 statement of changes in <br />financial position has been restated. The statements of cash flows are presented <br />utilizing the indirect method. <br />Cash Equivalents: The Venture considers all highly liquid investments with <br />maturity of three months or less when purchased to be cash equivalents. <br />Income Taxes: The Internal Revenue code provides for partnership income or losses <br />to be reported by the partners, who are to report their equitable share of the net <br />profit or loss on their tax returns. Accordingly, the financial statements do not <br />include any provision for income taxes. <br />Reclassification: Certain items reported in the 1987 financial statements have <br />been reclassified herein to conform to the 1988 classification. <br />-9- <br />