Statement of Owner Equity

Gerry Schwab and Sherrill Nott

Statement of Owner Equity

Purpose: To reconcile the owner equity amount stated at the beginning of the time period, with the owner equity amount determined at the end of the time period.

OWNER Equity
Term used to describe value of the business after the total claims of creditors are subtracted from the value of the assets. The term owner equity refers only to a business and this statement includes no information for an individual person.

Net Worth
The term net worth is used to describe value of business plus personal valuation after the total claims of creditors are subtracted from the value of assets. The term net worth refers to a statement for an individual person or a statement for a business which also contains data for an individual person.

Statement of Owner Equity

Components should include:
1. Beginning owner equity 2. Plus net income amount 3. Minus owner withdrawals 4. Plus contributions received by business 5. Minus contributions distributed to others 6. Equals Change in Retained Earnings/Contributed Capital 7. Ending Owner Equity (Cost Value Basis)

Statement of Owner Equity

Components should include:
7. Ending Owner Equity (Cost Value Basis) 8. Adjustment for change in Asset Values (Ending market value - cost value) (Beginning market value - cost value) from beginning to end of time period and adjustment for change in Deferred Debt (+Beginning - Ending Deferred Liabilities) 9. Equals change in market valuation equity 10. Ending Owner Equity (Market Value Basis)

Statement of Owner Equity

Market 1. Owner Equity, Beginning of Period 2a. Net Farm Income/Loss 2b. Non-farm Income Contributed to Farm Business 3a. Withdrawals for Family Living Expenses ________ 3b. - Income and Social ________ Security Taxes 3. Owner Withdrawals (net) = Total Change in Retained Earnings 4. + Other Capital Contributions/Gifts/ Inheritance received 5. - Other Capital Distributions/Dividends/ Gifts Made 6. = Total Change in Contributed Capital & Retained Earnings 7. Ending Owner Equity (cost value basis) _________ Cost

__________

__________

________

________ _____________ ______________

___________ _____________ ______________

______________

Statement of Owner Equity

8. Change in Excess of Market Value over Cost Basis of Marketable Securities and Farm Capital Assets
Beg. Intermediate Assets Real Estate _________ _________ Beg. + Change in: Deferred Liabilities 9. Total Change in Valuation Equity 10. Owner Equity, End of Period _________ _________ _________ _________ ___N.A. End + __________ __________ End Change _________ _________ Change Market _________ _________ Market Cost ___N.A. ___N.A. Cost

_________

_________

_________ _________

_________ _________

___N.A. ___N.A.

Statement of Owner Equity (net worth)

Cash Grain Farm -- Jan. to Dec. 2000
Market
1. Owner Equity, Beginning of Period 2. Net Farm Income/Loss 3. Non-farm Income Contributed to Farm Business 3a. Withdrawals for Family Living Expenses 3b. - Income and Social Security Taxes 3. Owner Withdrawals (net) = Total Change in Retained Earnings (Line 2 Line 3) 4. + Other Capital Contributions/Gifts/ Inheritance received 5. - Other Capital Distributions/Dividends/Gift s Made 6. Total Change in Contributed Capital & Retained Earnings 7. Ending Owner Equity (cost value basis) ________ (1,300) (28,389) (24,280) (52,669) 45,228 45,228 97,897 833,030

Cost
385,250

______

- 1,300

- 1,300

429,178

Statement of Owner Equity

8. Change in Excess of Market Value over Cost Basis of Marketable Securities and Farm Capital Assets
Beg. Intermediate Assets 202,750 End + 236,053 Change +33,303 Market Cost

Real Estate

725,000 Beg. +

725,000 End -

0.0 Change Market Cost

Change in: Deferred Liabilities 9. Total Change in Valuation Equity 10. Owner Equity, End of Period 479,970 508,635 -28,665 + 4,638 $ 881,596 N/A $ 429,178

Statement of Owner Equity -- Summary

Can determine CHANGE in Owner Equity from beginning to end of time period Components of change are:
1 Retained earnings from profit 2 Contributed capital from sources outside the business 3 Inflation/Deflation -- Change in Market Values