CenterPoint^® Accounting for Agriculture - Distribute General Revenue and Expenses by Operator Acre (Lease %)

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Document #:	3452	Product:	CenterPoint® Accounting for Agriculture

Account distributions allow you to distribute financial activity to your production details using the production information stored in the crop production details. This document explains how to distribute by operator acre lease %. Rather than using the total number of acres, this method uses the percentage of acres that the operator collects revenue for in the distribution calculation.

General revenue and expense transactions can be distributed to your crop production details based on the number of acres in each crop production detail multiplied by the distribution factor of that profit center. The distribution factor allows you to weight the various crops you produce based on labor intensity, utility usage, equipment usage, or other overhead costs. A distribution can be set up for all the combinations you need on your different accounts. Distributions can be used on any account types.

Let’s use an example of a farming operation with two brothers. Rather than using the total number of acres, this method uses the percentage of acres that the operator collects revenue for in the distribution calculation.

• Each brother has a separate company in CenterPoint - Brother 1 and Brother 2.
• Each brother is a crop owner/operator with two landloards Henry Landlord and Sam Meyers. Each is set up as a crop owner.
  • Leases:

• Brother 1 Owned Land - The lease marked as Owned and Brother 1 is the only operator\owner at 100%.

• Brother 2 Owned Land - The lease is marked as Owned and Brother 2 is the only operator\owner at 100%.

• Shared Ownership - The Lease is setup as Owned but each brother is set up with a percentage of 50%.

• Henry Landlord Land - Lease is rented land. Henry Landlord is 100% owner. Brother 1 and Brother 2 are operators each at 50%.

• Meyer Share Crop - The lease is Shared. Operator and Owners shares are 50%. Sam Meyer is the only owner. Brother 1 and Brother 2 are each 50%.

• Production Center Details
  • The production details were setup to create one crop production detail for each lease. Each production detail is 200 acres and all use the crop of Corn.
    • 23 Corn Blacktop 200 - assigned to lease Brother 2 Owned Land.
    • 23 Corn - Henry - assigned to lease Henry Landlord Land.
    • 23 Corn Home East - assigned to lease Brother 2 Owned Land.
    • 23 Corn Home South - assigned to Lease Owned for both brothers.
    • 23 Corn - Meyer Land - assigned to Lease Meyer Share crop.

 

 

 

 

 

 

Step A - Assign the Distribution Factor

Step B - Create the Account Distribution

Step C - Assign Accounts to the Distribution

Step D - Distribution Calculation (only if distribution in Step A was setup with the At Transaction timing option)

Step E - Apply Distribution (only if distribution in Step A was setup with the Later timing option)

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Step A - Assign the Distribution Factor

The Distribution Factor provides a way to more accurately assign the expenses by a scale of one crop to the average crop. The Distribution Factor automatically assigns 1.0. 1.0 represents average. Crops that cost less than average will be less than 1.0. Crops that cost more than average will be more than 1.0.

Example Calculation of Distribution Acres: If there are 200 acres of corn and it is assigned a distribution factor of 1.5. The distribution will use 300 for wheat ( 200 actual acres multiplied by 1.5 (distribution factor).

To assign the scaling factor:

1. Select Setup > Profit and Production Centers > Profit Centers.
2. Select the Profit Center.
3. Select the Detail tab.
4. For this example, enter the Distribution Factor of 1.00 to the Corn Profit Center.

Step B - Create the Account Distribution

1. Select Setup > Accounts > Distributions. Click New.
2. Enter an Abbreviation (optional), Name and Description for the distribution such as Percent of Acres.
3. The Active check box will automatically be selected, clear the check box if this distribution is no longer active. If the check box is cleared, accounts cannot be assigned on the Assign Accounts tab and if accounts are assigned when the distribution is inactivated, a message displays reminding you that the accounts will be removed when the distribution is saved.
4. Select the Distribution Detail tab. The Distribution tab will be used to identify how the expenses should be distributed. A distribution can be dispersed to an unlimited number of profit centers or production center details.
5. Click New in the lower left corner.
6. Enter a Name for this portion of the distribution, such as Crops in this example.
7. Change the Type to Per Operator Acre (Lease %).
8. Select the appropriate Timing option. In this example, we are using At Transaction.

• Later: This option will record the revenue or expense to the account but won't distribute it to profit centersor production center details until later when the Apply Distributions process is completed (defined in step D below). This option is for those that won't know at the time of purchase how they'll be using it, thus how they'll want it distributed.
• At Transaction: At the time the transaction is entered, it will record the revenue or expense and it will automatically distribute it to the previously defined profit centers or production center details.

 

9. Enter the Percentage of Total Amount for this portion of the distribution. In this example, 100% of general overhead expense is allocated to Crops by Operator Acre (Lease %).
10. In the By box, select Profit Centers.
11. Select the Select Production Center DetailRecords Using the Transaction Company (via Leases) check box to include production center details based on the Transaction Company (Leases/Owner/Operator).
12. All profit centers/production centers will be displayed on the left in the Available section. Use the right arrow to move Corn and Soybeans to the right (Selected) for this allocation.
13. Repeat step 4-12 for each distribution needed.
14. Click Save.

Step C - Specify the Accounts Assigned to the Distribution

1. Select Setup > Accounts > Distributions. Find the distribution set up in Step A and click Edit. In our example, it would be Percent of Acres
2. Select the Assign Accounts tab.

3. The Assign Accounts to Distributions area will list all accounts not already assigned to other distributions on the left side of the screen. Each account that should use this distribution should be moved to the right side of the screen by double-clicking on the account or using the green arrow buttons located between the account lists.

Distribution Calculation (only if distribution in Step A was setup with the At Transaction timing option)

If you have chosen At Transaction as the timing option on a distribution (step B8 above), the distribution can be displayed from the Distribution button on the transaction lines.

For our example, enter a payment to General Electric for $200.00 for Brother 1.

1. Click on the Orange column under Distribution and then expand the line to display the distribution details.

With each of the production center details (fields) at 200 acres the distribution of acres for transactions for each brother is:

Crop Production Detail	Brother 1	Brother 2
23 Corn Blacktop 200	0	200
23 Corn - Henry	100	100
23 Corn Home East	200	0
23 Corn Home South	100	100
23 Corn - Meyer Land	50	50

The operator acres (lease %) account distribution is calculated as follows:

• If the lease is owned, the owner/operator percentage within the lease are added together if the owner/operator company matches the transaction company and then multiplied by the crop profit center detail size ( multiplied by the profit center distribution factor) to get the "Operator Acres" the distribution will apply to for that particular profit center detail.

• If the lease is cash rented or shared, the owner/operator percentage within the lease are added together if the owner/operator company matches the transaction company and the crop/owner operator is not owned and then multiplied by the crop profit center detail size ( multiplied by the profit center distribution factor) to get the "Operator Acres" the distribution will apply to for that particular profit center detail.

• All "Operator Acres" are added together to get the "Total Operator Acres" and then the distribution percentage is calculated as: Profit Center Detail "Operator Acres" divided by "Total Operator Acres" multiplied by 100 (rounded to 4 decimal places.)

Step E - Apply Distribution (only if distribution in Step A was setup with the Later timing option)

If you have chosen Later as the timing option on a distribution (step B8 above), there is an additional processing step that manually distributes the dollars. We recommend being consistent on the frequency and time you run Apply Distribution, such as at the end of each month.

 

1. Select Processes > Periodic > Apply Distributions.
2. Click Create New.
3. In the Company box, enter the company name that the apply distribution transactions should be created for.

4. In the Transaction Date box, the next "calculated" date to create apply distribution transactions displays. The date is calculated by taking the last date transactions were created and incrementing the date one month. The day of the month will default to the last day of the month, but can be changed.
5. In the Transaction Number box, enter the transaction number for the apply distribution transactions or click the sequence number icon and select the next available sequence number.
6. In the Memo Line 1 box, enter an optional memo for the transaction. In the Line 2 box, if the transaction is assigned a name that was setup with a default memo, it will display automatically and can be overridden.
7. Enter an optional Notation.
8. Click OK.
9. If you wish to change the distribution amounts in the Amount column before posting, type over the existing amount. Click Edit to add/change/remove account distribution detail lines and recalculate the remaining details (click Reset to set the distribution back to the amounts prior to any changes).
10. Click Post to complete the process.

Document: 3452

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