CHS 2014 Annual Report Download - page 35

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Scope of Disclosures about Offsetting Assets and Liabil-
CHS Inc. (CHS, we, us, our) is one of the nation’s leading ities,’’ create new disclosure requirements about the
integrated agricultural companies. As a cooperative, nature of an entity’s rights of setoff and related arrange-
CHS is owned by farmers and ranchers and their ments associated with its financial instruments and
member cooperatives (members) across the United recognized derivative instruments. The disclosure
States. We also have preferred stockholders that own requirements in this update were effective for our annual
shares of our 8% Cumulative Redeemable Preferred and interim reporting period beginning in fiscal 2014.
Stock (8% Preferred Stock), which is listed on the The required disclosures have been included in Note 12,
NASDAQ Stock Market LLC (NASDAQ) under the Derivative Financial Instruments and Hedging Activities.
symbol CHSCP; Class B Cumulative Redeemable Pre-
ferred Stock, Series 1 (Class B Series 1 Preferred Stock), In February 2013, the FASB issued ASU No. 2013-02,
which is listed on the NASDAQ under the symbol ‘‘Comprehensive Income.’’ ASU No. 2013-02 requires
CHSCO; and Class B Reset Rate Cumulative Redeem- an entity to provide information about the effects of
able Preferred Stock, Series 2 (Class B Series 2 Preferred significant reclassifications out of accumulated other
Stock), which is listed on the NASDAQ under the symbol comprehensive income, by component, either on the
CHSCN. During September 2014, we issued shares of face of the financial statements or in the notes to the
Class B Reset Rate Cumulative Redeemable Preferred financial statements and is intended to help improve the
Stock, Series 3 (Class B Series 3 Preferred Stock), which transparency of changes in other comprehensive
is listed on the NASDAQ under the symbol CHSCM. income. ASU No. 2013-02 does not amend any existing
requirements for reporting net income or other compre-
We buy commodities from and provide products and hensive income in the financial statements. ASU
services to patrons (including member and other non- No. 2013-02 became effective for our annual and interim
member customers), both domestic and international. reporting period beginning in fiscal 2014. The required
We provide a wide variety of products and services, disclosures have been included in Note 9, Equities.
from initial agricultural inputs such as fuels, farm sup-
plies, crop nutrients and crop protection products, to
agricultural outputs that include grains and oilseeds, Cash equivalents includes short-term, highly liquid
grain and oilseed processing and food products. A por- investments with original maturities of three months or
tion of our operations are conducted through equity less at the date of acquisition. The fair value of cash and
investments and joint ventures whose operating results cash equivalents approximates the carrying value
are not fully consolidated with our results; rather, a pro- because of the short maturity of the instruments.
portionate share of the income or loss from those enti-
ties is included as a component in our net income under
the equity method of accounting. Grain, processed grain, oilseed, processed oilseed and
other minimally processed soy-based inventories are
stated at net realizable values which approximate
The consolidated financial statements include the market values. All other inventories are stated at the
accounts of CHS and all of our wholly-owned and lower of cost or market. Costs for inventories produced
majority-owned subsidiaries and limited liability compa- or modified by us through a manufacturing process
nies, which is primarily National Cooperative Refinery include fixed and variable production and raw material
Association (NCRA), included in our Energy segment. costs, and in-bound freight costs for raw materials.
The effects of all significant intercompany transactions Costs for inventories purchased for resale include the
have been eliminated. cost of products and freight incurred to place the prod-
ucts at our points of sale. The costs of certain energy
In December 2011, the Financial Accounting Standards inventories (wholesale refined products, crude oil and
Board (FASB) issued Accounting Standards Update asphalt) are determined on the last-in, first-out (LIFO)
(ASU) No. 2011-11, ‘‘Disclosures about Offsetting Assets method; all other inventories of non-grain products pur-
and Liabilities.’’ ASU No. 2011-11, and the subsequent chased for resale are valued on the first-in, first-out
amendments issued in ASU No. 2013-01, ‘‘Clarifying the (FIFO) and average cost methods.
CHS 2014 33
Summary of Significant Accounting Policies
Organization
Cash Equivalents
Inventories
Basis of Presentation