January 7, 2009

The following is one of four examples of an annual financial record for jointly owned machinery, as referenced in Share Machinery, Reduce Costs — Developing a Joint Ownership Agreement by UNL Extension Educator Tim Lemmons.

Scenario: Farmer A and Farmer B decide on the joint ownership of a new tractor. Farmer A will use the machine on 800 acres and Farmer B will use on 1000 acres. Farmer A has agreed to pay for the fuel/lube and maintenance on the machine and Farmer B has agreed to carry the insurance and the housing costs. Each signs an agreement. At the end of the year, the following information has been recorded.

This type of agreement is not unusual in joint ownership agreements. In this example, one operator carries the burden of all housing and insurance costs, while the other pays for fuel and other operating expenses. This example represents a situation in which one operator has access to superior housing or better insurance rates that may benefit both partners in the long-run.