Realized cost of agricultural and related programs, by function or purpose, fiscal years 1932-53-Continued [Millions of dollars] RELATIONSHIP OF REALIZED COSTS TO STATEMENTS OF ACCRUED INCOME AND EXPENSES FOR NONCORPORATE LENDING PROGRAMS The financial aspects of the noncorporate lending programs of the Rural Electrification Administration and the Farmers Home Administration, which are reported on this statement on a realized cost basis, are also susceptible of being reported on an accrued income and expense basis. Records for these programs are maintained and reports are made on the accrued basis pursuant to regulations covering business-type Government operations. To illustrate the differences involved in these two concepts the following tabulation, using the REA as an example, shows the results, from the beginning of the REA programs through the fiscal year 1953, on the accrual basis compared with the realized costs reflected in this statement. Lending operations of REA from inception to June 30, 1953 The principal differences in the two bases are as follows: (1) Interest income. The accrual basis includes interest earned but not collected. A substantial part of the difference is due to the inclusion on the accrual basis of interest deferred under the law during the first 5 years of a loan but properly accounted for as accrued interest earned although it is not due or payable. The realized cost basis includes actual collections of interest. (2) Interest expense. The accrual basis includes only the interest actually charged to REA on funds borrowed from RFC (in the earlier years) and from the Treasury, under borrowing authorizations provided by Congress. The realized cost basis includes as interest expense the amount resulting from applying to the average total of loans outstanding in each year the average interest rate paid by the Government for the funds it borrowed in that year. (3) Provision for possible losses on loans. The accrual basis includes projected or anticipated losses based on the best estimate that could be made at the end of the fiscal year 1953. The realized cost basis, which takes into account only those costs that have actually come about, does not include any anticiapted losses on loans. |