| Significant Accounting Policies [Text Block] | ( 1 Summary of Significant Accounting Policies
(a) Nature of Business Art’s-Way Manufacturing Co., Inc. (the “Company”) is primarily engaged in the fabrication and sale of specialized farm machinery in the agricultural sector of the United States. Primary product offerings include portable and stationary animal feed processing equipment; hay and forage equipment; sugar beet harvesting equipment; dirt work equipment and manure spreaders. The Company sells its labeled products through independent farm equipment dealers throughout the United States. The Company also provides after-market service parts that are available to keep its branded and OEM-produced equipment operating to the satisfaction of the end user of the Company’s products. The Company’s Modular Buildings segment is primarily engaged in the construction of modular laboratories and animal housing facilities through the Company’s wholly-owned subsidiary, Art’s-Way Scientific, Inc. Buildings commonly produced range from basic swine buildings to complex containment research laboratories. This segment also provides services relating to the design, manufacturing, delivering, installation, and renting of the building units that it produces. During the third 2023, third
(b) Principles of Consolidation The consolidated financial statements include the accounts of Art’s-Way Manufacturing Co., Inc. and its wholly-owned subsidiaries for the 2023
(c) Cash Concentration The Company maintains several different accounts at one
(d) Customer Concentration During the 2023 2022 one
(e) Accounts Receivable Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Accounts receivable are written-off when deemed uncollectible. Recoveries of accounts receivable previously written-off are recorded when received. Accounts receivable are generally considered past due 60 The Company began offering floorplan terms in its Agricultural Products segment during its Fall 2021 2022 2023 180 $1,920,000 November 30, 2023 $1,033,000 November 30, 2022 Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 30
(f) Inventories Inventories are stated at the lower of cost or net realizable value, and cost is determined using the standard costing method which approximates costs determined on the first first not may not
(g) Property, Plant, and Equipment Property, plant, and equipment are recorded at cost. Depreciation of plant and equipment is provided using the straight-line method, based on the estimated useful lives of the assets which range from three forty Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not may not For property, plant and equipment used in operations, including lease assets and assets held for lease, impairment losses are only recorded if the asset’s carrying amount is not
(h) Leases Lessee. 12 60 ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value payments over the lease term. As most of the Company’s leases do not may The Company has copier lease agreements with lease and non-lease components and has elected the practical expedient not not twelve The components of operating leases on the Consolidated Balance Sheets at November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022 Operating lease right-of-use assets (other assets) $ 22,427 $ 31,527 Current portion of operating lease liabilities (accrued expenses) $ 8,653 $ 9,101 Long-term portion of operating lease liabilities 13,774 22,426 Total operating lease liabilities $ 22,427 $ 31,527 The Company's continuing operations recorded $17,459 of operating lease expense in the year ended November 30, 2023 2022 Future maturities of operating lease liabilities as of November 30, 2023 Year Ending November 30, 2024 9,532 2025 9,532 2026 4,766 Total lease payments 23,829 Less imputed interest (1,402 ) Total operating lease liabilities 22,427 The components of finance leases on the Consolidated Balance Sheets on November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022 Finance lease right-of-use assets (net of amortization in other assets) $ 511,367 $ 396,220 $ 511,367 $ 396,220 Current portion of finance lease liabilities $ 257,454 $ 142,893 Long-term portion of finance lease liabilities 722,200 475,411 Total finance lease liabilities $ 979,654 $ 618,304 The Company received grant funds from the Iowa Economic Development’s Manufacturing 4.0 Future maturities of finance lease liabilities as of November 30, 2023 Year Ending November 30, 2024 $ 302,714 2025 248,050 2026 246,466 2027 213,481 2028 82,147 Total lease payments 1,092,858 Less imputed interest (113,204 ) Total finance lease liabilities $ 979,654 The weighted average lease term of the Company’s finance leases are 45 months while the weighted average rate of finance leases is 5.19%. The Company's continuing operations incurred $129,891 of amortization expense from ROU assets related to finance leases in fiscal 2023 2022 Lessor. one 1 2 3 4 5 no none 1 not 2 not See note 7
(i) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating losses. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not not The Company classifies interest and penalties to be paid on an underpayment of taxes as income tax expense. The Company files income tax returns in the U.S. federal jurisdiction and various states and previously in Canada. The Company is no November 30, 2020.
(j) Revenue Recognition The Company’s revenues primarily result from contracts with customers. The major sources of revenue for the Agricultural Products are farm equipment and service parts related to farm equipment. The Agricultural Products segment generally executes short-term contracts that contain a single performance obligation – the delivery of product to the common carrier. The Company recognizes revenue for the production and sale of farm equipment and service parts upon shipment of the goods. Risk of ownership and title pass to the customer upon shipment of the goods. All sales are made to authorized dealers whose application for dealer status has been approved and who have been informed of general sales policies. Any changes in the Company’s terms are documented in the most recently published price lists. Pricing is fixed and determinable according to the Company’s published equipment and parts price lists. Title to all equipment and parts sold passes to the customer upon delivery to the carrier and is not 30 In certain circumstances, upon the customer’s written request, the Company may not not no 2023 2022 The Modular Buildings segment is in the construction industry with its major source of revenue arising from modular building sales. Sales of modular buildings are generally recognized using input methods to measure progress towards the satisfaction of a performance obligation using the percentage of completion method. Revenue and gross profit are recognized as work is performed based on the relationship between actual costs incurred and total estimated costs at completion. Contract costs consist of direct costs on contracts, including labor, materials, amounts payable to subcontractors and those indirect costs related to contract performance, such as equipment costs, insurance and employee benefits. Contract cost is recorded as incurred, and revisions in contract revenues and cost estimates are reflected in the accounting period when known. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Contract losses are recognized when current estimates of total contract revenue and contract cost indicate a loss. Estimated contract costs include any and all costs appropriately allocable to the contract. The provision for these contract losses will be the excess of estimated contract costs over estimated contract revenues. Changes in job performance, job conditions and estimated profitability, including those changes arising from contract change orders, penalty provisions and final contract settlements may The Agricultural Products segment offers variable consideration in the form of discounts depending on participation in yearly early order programs. This variable consideration is allocated to the transaction price of all products in a sales arrangement and is not not not The Company’s returns policy allows for new and saleable parts to be returned, subject to inspection and a restocking charge, which is included in net sales. Whole goods are not For information on product warranty as it applies to ASC 606, 9
(k) Disaggregation of Revenue The following table displays revenue by reportable segment from external customers, disaggregated by major source. The Company believes disaggregating by these categories depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Twelve Months Ended November 30, 2023 Agricultural Modular Buildings Total Farm equipment $ 19,188,000 $ - $ 19,188,000 Farm equipment service parts 2,886,000 - 2,886,000 Modular buildings - 7,590,000 7,590,000 Modular building lease income - 112,000 112,000 Other 393,000 112,000 505,000 $ 22,467,000 $ 7,814,000 $ 30,281,000 Twelve Months Ended November 30, 2022 Agricultural Modular Buildings Total Farm equipment $ 17,825,000 $ - $ 17,825,000 Farm equipment service parts 2,575,000 - 2,575,000 Modular buildings - 4,550,000 4,550,000 Modular building lease income - 62,000 62,000 Other 512,000 122,000 634,000 $ 20,912,000 $ 4,734,000 $ 25,646,000 The Company began offering floorplan terms in its Agricultural Products segment during its Fall 2021 2022 2023 180 2023
(l) Contract Receivables, Contract Assets and Contract Liabilities The following table provides information about contract receivables, contract assets, and contract liabilities from contracts with customers included on the Consolidated Balance Sheets. November 30, 2023 November 30, 2022 Receivables $ 3,432,000 $ 2,466,790 Assets 289,000 451,000 Liabilities 767,000 1,153,000 The amount of revenue recognized in fiscal year 2023 November 30, 2022 December 1, 2021 $2,380,000; three November 30, 2023 2022 The Company will utilize the practical expedient exception for these contracts and will report only on performance obligations greater than one November 30, 2023 November 30, 2022 no one
(m) Software Development Costs The Company capitalizes costs related to software developed or obtained for internal use in accordance with the ASC 350 40, 350 40” 350 40: Preliminary project stage: (a) conceptual formulation of alternatives; (b) evaluation of alternatives; (c) determination of existence of needed technology; and (d) final selection of alternatives. Internal and external costs incurred during the preliminary project stage are expensed as incurred. Application development stage: (a) design of chosen path, including software configuration and software interfaces; (b) coding; installation to hardware; and (c) testing, including parallel processing phase. Internal and external costs incurred to develop internal-use computer software during the application development stage are capitalized. Data Conversion costs are expensed as incurred. Post-implementation-operation stage: (a) training; and (b) application maintenance. Internal and external costs incurred during the post-implementation-operation stage are expensed as incurred. Certain costs incurred are considered enhancements, modifications to existing internal-use software that result in additional functionality. Enhancements normally require new software specifications and may The Company moved to an updated cloud based version of its QAD ERP system in the third 2023. 350 40 May 31, 2025. twelve November 30, 2023 twelve November 30, 2022 twelve November 30, 2023
(m) Research and Development Research and development costs are expensed when incurred. Such costs approximated $204,000 and $193,000 for the 2023 2022
(n ) Advertising Advertising costs are expensed when incurred. Such costs approximated $229,000 and $190,000 for the 2023 2022
(o) Net Income Per Share of Common Stock Basic net income per share has been computed on the basis of the weighted average number of shares of common stock outstanding. Diluted net income per share of common stock has been computed on the basis of the weighted average number of shares outstanding plus equivalent shares of common stock assuming exercise of stock options. Potential shares of common stock that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted net income per share of common stock. Basic and diluted income per common share have been computed based on the following as of November 30, 2023 2022 For the Twelve Months Ended November 30, 2023 November 30, 2022 Numerator for basic and diluted net income per share: Net income from continuing operations $ 762,789 $ 374,121 Net loss from discontinued operations (495,820 ) (276,324 ) Net Income $ 266,969 $ 97,797 Denominator: For basic net income per share - weighted average common shares outstanding 5,002,238 4,707,384 Effect of dilutive stock options - - For diluted net income per share - weighted average common shares outstanding 5,002,238 4,707,384 Net income per share - Basic: Continuing Operations $ 0.15 $ 0.08 Discontinued Operations (0.10 ) (0.06 ) Net income per share $ 0.05 $ 0.02 Net income per share - Diluted: Continuing Operations $ 0.15 $ 0.08 Discontinued Operations (0.10 ) (0.06 ) Net income per share $ 0.05 $ 0.02
(p) Stock Based Compensation Stock-based compensation expense reflects the fair value of stock-based awards measured at the grant date and recognized over the relevant vesting period. The Company estimates the fair value of each stock-based award on the measurement date using the Black-Scholes option valuation model which incorporates assumptions as to stock price volatility, the expected life of the options, risk-free interest rate and dividend yield. Restricted stock is valued at market value at the day of grant.
(q) Use of Estimates Management has made a number of estimates and assumptions related to the reported amount of assets and liabilities, reported amount of revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates.
(r) Recently Issued Accounting Pronouncements Accounting Pronouncements Not Measurement of Credit Losses on Financial Instruments In June 2016, 2016 13, 2016 13 2016 13 December 15, 2022, December 15, 2018, 2016 13 2024. not |
