SHARPECPA

Sharpe CPA  /  Footnotes  /  Fuel jobbers

Note 1 for a fuel jobber.

Cardlock, branded and unbranded dealers, agriculture, industry and the railroads, lubricants and convenience stores — each with its own gallons and its own margin, bought from fewer suppliers every year. Describe the business, enter the gallons, and the note lays out the lines of business, the supplier concentration and the jobber policies. Free, and it runs in your browser.

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The entity

The date subsequent events were evaluated through.

Lines of business

Tick what the jobber does and enter the year’s gallons, revenue and gross profit for each. The note describes each line and shows gallons and revenue by line; gross profit stays in your analysis unless you include it.

What the numbers say

Volume and profit rarely line up: a line can be a small share of the gallons and a large share of the gross profit. Insurers rate a jobber on its gallons in each sector, so the gallons schedule should agree to the one given to the carrier.

Suppliers and customers

Few refiners serve most markets now, and fewer each year. Name the major suppliers and the share of fuel bought from each; the note discloses the concentration (ASC 275-10-50-18).

Supplier% of fuelArrangementExpires

Major customers

Any customer at 10% or more of revenue. Leave blank if none.

Customer% of revenue% of receivables

Jobber policies

The policies

Tick the ones that apply. Each carries the choices the note has to state.

Highlighted text is still to be filled in or checked. The wording is a starting point: the policies have to describe what this entity actually does, and the CPA who signs the report owns every word.

The standard

What a jobber’s Note 1 has to carry.

The policies are the same GAAP policies any company discloses. What makes a jobber’s note different is how much of the business sits in a few suppliers, a few lines of business with very different margins, and gallons.

Lines of business and gallons

  • Disaggregate revenue into categories that show how economic factors affect it (ASC 606-10-50-5). A private company may give less, but must at least describe the revenue by timing and in qualitative terms (606-10-50-7).
  • Gallons are not a GAAP measure. In the notes they are covered by the opinion unless labeled unaudited.
  • Cardlock is often a quarter to a third of a jobber’s gallons, at a margin well above dealer supply; lubricants and convenience stores are small in gallons and large in profit.

Suppliers

  • ASC 275-10-50-18: disclose a concentration in the available sources of supply when it makes the entity vulnerable to a reasonably possible severe impact in the near term.
  • Branded supply agreements: term, volume commitments, and incentive or image funds repayable on early termination.
  • Consideration from suppliers — rebates, discounts, incentives — reduces cost of sales (ASC 705-20).

Revenue

  • Point-in-time sales at delivery, loading or dispensing; freight after control passes is a fulfillment activity.
  • Motor fuel excise taxes imposed on the jobber at the rack are generally included in revenue; taxes collected from customers may be excluded by election (ASC 606-10-32-2A).
  • Cardlock network sales: principal or agent when the jobber’s cardholders fuel at another participant’s site.

Tanks and the environment

  • Asset retirement obligations for tank removal (ASC 410-20).
  • Remediation accrued when probable and estimable, gross of expected recoveries; fund reimbursements recognized when probable (ASC 410-30).
  • Derivatives used to hedge fuel prices are carried at fair value (ASC 815).

References are to the FASB Accounting Standards Codification. Check them against the current text before relying on them; the CPA who signs the report owns every word.