River City Ranches #4 - Page 103

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          year of operations, to reflect the number of animals in the                 
          partnership's flock at yearend as the number of animals initially           
          acquired by it.                                                             
               Mr. Hoyt's above testimony is not consistent with the                  
          accounting treatment accorded RCR #1, RCR #2, and RCR #3 in the             
          prior annual flock recap sheets.  With respect to RCR #1, RCR #2,           
          and RCR #3, Mr. Hoyt maintained that it had been his                        
          organization's practice not to account for events such as culls,            
          deaths, and disappearances during each of those partnership's               
          first year of operations.  The 1981, 1982, and 1983 flock recap             
          sheets, in fact, reflect each partnership as owning, as of the              
          end of its first year of operations, the same number of animals             
          specified in its bill of sale.  See infra Appendix F.                       
               Moreover, this accounting treatment is completely contrary             
          to standard accounting principles because these flock recap                 
          sheets show each partnership's breeding flock to have had no                
          lambs born, no sheep culled, and no deaths or disappearances.  It           
          is extremely unlikely that the alleged breeding flock each of               
          these partnerships purportedly acquired would, in fact, have                
          produced no lambs during that partnership's first year of                   
          operations.  RCR #1 entered into its transaction with Barnes                
          Ranches to acquire 401 breeding sheep on April 20, 1981; RCR #2             
          entered into its transaction with Barnes Ranches to acquire 514             
          breeding sheep on February 15, 1982; RCR #3 entered into its                

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