Boreal Farms and Nursery Kinnear just completed a university degree in natural r

Question

Boreal Farms and Nursery Kinnear just completed a university degree in natural resource sciences. Given the tough economic n t has been difficult to find any form of meaningful employment. Prior to moving to Montreal in order times o uversity, Jenny lived with her parents in a small farming community. Accordingly, Jenny has been hinking about acquiring some farm land on the outskirts of Montreal and establishing a farm and nursery Farm land can now be obtained for a reduced price. Jenny has discussed the idea with her retired parents, and they suggested they would move to Montreal if she decides to pursue the business in order to assist her so get the business up and running. On January 1. 2016. Jenny decided to go into business by incorporating Boreal Farms and Nursery BEN). BFN immediately purchased a plot of farm land from a family of retiring farmers. The land was ob- und for the bargain price of $1 million. A bank loan, with an interest rate of 5% was obtained in order to help fhnance the land acquisition cost. Jenny and her parents decided to segregate the farm land in order to be able to grow seasonal produce (strawberries, beans, peas, corn, etc.). Christmas trees, and raise chicken and cattle. A storefront is also in- cluded on the land. A map of the land can be found in Exhibit L t is now December 2017, and Jenny is beginning to worry about BFN's financial statements. She knows that the bank loan requires BFN to file audited annual financial statements BFN has engaged Abdillahi and Blouin LLP to perform the audit. In order to prepare for the upcoming audit, Jenny has hired you, CPA, for a special consulting contract. Specifically, Jenny provides you with the terms of the consulting project: I feel that the nature of BFN's business is fairly straightforward, except for inventory. Therefore, I would like you to prepare a report that discusses all theoretically possible measurement bases of inventory, along with the resulting impact of each measure on revenue recognition. Based on your theoretical discussion, I would like your report to focus in on the actual accounting standards. Because the bank will accept either ASPE or IFRS financial statements I would like you to discuss how my inventory should be accounted for under both standards- enny provides you with some additional information regarding the operations of BFN (Exhibit Im), along with some financial information related to the inventory (Exhibit III). Required Prepare the report for Jenny.

Explanation / Answer

Statement of Profit & Loss

87 Hens Eggs

(120 days * 1 eggs)/12 *$4

(120 days * 0.5 eggs)/12 *$4

Particular Amount Particular Amount Purchase : Revenue : Chirstmax White Pine 64,000 Chirstmax Tree (estimating 6feet) 310,400 Hens, Chicks, rooster 950

87 Hens Eggs

(120 days * 1 eggs)/12 *$4

(120 days * 0.5 eggs)/12 *$4

5,220 Corn (skipped in question) xxx Interest Expense 50,000 Water Expense 55,000 Employee for Seeds (Summer) 35,000 Depreciation for Sprinkler 21,875 Depreciation for Land Cultivator 9,167 Depreciation for Cage 209 Design Cost of Corn Field 7,500 Seasonal Produce Tree 29000 Tree Booster - 17,500 - (2,500) 15,000 Tree Bug - 27,000 - (3,500) 23,500 Pest Be Go - 34,000 - (2,500) 31,500 Chiken Feed- 6,500 - (2,500) 4,000 Profit for the year

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