A tree farm harvests a variety of trees that are sold to garden centres. In 20X5, the company was created and they acquired 1,500 immature blue spruce trees and 300 mature blue spruce trees. Each spruce is grown to be 8 feet, at which point they are sold to a garden centre. The cost to sell each tree, no matter the size, is estimated at $25.

The company uses a periodic system to account for the sale of trees. The trees sold each year is included below along with the following information.

The fair values of trees are determined based on their relative size. While there is a market to sell smaller trees, the company’s policy is to only sell trees grown to maturity.

Required:

Prepare the journal entries for 1 January 20X5, 31 December 20X5, and 31 December 20X6 in accordance with IFRS.

Transcribed Image Text:

Fair value-immature blue spruce Fair value-mature blue spruce Mature trees sold Immature trees that became mature during the period 1 31 31 January December December 20X5 20X5 20X6 $250 $265 $325 $600 $600 $600 100 80 75 220