For the following financial reporting assessment opportunities (AO), provide a resolution to each AO and ensure that the resolution is well supported by appropriate standard references.
Question 4 April 1, 20x7, Nicholas and Noelle Christmas realized their life-long dream of moving to the county and living and working on a Christmas tree farm. They purchased Festive Trees Farm (FTF) for $1.6 million. This included 75 acres of land, of which 70 acres was planted with Christmas trees, 5 acres was used for buildings to store various equipment and machinery, and 5 acres was home to the family home and garden. At the time of purchase, it was determined that the buildings and 5 acres was worth $400,000 and the remaining $1.2 million was the price of the 70 acres planted with trees. 70 acres of vacant land in the area would sell for $70,000. Land prices in the area have remained constant for the past several years and should continue to do so. FTF had been in operation for 15 years and was IFRS compliant. The new owners were planning on also following IFRS. It is March 31, 20x8, year-end, and after a successful first year, Nicholas and Noelle have come to you for help in preparing their financial statements. Noelle has been following the market price for Christmas trees and has related the following data to you: Christmas Tree Prices - March 31, 20x8: Saplings 1-year old $30/tree $35/tree 2-year old $45/tree 3-year old $45/tree 4-year old $50/tree Selling Costs per tree $5/tree 400 trees Number of trees per acre Noelle tells you that FTF has its 70 acres split equally between the 5 ages of trees above to always keep a steady flow of mature trees that can be sold. FTF is showing the initial cost of $1,200,000 for the value of the "Tree Farm" on its balance sheet. Question 4 April 1, 20x7, Nicholas and Noelle Christmas realized their life-long dream of moving to the county and living and working on a Christmas tree farm. They purchased Festive Trees Farm (FTF) for $1.6 million. This included 75 acres of land, of which 70 acres was planted with Christmas trees, 5 acres was used for buildings to store various equipment and machinery, and 5 acres was home to the family home and garden. At the time of purchase, it was determined that the buildings and 5 acres was worth $400,000 and the remaining $1.2 million was the price of the 70 acres planted with trees. 70 acres of vacant land in the area would sell for $70,000. Land prices in the area have remained constant for the past several years and should continue to do so. FTF had been in operation for 15 years and was IFRS compliant. The new owners were planning on also following IFRS. It is March 31, 20x8, year-end, and after a successful first year, Nicholas and Noelle have come to you for help in preparing their financial statements. Noelle has been following the market price for Christmas trees and has related the following data to you: Christmas Tree Prices - March 31, 20x8: Saplings 1-year old $30/tree $35/tree 2-year old $45/tree 3-year old $45/tree 4-year old $50/tree Selling Costs per tree $5/tree 400 trees Number of trees per acre Noelle tells you that FTF has its 70 acres split equally between the 5 ages of trees above to always keep a steady flow of mature trees that can be sold. FTF is showing the initial cost of $1,200,000 for the value of the "Tree Farm" on its balance sheet
