I am trying to find a solution to the case study "Boreal Farms and Nursery" in the Canadian Financial Accounting Cases 2nd edition

3i'li20'l 3 PRINTED BY: stephenahesketh@gmail.corrt Printing is for personal, private use only. No part of this book may be reproduced or transmitted without Canadian nancial Aooounl'l'lg Cases pub lisher's prior 1: ermission. Violators will be prosecuted. Boreal Farms and Nursery Irony Kinnear just complclacd a university degree in natural resource sciences. Given the tough economic times, ithas been diieult to nd any form ofmeeningxl employment Prior to moving to Montreal in order to attenduniversitgg Jennyl'rved with her parents in a small farming mmmuniljr Amordingly, leanyhasbcen tllinlringahout acquiring somefarm land on the outskirts ofMontreal and establishing a farmland nursery. Farmland (an nonr be obtained for a reduced price. Iennylms discussed the idea with her retired parents, and theyeuggestedtheywrdd moveto Montrealifrhe decides to pursue the businessin order coassist her to get the business up and running. On lanuary l, 2016, Ienny decided to go into business by incorporating Boreal Farms and Nursery (BEN). BEN immediately purchased a plot offarrn land from a family ofretiring farmers. The land was at} tained n- lhehergain price DESI million. Abankloan, with an interest rate 01'596, was obtained inorder to help nance the land acquisition cost. Iennyandherparents decidedtc segregatethefarmland in orderto beside to growseesenalproduee (strawberries, beans, peas, corn, are), Christmas trees, and raise chicken and rattle. A storefront is also in cludedonlheland. A ma]: ofthelandoanbe folmdin Exhibit 1. It is now December 101?, and learn)! is beginning to worry about We nancial statements, She knows that the bank loan requires BFN to le audited annual nancial statements. BFN has engaged Abdillalni and Bloujn LLP to perform the audit. In order to prepare for the upcoming audit. lenny has hired you, CPA, for a special coonrlng contracL Spudeally, Emmy provides you with the icons of the consulting project: \"I feel that the nature ofBFN's business is fairly straightforward, except for inmtoqr. Me, I would like you to preparers report that discusses allthcoretically possible measurement bases of inventory, along with the resulting impact ofeaeh measure on revenue recognition. Based on your theoretical discussion, I would like your report to focus in on Lheactual accounting standards. Because the bank will accept either ASPE or IFRS nancial statements. I would like youto discuss how my ir'nrentorfp.r sh ould be accounted for under both standards.\" Ianrqr provides you with some additional inarmation regarding the operations of BFN [Exhibit 11}, along with some nancial information related to the inventory (Exhibit III). Required. Prepare the rep-art for Tenn}; htlps.'hbod(shelf.vilalswroe.ounf#ibod(st9731119290853lci!39!f4t4@0.00:0.00 1M 3l1i20'l 3 PRINTED BY: stephenaheske1gmailcorn Printing is for personal, private use only. No part of this book may be reproduced or transmitted without Canadian nancial Aooounl'l'lg Cases pub lisher's prior p ermission. Violators will be prosecuted. 80 Ganarl "tan Financial Accounting Cases EXHIBIT I MAP OF FAHMLAND '1 Various ml mm c "3.3:,\" ms) Cum uid [5%] Vacant land [8%] EXHIBIT || INFORMATION FROM BFN'S OPERATIONS Year end Jenny sslecledihe scal yenrtorun from Ianuary 1 toDecsmherBl inorder to cap-tine afull season of the seasonal produce and com eld activities. Seasonal produce 3 BEN grows avaricty of seasonal produce, including peas, strawhen'ies, cucumbers. and peppers. At the and of the season, BFN sells produce through various cums: (1) in bundles through their storefront; {2) through local retailers that promote local produce; (3) through farmer's. markets; and i4) hyallowing customers to pick their own basket ofproduoe on site. The corn eld is a component of the seasonal produce. The corn is grown and. then sold throng: the same outlets as the rest of the seasonal produce. Durin the month of October, theoorn eld is turned intoa Halloween corn eld, whereby mstomers through for $10. TheHallowem corn eld was ahuge succms this year, and a great source ofsupplemental income. jenny paid $7,500 to design the layout ofthe corn eld1 andto purchase the required accessories. Christmas trees I The Christmas tree market can be classied as pure competition. There is an abundant supply of trees, such that any imiidual supplier cannot impact the price. In addition there are an abundant number of purchasers, such that any single purchaser cannot impact the price. Finally, the product is considered to he homogenous aswell, aside from the type of tree le.g., Douglas r. white pine). Although trees may come in different shapes and colours, the value of a tree is based solely on its height (the shape mnhe altered through pruning while colourmn be adjusted through dyes). A Christmas treeis priced similar to any commodity that trades in a market. The market price of a Christmas tree is determined Based on its equivalent ofa commodity spot price. The tin-owing are the current Christmas tree prices for white pine: 3 Fect; $30 7 Fed: $45 Note: estimated selling cost: 4 Feet: 535 5 Feet: 547 are 10% Ufte sales price. 5 Feet: 538 9 Peat: $55 6 Feet: 540 Generally. white pinetees are not grown to exceed 9 feet as their retail commercial value disappears at this leveL hllps.'hbod(shelf.vilalswroe.ootnf#ibod(si9731119290853lci!39!f4i4@0.00:0.00 2M 3l1i2013 Canadian nancial Aooounl'l'lg Cases PRINTED BY: stephenaheske1@gmail.com. Printing is for personal, private use or1ly.No part of this book may be reproduced or Iransmitted without pub lisher's prior 1: ermission. Violatorswill be prosecuted. Section 4: In'ien'nedie'te Accounting | Gases 81 3 Trees are scrapped as soon as it becomes apparent that they no longer have any value. Aside from any weather calamities or insect infestation mitbreaks, Erie wappage rate is fairly consistent from year In year. 3 The growl]: rate for white pine depends a lot on whether trees are free to grow or are suppressed undera moldy. Avera heightgrowth ibr young suppressed white pine is often less than 6 inches peryear. Howevcr,Mt6reeto- gamma-.5 on them-er sites. height growthu normallyzto Heat pyd'. r Dunngthe stymnBFNsetupachickenpen.Thechickmsareusulto rodumeggamrhinhare sold thrmi retailers and atl'armers markets. Eventually, the chickens mlijhe sold a: poultry 5 Ahmsreproduclion cwleissetby iclenglhofthc day. Dining the summermonis, ahenusually Em roduoesmeeggperdayhhenwllay Mfewersastheda yahonengev-enmailyskippingdaya lam-nan eggsMaJ-ry hm stop laying eggs Iagether until the spring arrives homily: wintm- is a had iimetomise chicks given that cold miller decreases a Chick's dunce ofsurviva]. : BFNis planningtopumhaseeatllenen younandoifer dairy produetaaswell(miik,cheese,ete..) No expenses havehoenincurmdinthia rqard forthecmrent year. hllps.'hbod(shelf.vilalswroe.cu11f#lbod(sl'9731119290853lci!39!f4l4@0.00:0.00 3i'li2018 Canadian nancial Aooounl'l'lg Cases PRINTED BY: stephenahesketh@gmail.cmrt Printing is for personal, private use only. No part of this book may be reproduced or transmitted without pub lisher's prior 1: emission. Violatorswill be prosecuted. 82 Canadian Financial Accounting Cases EXHIBIT III FINANCIAL INFORMATION RELATED TO INVENTORY :9 During the year, BEN started its Christmas tree rm by\" purdiasing 3,000 white pine seedlings for 53 each. The seedlings arejust below one foot tall when planted this year. Appromnately 396 (1sz seedlings do not survive theirrst year. a BFN purchased and installed a sprinkler syrtm'i that mvers farmland area (seasonal and Christians trees} for aiotal 0170175300. The system has an expeded useful life DEB years. 3 BEN consumed $55,000 in water directlyr retatedtothe use of'the sprinkler system. a BFN hired two student employees no work directly to maintain (prune, wad. water, etc.) the sea sonal produce and Christmas trees. The two employees earned $35,000 in total on: the course of the summer months. 3 BEN Luau-redeem; of$13.000 Ear seeds related tot'ne seasonal produce items. 3 BEN utilized fertilizers during'ihe past year in order to aid withll'le growth promos. Super Grow fertilizer was used for both the seminal produce and trees, and 051 $29,000. In sddjnn, a. total of $17,500 worth of The Booster was purchased duringthe year. A total [32,500 worth ofthe product remained at year end. B Air-organic pesticide was used during 1119 yesrss weilrt total of $217,000 and $34,000 was spent-an Tree Bug Zapper and Pest Be Gone, respectively! The ending balance ofTree Bug Zapper and Pest Be Gone was $3,500 and $2,500, respectively I In order in help aerate the sail. BFN purchased a land cultivator For $55,000. The equipment is expected to have a useful life of six years, and was used for the land around both the seasonal produce and trees. 3 BFN purchased 100 chickens (whens able lo lay eggs, 1.0 chickaands roosters) for atotsl cost of $950 from a local farm. The hens are-expected tohe shle to haw for the next ve years. at which point the hens willhe sold for $8 each to a local grocery store. 3 BEN purchased $5,500 of chicken feed during the year. The year-end inventory of chicken feed is 52.250. In sddion,IBFN plurhased a sage Err $2,500, which is expededto last 12 years. I A. dmen eggs are sold. for $4., whichreectsa premium as line}: are sold asorganic eggs. 3 Hensmnbesoldintheopenmarketfdri'iperhen. htlps.'hbod(shelf.vilalswroe.cunf#ibod(si9731119290853biIBQII4i4DDDZDDD