In the Midwestern United States, PSI Inc. owns and operates a number of agricultural fields. Soybeans have traditionally been grown, harvested, and sold on these fields. The problem of weeds in soy fields, however, has arisen in recent years. Suffocating soybeans and killing them, this weed cannot be eradicated by regular herbicides. Though the strain is currently centered in the eastern U$.$S$.,$ it has been traveling westward and will reach PSI's fields soon.

PSI's management is worried that the extra labor costs associated with growing soy beans will make soy bean farming unaffordable for the company in the future. Eastern producers can still kill the weed by hiring workers to pull it manually early in the season, but the extra labor costs will make soy bean farming too expensive for PSI. This has led them to decide to make Year $15$ their final soybean growing season.

A generic nitrogen fertilizer was added to PSI's fields as part of their annual process to protect the environment and get ready for the following year, after the harvest of Year $15.$ PSI cleaned up any spills and inadvertent damage to nearby streams and woods, and removed the remaining soybeans. They began preparing the soil for planting apple trees after allowing the fields to sit ideal for a month.

As a result of the transition between soy harvest and apple harvest, it is currently difficult to accumulate the costs. The accounting head believes that these costs should be allocated to the soybean crop in Year $15,$ while the CFO believes that these costs should be accumulated and then transferred to the first harvested apple crop in Year $20.$ For the next few years until the apple trees are ready to produce, the CEO suggested adding what they have already spent in Year $15$ to the estimated costs and allocating the costs equally.

Activity Direct Labor Fertilizer and other supplies Allocated Overhead

Traditional Field cleanup $$5,000$ $$500$ $$10,000$

Traditional Environmental cleanup $$10,000$ $$2,000$ $$20,000$

Traditional Fertilizer $$2,000$ $$1,000$ $$4,000$

Field Conversion $$22,000$ $$750$ $$44,000$

Specialized Fertilizer $($for apples$)$ $$3,000$ $$5,000$ $$6,000$

To prepare, plant, and nurture the apple trees until they produce their first crop, the company expects to spend $$500,000$ total.

Questions :

$$ How should the company recognize its Year $15$ traditional costs based on the discussion above and the ASC rules?

$$ In what manner should the company recognize its preparations for the new orchards during Year $15?$

$$ What is the best way to record the costs, according to your recommendation? Let's assume that all the soybeans have already been sold.

What $2$ FASB codification can be applied to the solution to this problem