PSI Inc. owns and operates a number of agricultural fields in the Mid - Western United States. Historically they have used these fields to grow, harvest, and sell soybeans. In recent years, however, a new weed has begun causing problems in soy fields. The weed suffocates soybeans and kills the m and is round - up ready, meaning it cannot be killed by normal forms of herbicide. While the new weeds are currently centered in the eastern U.S., the strain has been moving westward and will be in PSIs fields soon. While Eastern producers are still ab le to kill the weed by hiring workers to pull it manually early in the season, PSIs management team is worried that these extra labor costs will make growing soy beans too expensive for the company. With that in mind, then have decided to make Year 15 the ir final year of growing soybeans. In the fall of Year 15, after the harvest, PSI cleared out the remainder of the soybeans, cleaned up any spills or inadvertent damage to the surrounding streams and woods, and added a generic nitrogen fertilizer to thei r fields, as part of their annual process for protecting the environment and getting ready for the following year. After allowing the fields to sit ideal for a month, they began preparing the soil for planting apple trees. The current problem is how to a ccumulate the costs accrued during this transition period between the harvest of the soy crop and the beginning of the apple crop. The head of accounting believes that these costs should be allocated to the soybean crop of Year 15 but the CFO believes tha t the costs should be accumulated and then allocated to the first harvested apple crop in Year 20. The CEO has suggested that they simply add what they have already spent in Year 15 to the estimated costs for the next few years until the apple trees are re ady to produce and allocate the costs evenly. 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 Overall, the company believes that they will spend a total of $500,000 preparing for, planting, and nurturing the apple trees until they can produce their first crop

Based on the discussion above and the rules in the ASC, how should the companyrecognize their Year 15 traditional costs?How should the company recognize their Year 15 preparations for the new orchards?Based on your recommendation, how should the costs be recorded? Assume that all ofthe soybeans have already been sold.