The asset side of the 2021 balance sheet for Katy Co. is as follows:

Katy Co.

Balance Sheet (excerpts)

December 31,	2021	2020
Current assets
Cash and cash equivalents	$ 5,706,351	$ 4,010,664
Restricted cash	0	1,476,232
Accounts receivable, net	1,871,450	1,684,502
Inventories	11,970,656	10,632,462
Prepaid expenses and other current assets	399,740	131,173
Income tax receivable	0	204,513
Total current assets	19,948,197	18,139,546
Investment in Kore Wine Company	59,186	60,000
Development costs, net	4,666,794	3,699,947
Property and equipment, net	20,196,945	16,729,162
Total Assets	$44,871,122	$38,628,655

The following footnotes are from the annual report for the company for 2021.

Development Costs

Development costs consist primarily of the costs of the vines and expenditures related to labor and materials to prepare the land and construct vine trellises. The costs are capitalized until the vineyard becomes commercially productive, at which time annual amortization is recognized using the straight-line method over the estimated economic useful life of the vineyard, which is estimated to be 30 years. Accumulated amortization of vineyard development costs aggregated $1,185,823 and $1,109,406 at December 31, 2021 and 2020, respectively. Amortization of development costs are included in capitalized crop costs that in turn are included in inventory costs and ultimately become a component of cost of goods sold. For the years ending December 31, 2021 and 2020, approximately $76,417 and $75,669, respectively, was amortized into inventory costs.

Note 4. Property and Equipment

December 31,	2021		2020
Construction in progress	$ 449,409		$ 482,284
Land and improvements	8,063,716		5,089,472
Winery building and hospitality center	14,458,309		13,756,320
Equipment	10,122,593		9,055,987
	33,094,027		28,384,063
Less accumulated depreciation	(12,897,082	)	(11,654,901	)
	$20,196,945		$16,729,162
Depreciation expense	$ 1,254,455		$ 1,194,191

Required:

a.	Explain the difference between development costs and Land and improvements.
b.	Calculate the percent used up of the development costs.
c.	Calculate the percent used up of the Property and equipment. What does this imply for future cash flows?
d.	Assume that on January 1, 2022 the company determined that the development costs had a fair value of $4,000,000. How would this affect the company's balance sheet and income statement in 2022?