Laffy Farms Corp. (Laffy), a publicly accountable entity, is growing half an acre of cannabis in its east field. Laffy incurred costs of planting in May 2020, including seedlings and labour, of $28,000. At the time of planting, the cannabis seedlings had a fair value of $18,000. The cannabis are expected to be harvested and sell for $90,000 in August 2020 and Laffy expects to incur additional costs of $12,000 prior to harvest. There are no costs to sell. Assuming that cannabis seedlings are a biological asset, how should the seedlings be measured at initial recognition? Question 21 options: a) Capitalized for $28,000. b) All costs related to the planting should be expensed. c) Capitalized for $50,000. d) Capitalized for $18,000

Laffy Farms Corp. (Laffy), a publicly accountable entity, is growing half an acre of cannabis in its east field. Laffy incurred costs of planting in May 2020, including seedlings and labour, of $28,000. At the time of planting, the cannabis seedlings had a fair value of $18,000. The cannabis are expected to be harvested and sell for $90,000 in August 2020 and Laffy expects to incur additional costs of $12,000 prior to harvest. There are no costs to sell. Assuming that cannabis seedlings are a biological asset, how should the seedlings be measured at initial recognition? Question 21 options: a) Capitalized for $28,000. b) All costs related to the planting should be expensed. c) Capitalized for $50,000. d) Capitalized for $18,000

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter3: Income Sources

Section: Chapter Questions

Problem 43P

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