Identify the biological asset(s) and agricultural produce of JCC. Describe how each biological asset and item of agricultural produce should be measured at December 31 of the first year. For any biological asset and item of agricultural produce that should be recorded on the statement of financial position at December 31 of the first year, calculate the value. Calculate the impact on the statement of comprehensive income of selling the annual egg production and corn harvest of JCC for the year ended December 31.
Jenen Chicken Co. (JCC) is a chicken farm in Abbotsford, B.C. JCC reports under IFRS and has a December 31 fiscal year end. JCC also grows corn in the acres surrounding its chicken barns and sells the corn each August once the crop is harvested.
JCC has four chicken barns, each with 12,000 laying hens. Each hen lays five eggs per week, which are sold to grocery stores. Eggs sell for $0.05 each, and JCC incurs
$1,150 per week in egg packing and cleaning costs. Hens are kept for two years before needing to be replaced and are purchased in January 1 every second year for $0.75 each. After the two years, the laying hens are sold at a price of $0.45 each. If JCC disposed of the laying hens after one year, they would be sold at a price of $0.55 each. The hens currently owned by JCC have been around for one year.
JCC’s corn seed is planted each April 1 at a cost of $0.20 per cornstalk. JCC planted 45 cornstalks per acre on each of its 36 acres. It costs JCC $1,000 in labour to plant the field, and $250 per month to fertilize and maintain. At the end of August, JCC harvests the corn at a total cost of $2,000, and the corn is sold for $0.50 per ear of corn. A harvest generally produces 25,000 ears of corn. After the harvest, JCC’s field is empty and left ready for the next year’s planting.
Required:
- Identify the biological asset(s) and agricultural produce of JCC.
- Describe how each biological asset and item of agricultural produce should be measured at December 31 of the first year. For any biological asset and item of agricultural produce that should be recorded on the statement of financial position at December 31 of the first year, calculate the value.
- Calculate the impact on the statement of comprehensive income of selling the annual egg production and corn harvest of JCC for the year ended December 31.
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