On March I 2014, Russell Winery Ltd. purchased a five-hectare commercial vineyard for $1,050,000. The total purchase price was based on appraised market values of the building, grapevines, and equipment ($580,000, 5260,000, and 5210,000, respectively). Russell Winery incurred the following cash expenditures between March I and June 30, the date of Russell Winery's first harvest of the grapevines:
Major repairs to sprayer equipment ................. $28,000
Grapevine fertilizer ........................ 7,000
Phase 1 construction of a new grape trellis system for the grapevines ...... 31,000
Construction of a new custom wine cellar ................ 62,000
Harvesting labour ........................ 36,000
The fair value of the grapevines was estimated to have increased to $295,000 by December 31, 2014, the company's fiscal year end, and any sale of vineyard assets would attract a 4% realtor commission. Russell Winery prepares financial statements in accordance with IFRS.
Instructions
(a) What is the carrying amount of the grapevines on the statement of financial position at December 31, 2014? If there are differing accounting treatments of the items involved, discuss the options.
(b) In 2015, Russell Winery incurs $17,000 in costs related to Phase 2 construction of the new grape trellis system for the grapevines, and the fair value of the grapevines increases to 5330,000 by December 31, 2015. What is the carrying amount of the grapevines on the statement of financial position at December 31, 2015?
(c) Would the carrying amount of the grapevines provided in pan (a) differ if Russell Winery prepares financial statements in accordance with ASPE?