Now that you have learned the basics of using the ASC database, it is time for you to practice actually finding GAAP to answer an accounting question. As an accounting professional, you will use the ASC to help your company or your clients to correctly account for many transactions.In fact, learning how to properly and thoroughly search the ASC database and present your findings is one of the key skills our recruiters want you to learn.The goal of these assignments is to help you practice three key skills: finding the correct GAAP to address a specific problem; interpreting GAAP to make a recommendation; writing up your recommendation with appropriate citations to the ASC.In all of the cases you will take the role of a CPA who has been asked by the Board of Directors of the company in the case to make a formal recommendation on accounting policies and procedures. Remember, the good name of your accounting firm (not to mention your job) will be on the line for every recommendation you make.

Write-Up: Read the following case and answer the questions provided. Your answer should be presented aspart of a formal recommendation letter to the company's management team.In other words, you should NOT use a traditional homework format, answering each question one by one. Instead, your work should be written as a concise, clear recommendation letter.Your letter should contain a summary of the issue, a discussion of the relevant GAAP,1and a formal recommendation for the company.Your letter should not exceed one page, but may include an additional page of quotes from theASC if you feel that they would really be beneficial to a client.

Case Information: Background: 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 soybean sand kills them 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 PSI's fields soon.While Eastern producers are still able to kill the weed by hiring workers to pull it manually early in the season, PSI's management team is worried that these extra labor costs will make growing soy beans too expensive for the company. With that in mind, they have decided to make Year 15their 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 their fields, as part of their annual process for protecting the environment and getting ready for the following year. After allowing the fields to sit idle for a month, they began preparing the soil for planting apple trees.The current problem is how to accumulate 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 that the costs should be accumulated and then allocated to the first harvested apple crop in Year 20. TheCEO 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 ready to produce and allocate the costs evenly.ActivityDirectLaborFertilizer and other suppliesAllocatedOverheadTraditional Field cleanup$5,000$500$10,000Traditional Environmental cleanup$10,000$2,000$20,000Traditional Fertilizer$2,000$1,000$4,000Field Conversion$22,000$750$44,000Specialized Fertilizer (for apples)$3,000$5,000$6,000Overall, the company believes that they will spend a total of $135,250 preparing for, planting, and nurturing the apple trees until they can produce their first crop.

The following questions: Based on the discussion above and the rules in the ASC, how should the company recognize their Year 15 traditional costs?

How should the company recognize their Year 15preparations for the new orchards?

Based on your recommendation, how should the costs be recorded?Assume that all of the soybeans have already been sold