During late $2024,$FD$$s executive staff met to discuss how the company might capitalize on a growing demand for heavily aged rum sold directly to customers in a barrel. The executive team, in reviewing customer tastes, decided that a $10-$year rum aged in expended sherry barrels from the south of France would be most appealing to the market. Marketing executives decided to call this new offering $$Shrum$.$ During this meeting, the COO also expressed interest in offering a special privilege to would$-$be buyers of Shrum: a $10-$year pass to visit, tour and sample from FD$$s historic distillery. In order to keep this initiative highly exclusive to customers the executive team decided to limit sales of Shrum $($and the $10-$year pass$)$to the first $100$customers$,$ setting a price of $$100,000$on the offering. Willing customers will be responsible to pay the full $$100,000$up$-$front to secure their Shrum, although FD decided that full refunds would be granted up to one year from purchase. Visitor Pass Information:

FD has never offered a visitor pass before, however a comparable distillery in the region offers a day$-$pass with similar privileges for $$25($per person, per day$).$ During the sales process, FD gauged buyers interest in the pass. The following information was obtained:

$10$ said they were unlikely to use the pass.

$35$ expressed interest in visiting a handful of times over the $10-$year period.

$25$ planned an annual visit for the first five years, with two visits over the next five.

$30$ planned to visit an average of $2$ times each year over the $10-$year period.

FD expected incremental costs associated with this pass to be negligible as co$-$op students with idle capacity would be asked to supervise the buyers during their tours.

Shrum Information:

An overview of the process is as follows:

Process Step

Description

Time

Costs$[1]($Per Barrel$)$

$1.$ Mashing

Starches are converted into fermentable sugars.

~$1-2$ days

$$8,300$

$2.$ Fermentation

Yeast is added to converted sugars into alcohol.

~$1$ week

$$5,500$

$3.$ Distillation

Alcohol is concentrated via boiling and evaporation.

~$1$ week

$$4,700$

$4.$ Maturation

Alcohol is placed in a barrel to absorb flavours, colours and aromas.

~ $10$ years

~$$300/$year

$$

The production of Shrum follows a similar process to FD$$s current rums, excepting maturation. If FD were to cease the maturation step within three to four months, the quality of the Shrum would approximate that of their rum sold to retail markets.

To better understand the expected development of complex flavours, colours and aromas expected from Shrum, FD consulted with a rum maturation consultant. According to the consultant the Shrum would have only matured to ~$20\%$ of its final state during the first fiscal year. Remaining maturation would occur roughly evenly in the remaining nine years.

At the end of the maturation period the buyer will be notified that the Shrum is ready for final customer inspection$[2]$ and pickup.

$$

$[1]$ As of January, $2025$ cost figures for steps $1-3$ are known, representing materials and labour. Unlike steps $1-3,$ maturation involves few costs beyond staff time to periodically inspect and maintain the barrels. These costs are estimated, but FD does not expect actual costs to significantly vary from these estimates.

$[2]$ Customers are welcome to take possession of the rum at any time during the $10-$year maturation process; although based on discussions with other distilleries this is extremely uncommon.

please make$$A complete list of journal entries for the ten$-$year period $($i$.$e$.,$revenues$,$ costs, contract assets or liabilities, if any$)[1].$ and A brief commentary on any additional information you would advise the CFO of$.$

$[1]$You should state any assumptions made in the process of constructing your journal entries.