Nerang Orange Farms Ltd has orange tress which on 30 June 2009 had a fair value of $1,600,000. On 30 April 2010, oranges with an estimated market value of $300,000 were picked. The costs of picking, sorting and packing paid in cash amount to $150,000. The oranges were sold on the same day for $310,000. An independent valuation on 30 June 2006 report that the estimated fair value of the orange trees is $1,500,000. What is the journal entry to recognise the harvest of oranges on 30 April 2010?
E) None of the given answers.

Question

Quizplus · Accepted Answer

The journal entry to recognize the harvest of oranges on 30 April 2010 would be:
Dr. Inventory $300,000
Cr. Produce Revenue $310,000
Cr. Produce Harvesting Costs $150,000
The harvest is recognized at fair value, which is the estimated market value of $300,000. The revenue is recognized for the sale of oranges for $310,000, and the cost of harvesting is recognized as an expense for $150,000. The fair value of the orange trees is not relevant for this transaction.

Nerang Orange Farms Ltd Has Orange Tress Which on 30