72
76
120
In the cannabis industry, because of the time it takes to grow, harvest, and sell cannabis these entries are often booked in one fiscal period and reconciled in another. That is not too dissimilar from those that do not follow IAS 41 as have discussed. IAS 41 also facilitates companies to secure working capital financing needs.
Be assured the Financial Institution extending credit is doing its due diligence to verify the valuation and therefore companies tend to be conservative in such valuations – a responsible prudent IAS 41 reporting company would not adopt aggressive accounting techniques. Additionally, a company’s CPA audited financial statements provide the gold standard level of stakeholder confidence.
The example given earlier with respect to warranty expense where the sale was recorded in Q1 but the warranty related expense occurred in Q3 - what happens when it is a 10 year warranty for example? How do you match a year-10 warranty expense to a sale a decade earlier? Please refer to this link (CLICK HERE) if you want a better understanding of the Accounting treatment of warranty expenses. Essentially the company estimates the warranty expense at the time of sale and that estimated expense becomes part of COGSs in the same fiscal period as the sale and overtime the amount is adjusted accordingly based on any actual warranty expenses incurred. Cannabis companies using IAS 41likely do not have revenues and expenses relating to a sale from a decade, or more, earlier.
IAS 41 applies to Licensed Producers that cultivate, harvest, process, and sell cannabis. Companies with solely a Dealer’s License would not fall under IAS 41 because they are buying the cannabis from an LP and the purchased cannabis would be considered inventory (a financial transaction occurred for their inventory allowing it to be valued at lower of cost or market). What does any of this have to do with market and investor manipulation?