The company capitalizes costs related to cannabis cultivation, including labor, utilities, nutrition, and irrigation, into inventory until harvest. Inventory is valued at the lower of cost or net realizable value using the weighted average cost method. Costs incorporated into inventory comprise raw materials, packaging, direct labor, overhead, shipping, and depreciation of manufacturing equipment and facilities. Manufacturing overhead includes salaries, wages, employee benefits, utilities, maintenance, and property taxes. Inventory obsolescence is evaluated each reporting period based on slow-moving or non-marketable items. Prepaid expenses consist of payments for consulting, advertising, insurance, and service contracts. Assets held for sale are classified and measured in accordance with ASC 360. Property and equipment are recorded at cost less accumulated depreciation, with depreciation calculated on a straight-line basis. Repairs and maintenance costs are expensed unless they extend the asset's useful life, in which case they are capitalized.
Stem Holdings Inc's Comment on Supply Chain
The company capitalizes costs related to cannabis cultivation, including labor, utilities, nutrition, and irrigation, into inventory until harvest. Inventory is valued at the lower of cost or net realizable value using the weighted average cost method. Costs incorporated into inventory comprise raw materials, packaging, direct labor, overhead, shipping, and depreciation of manufacturing equipment and facilities. Manufacturing overhead includes salaries, wages, employee benefits, utilities, maintenance, and property taxes. Inventory obsolescence is evaluated each reporting period based on slow-moving or non-marketable items. Prepaid expenses consist of payments for consulting, advertising, insurance, and service contracts. Assets held for sale are classified and measured in accordance with ASC 360. Property and equipment are recorded at cost less accumulated depreciation, with depreciation calculated on a straight-line basis. Repairs and maintenance costs are expensed unless they extend the asset's useful life, in which case they are capitalized.
Sources:
Stem Holdings Inc 's official press releases and regulatory filings; CSIMarket.com's supply-chain research; and the financial filings and press releases of other companies cited in this report.
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