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11. SUBSEQUENT EVENTS
9 Months Ended
Sep. 30, 2016
Subsequent Events [Abstract]  
NOTE 11. SUBSEQUENT EVENTS

Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. The Company recognizes in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing the financial statements. The Company’s financial statements do not recognize subsequent events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after the balance sheet date and before financial statements are issued.

 

In October 2016, the Company entered into an agreement to purchase approximately 40 acres of vineyard land, part of which is in the Dundee AVA. Additionally, the Company entered into purchase agreements to buy two parcels of land in the Walla Walla AVA, totaling approximately 37 acres, but has not yet completed those transactions.

 

In October 2016 the Company determined that approximately 74 tons of Pinot Noir grapes, received from a contract grower, contained excess sulfur making them unusable for the production of wine.  As of September 30, 2016 work-in-process inventory included $95,272 attributable to these grapes.  In November 2016 the Company reduced inventory by $95,272 and established a corresponding $95,272 receivable from the grower who supplied the defective grapes.

In October 2016 the Company settled a claim, against a neighboring farmer, for the over-spray of chemicals that damaged Pinot Noir grapes in the Elton Vineyard in 2013. As a result of a settlement of $180,000, the Company received $110,000, net of attorney fees, which will be recorded as Other Income in the fourth quarter of 2016.