Q1 Financial Report - 2011

Ag Growth International Inc.
NOTES TO UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
[in thousands of Canadian dollars, except where otherwise noted and per share data]
March 31, 2011
Sale of goods
Revenue from the sale of goods is in general recognized when significant risks and rewards of
ownership are transferred to the customer. Ag Growth generally recognizes revenue when
products are shipped, free on board shipping point; the customer takes ownership and assumes risk
of loss; collection of the related receivable is probable; persuasive evidence of an arrangement
exists; and, the sales price is fixed or determinable. Customer deposits are recorded as a current
liability when cash is received from the customer and recognized as revenue at the time product is
shipped as noted above.
In transactions involving the sale of specific customer products, Ag Growth applies lay away sales
accounting. Under lay away sales, Ag Growth recognizes revenue prior to the product being
shipped, provided the following criteria are met as of the reporting date:
The goods are ready for delivery to the customer; this implies the goods have been produced to
the specifications of the customer and Ag Growth has assessed, through its quality control
processes, that the goods comply with the specifications;
A deposit of more than 80% of the total contract value for the respective goods has been
received;
The goods are specifically identified for the customer in Ag Growth's inventory tracking
system; and
Ag Growth does not have any other obligation than to ship the product, or to store the product
until the customer picks it up.
Construction contracts
Ag Growth from time to time enters into arrangements with its customers that are considered
construction contracts. These contracts [or a combination of contracts] are specifically negotiated
for the construction of an asset or a combination of assets that are closely interrelated or
interdependent in terms of their design, technology and function or their ultimate purpose or use.
Ag Growth principally operates fixed price contracts. If the outcome of such a contract can be
reliably measured, revenue associated with the construction contract is recognized by reference to
the stage of completion of the contract activity at period end [the percentage of completion
method].
The outcome of a construction contract can be estimated reliably when: [i] the total contract
revenue can be measured reliably; [ii] it is probable that the economic benefits associated with the
contract will flow to the entity; [iii] the costs to complete the contract and the stage of completion
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