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Financial Accounting and Reporting Assignment: Biological Assets
1. Blue Company had the following items in 2016 related to its biological assets:
Acquisition cost of biological assets - January 1, 2016 1,000, Fair value surplus on initial recognition at fair value on January 1, 2016 200, Cost to sell of biological assets on acquisition date 50, Increase in fair value due to price and physical change 120, Increase in fair value due to new born biological assets 20, Decrease in fair value due to harvest 40, Wool and milk harvested during the year but still on hand at year-end 200,
Q1. What amount should be reported for biological asset on December 31, 2016 Statement of financial position? a. P1,050, b. P1,300, c. P1,250, d. P1,290,
Q2. What amount should be reported as net gain (loss) on biological asset on 2016 Income statement? a. P50, b. P250, c. (P100,000) d. (P250,000)
2. (^) Farmville Inc. purchased a plantation forest for P10,000,000. There were no separate fair market value for the trees but the fair market value of the land and land improvements amounted to P3,000,000. What is the amount of biological asset? a. P10,000, b. P3,000, c. P7,000,
d. P13,000,
3.
On January 1, 2016, Black Company purchased 100 horses at an auction price of P5,000,000. Black incurred P150,000 for auction fee and transportation cost necessary to bring the horses to the farm amounted to P100,000. Black would have to incur similar auction fee and transportation cost if it was to sell the horses in an auction. The biological assets should be initially recognized at a. P5,000, b. P4,750, c. P4,850, d. P4,900,
4. (^) On January 1, 2015, Black Forest Company purchased 50 2-year old cows for P20,000 each for its dairy milk farm. On August 1, 2016, the cows gave birth to 5 calves. There were no animals sold, died or additional purchases during 2015 and 2016.
The fair values of the biological assets in the active market are as follows:
New Born -- -- 5,000 4, 5 months old -- -- 5,500 6, 2 years old 20,000 21,000 22,000 24, 3 years old 33,000 30,000 28,000 32, 4 years old 35,000 38,000 40,000 39,
Cost to sell for each biological asset is 5% of fair value.
Q1. What amount should Black Forest report the biological assets in the December 31, 2015 Statement of financial position? a. P1,567, b. P1,425, c. P1,520, d. P1,500,
Q2. What amount of net gain (loss) should be reported in the 2016 income statement? a. P555, b. P427,
