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3. What is the carrying amount of the biological asset on December 31, 2020?
4. What amount of net gain from change in fair value of biological asset should be reported
in the 2020 income statement?
Case 3. Mike Company is engaged in raising dairy livestock. The entity provided the following
information during the current year:
Carrying amount on January 1 5,000,000
Increase due to purchases 2,000,000
Gain arising from change in fair value less cost of disposal
attributable to price change 400,000
Gain arising from change in fair value less cost of disposal
attributable to physical change 600,000
Decrease due to sales 850,000
Decrease due to harvest 200,000
Case 4. Dog Company produced milk for sale to local and national ice cream producers. The
entity began operations at the beginning of current year by purchasing 650 milk cows for
P8,000,000. The entity provided the following information for the current year: Acquisition cost,
January 1 8,000,000
Change in fair value due to growth and price changes 2,500,000
Decrease in fair value due to harvest 250,000
Milk harvested during the year but not yet sold 400,000
6. What amount of gain on change in fair value should be recognized for biological asset in
the current year?
7. What amount of gain on change in fair value should be reported for agricultural produce
in the current year?
CAse 5. On January 1, 2014, Farm Company planted trees on its land The entity purchased the
land two years ago at a cost of P1,000,000. The trees were considered bearer plants and had
accumulated cost of P500,000 on December 31, 2018. By January 1, 2019, the trees had matured
and were expected to bear produce for a period of 5 years. On December 31, 2019, the trees
produced fruit and the fair value less cost of disposal on such date was P50,000. There was no
harvest during 2019. On December 31, 2020, the fruits were harvested and the fair value less
cost of disposal on such date was P75,000.
8. What is the carrying amount of the property, plant and equipment on December 31, 2019?
9. What is the carrying amount of the biological asset on December 31, 2019?
10. What amount of gain from change in fair value is recognized for us agricultural produce
for the year ended December 31, 2020?
Case 6. At the beginning of the current year, Honey Company had a herd of 10 two-year old
animals.. One animal aged 2.5 years was purchased on July 1 for P108 and one animal was born
on July 1. No animals were sold or disposed of during the year.
11. What is the fair value of the biological assets on December 31?
12. What amount of gain from change in fair value of biological assets should be recognized
in the current year?
13. What is the gain from change in fair value due to price changes
Case 7. Colombia Company is a producer of coffee. The entity is considering the valuation of
harvested coffee beans. Industry practice is to value the coffee beans at market value and use as
reference a local publication “Accounting for Successful Farms”. On December 31, 2019, the
entity harvested coffee beans costing P3,000,000 and with fair value less cost of disposal of
P3,500,000 at the point harvest. Because of the long aging and maturation process after harvest,
the harvested coffee beans were still on hand on December 31, 2020. On December 31, 2020, the
fair value less cost of disposal is P3,900,000 and the net realizable value is P3,200,000.
14. What is the measurement of the coffee beans inventory on December 31, 2020?
Case 8. Dairy Company provided the following information for the current year:
Cash 500,000
Trade and other receivables 1,500,000
Inventories 100,000
Dairy livestock-immature 50,000
Dairy livestock-mature 400,000
Property, plant and equipment, net 1,400,000
Trade and other payables 520,000
Note payable- long-term 1,500,000
Share capital 1,000,000
Retained earnings- beginning 800,000
Fair value of milk produced 600,000
Gain from change in fair value 50,000
Inventories used 140,000
Staff costs 120,000
Depreciation expense 15,000
Other operating expenses 190,000
Income tax expense 55,000
15. What is the net income for the current year?
16. What is the fair value of biological assets at year-end?
Case 9. At the beginning of the current year, Divine Company purchased a vineyard costing
P6,000,000. It was determined that the grape vines can produce fruit for a period of 8 years.
During the year, the entity harvested grapes with a fair value less cost of disposal of P2,000,000.
By the end of the year, the grapes were sold for P3,500,000. The entity incurred operating
expenses of P500,000. The entity used the perpetual method.
17. What is the gross income on sales?
18. What is the pretax net income?