Chapter 24

Biological Assets

Problem 34-1 (IFRS)

Forester Company provided the following assets in a forest plantation and farm:

Freestanding trees 5,000,000

Land under trees 600,000
Road in forest 300,000
Animals related to recreational activities 1,000,000
Bearer plants 1,500,000
Bearer animals 2,000,000
Agricultural produce growing on bearer plants 800,000
Agricultural produce harvested 1,200,000
Plants with dual use 1,400,000

1. What total amount should be reported as biological assets?

a. 7,800,000
b. 7,200,000
c. 8,400,000
d. 9,200,000

2. What total amount should be included in property, plant and equipment?

a. 4,600,000
b. 3,400,000
c. 1,800,000
d. 4,200,000
Problem 34-2 (IFRS)

Joan Company provided the following data:

Value of biological asset at acquisition on

December 31, 2019 600,000
Fair valuation surplus on initial recognition at fair
value on December 31, 2019 700,000
Change in fair value to December 31, 2020 due to
growth and price fluctuation 100,000
Decrease in fair value due to harvest in 2020 90,000

1. What is the carrying amount of the biological asset on December 31, 2020?

a. 1,400,000
b. 1,310,000
c. 1,300,000
d. 1,490,000

Problem 34-3(IFRS)

Salve 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

1. What is the carrying amount of the biological asset on December 31?

a. 6,950,000
b. 6,000,000
c. 8,000,000
d. 7,150,000
Problem 34-4 (IFRS)

Bear 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 harvest during the year but not yet sold 400,000

1. What amount of gain on change in fair value should be recognized for biological asset in the current
year?

a. 2,500,000
b. 2,250,000
c. 2,900,000
d. 2,650,000

Problem 34-5 (IFRS)

On January 1, 2014, Farm Company planted trees on its land. The entity purchased the land two years
ago at 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 fruits and fair value less cost of disposal on such a date was
P50, 000. There no harvest during 2019.

On December 31, 2020, the fruits were harvested and the fair value less cost of disposal on such a date
was P75, 000

1. What is the carrying amount of the property, plant and equipment on December 31, 2019?

a. 1,500,000
b. 1,400,000
c. 1,000,000
d. 0
Problem 34-6 (IFRS)

At the beginning of the current year, Honey Company had a herd of 10 2-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 animal were sold or disposed of during the year.

Fair value less cost of disposal per unit

2 – year old animal on January 1 100

2.5 – year old animal on July 1 108
New born animal on July 1 70
2 – year old animal born on December 1 105
2.5 – year old animal on December 31 111
New born animal on December 31 72
3 – year old animal on December 31 120
0.5 – year old animal on December 31 80

1. What is the fair value of the biological assets on December 31?

a. 1,400
b. 1,320
c. 1,440
d. 1,360

2. What amount of gain from change in fair value of biological assets should be recognized in the current
year?

a. 222
b. 292
c. 300
d. 332
Problem 34-8 (IFRS)

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

1. What is the net income for the current year?

a. 650,000
b. 600,000
c. 130,000
d. 185,000

2. What is the fair value of biological assets at year-end?

a. 550,000
b. 450,000
c. 500,000
d. 400,000