Republic Central Colleges

Angeles City

Activity 4- Biological Assets

Name_________
Score

Problem 1- (5 points )
Jonathan Company is in the business of cattle farming. A herd of 200 3 year old and 180 4-
year old cattle areld on January 1, 2028. On July 1, 2018, 50 calves were born. The only
change during the year is the increase in their physical attributes due to aging. The relevant
data are as follows:
The fair value of a 3-year old cattle on January 1, 2018 P 4,500
The fair value of a 4 year- old cattle on January 1, 2018 6,500
The fair value of a 0- month old calf at July 1, 2018 1,000
The fair value of a 0- month old calf at December 31, 2018 1,300
The fair value of a 6-month calf at December 31, 2018 1,700
The fair value of a 3 month old cattle at December 31, 2018 4,950
The fair value of a 4 year old cattle at December 31, 2018 6,750
The fair value of a 5 year old cattle at December 31, 2018 8,700

How much is the increase in the fair value of the biological asset due to physical
change?

Problem 2
Bio Farm purchased 100 beef cattle at an auction for P 800,000 on July 1, 2019. Transportation
costs were P 8,000. Bio Farm would have to incur the same transportation costs if it had sold
its cattle in the auction. In addition, there would be a 2% auctioneer's fee on the market price of
the cattle payable by the seller. Bio Farm also incurred P 4,000 veterinary expenses. On
December 31, 2019, the fair value of the cattle in the most relevant market increased to P
880,000. On May 2, 2020, Bio Farm sold 18 cattle at auction for P 160,000 and incurred
transportation charges of P 1,200.

On June 15, 2020, the fair value of the remaining cattle was P 662,560, but on the same day, 42
cattle were slaughtered with a total cost of P 33,600. The fair value of the carcasses on the
day was P 386,400, and the estimated transportation cost to sell the carcasses is P 3,360. No
other selling costs are expected.

On June 30, 2020, the fair value of the remaining 40 cattle was P 358,400. The estimated
transportation cost is P 3,200.
Required: 3 points each
1. How much is the fair value of the Biological Asset at point of purchase on July 1,
2019?
2. How much is the fair value of Biological Asset at December 31, 2019?
3. How much is the increase in change in fair value on December 31, 2019?
4. How much is the fair value of inventory (carcasses)?
5. What are the net proceeds from the sale of cattle on May 2?