Problem 01: Joan Company provided the following data: Value of biological asset at acquisition

cost on December 31, 2019, 600,000. Fair value 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 90,000.

Required:

1. What is the carrying amount of the biological asset on December 31, 2020?
2. What is the gain from change in fair value of biological asset that should be shown in the
2020 income statement?

Answers:

1. Carrying amount = 600,000 + 700,000 + 100,000 – 90,000 = 1,310,000

2. Net gain = 100,000 – 90,000 = 10,000

Problem 02: Honey Company has a herd of ten 2-year-old animals on January 1, 2020. One
animal aged 2.5 years was purchased on July 1, 2020 for P1,080, and one animal was born on
July 1, 2020. No animals were sold or disposed of during the year. The fair value less cost to
sell per unit is as follows:

2-year-old animal on January 1 1,000

2.5-year-old animal on July 1 1,080

Newborn animal on July 1 700

2-year-old animal on December 31 1,050

2.5-year-old animal on December 31 1,110

Newborn animal on December 31 720

3-year-old animal on December 31 1,200

0.5-year-old animal on December 31 80

Required:

1. What is the fair value of the biological assets on December 31, 2020?
2. What is the gain from change in fair value of biological assets to be recognized in 2020?
3. What is the gain from change in fair value due to price change?

Answers:

1. FV of 3-year-old animals on December 31 (11 x 1,200) 13,200

FV of 0.5-year-old animal on December 31 (1 x 800) 800
Total fair value – December 31,2020 14,000
 2. FV of 10 animals on January 1 (10 x 1,000) 10,000
Acquisition cost of one animal on July 1 1,080
Total carrying amount of biological assets – Dec. 31 11,080

Fair value on December 31, 2020 14,000

Carrying amount 11,080
Gain from change in fair value 2,920

3. Gain from change in fair value to price change:

2-year-old animals (1,050 -1,000 = 50 x 10) 500
2.5-year-old animal (1,110 – 1080 = 30 x 1) 30
newborn on July 1 (720 – 700 = 20 x 1) 20
Total 550

Problem 03: GOAT Company provided the following assets in a forest plantation and farm:

Freestanding trees 5,000,000

Land under trees 600,000

Roads in forests 300,000

Animals related to recreational activities 1,000,000

Bearer plants 1,500,000

Bearer animals 2,000,000

Required:

1. What total amount of the assets should be classified as biological assets?

Answer:

1. Freestanding trees 5,000,000

Bearer animals 2,000,000

Biological assets 7,000,000

Problem 04: CHIKEN Company provided the following data:

Value of biological asset at acquisition cost on December 31, 2018 600,000

Fair value valuation surplus on initial recognition at fair value 700,000

on December 31, 2018

Change in fair value to December 31, 2019 due to growth and price fluctuation 100,000

Decrease in fair value due to harvest in 2019 90,000

Required:

1. What is the carrying amount of the biological assets on December 31, 2019?
2. What is the gain from change in fair value of biological asset that should be reported in
the 2019 income statement?

Answers:

1. Acquisition cost – December 31, 2018 600,000

Increase in fair value on initial recognition 700,000
Change in fair value in 2019 100,000
Decrease in fair value due to harvest (90,000)
Carrying amount – December 31, 2019 1,310,000

2. Change in fair value in 2019 100,000

Decrease in fair value due to harvest in 2019 (90,000)
Net gain from change in fair value in 2019 10,000

Problem 05: YCOMPANY produces milk for local ice cream producers. The entity began
operations on January 1, 2017 by purchasing milking cows for P5,000,000. The entity provided
the following information at year-end relating to the milking cows:

Carrying amount - January 15,000,000

Change in fair value due to growth and price change 2,000,000

Decrease in fair value due to harvest 250,000

Newborn calf at year-end at fair value 400,000

Milk harvested during the year but not yet sold 850,000

Required:

1. What amount of gain on biological asset should be reported in the current year?
2,150,000
2. What amount of gain on agricultural produce should be recognized in the current year?
850,000
3. What is the carrying amount of the biological asset on December 31, 2015? 7,150,000

Answers:

1. Change in fair value due to growth and price change 2,000,000

Decrease in fair value due to harvest (250,000)
Newborn calf at year-end at fair value 400,000
Gain on biological asset 2,150,000

2. Gain on agriculture produce 850,000

3. Acquisition cost on January 1, 2017 5,000,000
Change in fair value due to growth and price change 2,000,000
Decrease in fair value due to harvest (250,000)
Newborn calf at year-end at fair value 400,000
Carrying amount of the biological asset 7,150,000