CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila

FINANCIAL ACCOUNTING AND REPORTING VALIX/VALIX/SANTOS

BATCH 93 – MAY 2023 CPALE

BIOLOGICAL ASSET

1. An entity produces milk for local ice cream producers. The entity began operations at the beginning of
current year by purchasing milking cows for P5,000,000. The entity provided the following information
at year-end relating to the milking cows:

Carrying amount – beginning of year 5,000,000

Increase 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

1. What amount of gain on biological asset should be reported in the current year?
a. 2,400,000
b. 2,150,000
c. 3,000,000
d. 3,250,000

2. What amount of gain on agricultural produce should be recognized in the current year?
.

a. 1,250,000
b. 1,000,000
c. 850,000
d. 0

3. What is the carrying amount of the biological asset at year-end?

a. 8,000,000
b. 8,250,000
c. 7,150,000
d. 7,600,000

2. An entity provided the following assets in a forest plantation:

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
Agricultural produce growing on bearer plants 800,000
Agricultural produce harvested 1,200,000

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

a. 7,800,000
b. 7,000,000
c. 7,500,000
d. 8,500,000

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

a. 5,400,000
b. 3,400,000
c. 2,900,000
d. 1,900,000

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3. An entity is engaged in raising diary 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 due to price change 400,000
Gain arising from change in fair value less cost of disposal due to physical change 550,000
Decrease due to sales 850,000
Decrease due to harvest 200,000
What amount should be reported as biological asset on December 31?
a. 6,900,000
b. 7,000,000
c. 7,950,000
d. 6,700,000

4. On January 1, an entity purchased 100 2-year old animals for P10,000 each. Ten animals aged 2.5 years
were purchased on July 1 for P10,800 each. Ten animals were born on July 1. No animals were sold or
disposed of during the year. The fair values less cost of disposal per unit were:
2-year old animal on January 1 10,000
2.5-year old animal on July 1 10,800
New born animal on July 1 7,000
2-year old animal on December 31 10,500
2.5-year old animal on December 31 11,100
Newborn animal on December 31 7,200
3-year old animal on December 31 12,000
0.5-year old animal on December 31 8,000

1. What amount should be reported as biological assets on December 31?

a. 1,400,000
b. 1,320,000
c. 1,440,000
d. 1,360,000

2. What is the total gain from change in fair value of biological asset?
a. 222,000
b. 292,000
c. 300,000
d. 332,000

3. What is the gain from biological asset attributable to price change?

a. 292,000
b. 222,000
c. 237,000
d. 55,000

4. What is the gain from biological asset attributable to physical change?

a. 150,000
b. 167,000
c. 220,000
d. 237,000

End

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