Problem Solving - Biological Assets

1. Indolent Company
A.
Biological Asset 600,000
Cash 600,000

Biological Asset 700,000

Gain on initial recognition 700,000

Biological asset 100,000

Gain from change in FV 100,000

Loss from change in FV 90,000

Biological Asset 90,000

Cash 400,000
Biological Asset 400,000

B.
Acquisition cost 600,000
Increase in FV on initial recognition 700,000
Change in FV due to growth and price change 100,000
Decrease in FV due to harvest (90,000)
Decrease due to sale (400,000)
Carrying amount of biological asset, 12/31 910,000

2. Query Company

1-Jul Biological Asset 108

Cash 108

Biological asset 70
Gain from change in FV 70

31-Dec Biological Asset, 1/1 (10 x P100) 1,000

Acquired biological asset 108
New born 70
Carrying amount, 7/1 1,178

FV - 12/31
3-yr old (10 x P120) 1,200
3-yr old (1 x P120) 120
0.5-yr old (1 x P80) 80
1,400

Gain from change in FV 222

Biological asset 222

Gain from change in FV 222

B. Price change (same age, different period)

2-yr old [10 x (P105 - P100)] 50

2.5-yr old [ 1 x (P111 - P108)] 3
new born [ 1 x (P72 - P70)] 2
Gain from change in FV due to Price change 55

Physical Change (different age, same period)

3-yr old [ 10 x (P120 - P105)] 150
3-yr old [ 1 x (P120 - P111)] 9
0.5-yr old [ 1 x (P80 - P72) 8
New Born 70
Gain from change in FV due to Physical change 237
3. Savvy Company

Carrying amount, 1/1 5,000,000

Increase due to purchases 2,000,000
Gain from change in FV due to price change 400,000
Gain from change in FV due to physical change 600,000
Decrease due to sales (850,000)
Decrease due to harvest (200,000)
Carrying amount, 12/31 6,950,000

4. Dairy Company

Dairy Company
Income Statement
For the year Ended December 31, 2020

Fair value of milk harvested 600,000

Gain from change in FV 50,000
Total Gain or Income 650,000
Less: Inventories used 140,000
Staff costs 120,000
Depreciation expense 15,000
Other operating expenses 190,000
Total Expenses 465,000
Operating income 185,000
Less: Income tax expense (55,000)
Net income 130,000

Dairy Company
Statement of Changes in Equity
For the year Ended December 31, 2020

Share Capital 1,000,000

Retained earnings, beg 800,000

Add: Net income 130,000
Total 930,000
Less: Dividends -
Retained earnings, end 930,000

Total Shareholder's Equity 1,930,000

Dairy Company
Statement of Financial Position
December 31, 2020

Assets

Current Assets:
Cash 500,000
Trade and other Receivables 1,500,000
Inventories 100,000
Total Current assets 2,100,000

Noncurrent Assets:
Biological Assets (See note) 450,000
PPE 1,400,000
Total Noncurrent assets 1,850,000

Total Assets 3,950,000

 Liabilities

Current Liabilities:
Trade and other payables 520,000
Total Current liabilities 520,000

Noncurrent Liabilities:
Notes payable - Long term 1,500,000
Total Noncurrent liabilities 1,500,000

Total Liabilities 2,020,000

Shareholder's Equity
Share Capital 1,000,000
Retained earnings, end 930,000
Total Shareholder's Equity 1,930,000

Total Liabilities and Shareholder's Equity 3,950,000

Notes: Biological Asset:

Dairy Livestock - immature 50,000
Dairy Livestock - mature 400,000
Total Biological Asset 450,000