HOMEWORK ON AGRICULTURE

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Problem 1
Farm Corporation reported the following lists of biological assets and agricultural produce
for the year ended December 31, 2022:

Assets Fair Value

Diary cattle 3,000,000
Beef cattle 5,500,000
Sheep 2,000,000
Calves on diary cattle 1,000,000
Calves on beef cattle 2,500,000
Lambs 800,000
Milk on diary cattle 500,000
Carcass on beef cattle 800,000
Wool 400,000

Requirements:
a. What amount of biological asset should Central Farm Company report in its
December 31, 2022 statement of financial position?
b. What amount should Central Farm Company report as inventory related to the
above biological assets?

Problem 2
Beeju Company’s biological assets fair value as of January 1, 2022 was P2,700,000 and
as of December 31, 2022 was P2,250,000. The fair value of the agricultural produce
harvested during the period was P2,100,000 on the respective dates of harvest.

What net amount of gain or loss should Beeju Company report in its December 31, 2022
profit or loss related to the biological asset and agricultural produced?

Problem 3
Tree House Inc. is in the business of processing animal meat. As of January 1, 20A1,
Tree House Inc. had a herd of 10, two-year old animals, with fair value less cost to sell of
P1,000 each. On July 1, 20A1, Tree House purchased one 2.5 year old animal for P1,080.
One animal was also born on the same date. No animals were sold or disposed of during
the period. However, 2 animals died on July 1, 20A1. The per-unit fair values less costs
to sell were as follows:

2 year old animal, January 1, 20A1 P1,000

Newborn animal, July 1, 20A1 700
2.5 year old animal, July 1, 20A1 1,080
New born animal, December 31, 20A1 720
0.5 year old animal, December 31, 20A1 800
2 year old animal, December 31, 20A1 1,050
2.5 year old animal, December 31, 20A1 1,110
3 year old animal, December 31, 20A1 1,200

Required:
1. Prepare the necessary journal entries for the year 20A1.
2. Compute price and physical change.

Updated August 2022