falecd Com Rew noe? SOLUTION MFRS 141 AGRICULTURE AND BIOLOGICAL ASSETS Question 1 a) Yos,Zani Livestock Bhd/fas an asset. An asset is resources controlled by the entity as, ult of past eventsand from which future economic benefits are expected to flow to the ony aa 4.4(a) of the conceptual framework). b) = sheep and Dorper sheep are an item of Biological assets when and only The entity controls the assets as a result of past event,“ fl. Its probable that future economic benefit associated with the asset will low to the entity, li, The fair value or cost of the asset can be measured reliably. Question 2 1 Jan 2012 Dt. Biological asset/(100 x RM400) RM40,000 Cr. Cashiate payable RM40,000 31 Dec 2012 Dt. Biological asset (RM1,200— RM490) RM80,000 Gr. SOPL -gain in fai value” RM80,000 Question 3 [o° sepercranp 200 fapetiop boo ’ Local market! Brunei marker mn we RM RM Market price 70,000 160,000, Less: cost to sell ~v y Transportation (6,000 000) Commission to broker ae sty [A (5% of market price) 3,500)» | (8,000) / Fair value less cost to sell 61,500 | 132,009 = '7% 5° Question 4 a) Change in fair value of the herd of sheep and analysis of change due to physical change and price change. RM RM Fair value of sheep as at 1 Jan 2013: 3yr (200 x RM1,400)_ 80,000.) Decreases due to sales: (40 ¥RM1,400) (56,000), 224,000 Increase due to purchase: 4 Jan 2013: 4 yr (40% RMS50)" 74,000 [4 July 2013: 1 ir (30x RM400)" 12,000 | 26,000. Increase in fair value due to physical change: 31 Dec 2013 160/of 4 yr old x (RM1,800— RM1,500) daniver ge mr ET 48,000 4G,6f 2 yr old x (RM1, 109— RM6&0) >, 17,600 30 of 1% yr old x (RM80Q— RM66Q} | : 4,200 69,800 [Tnorgase in fair value due td price changer 160 of 3 yr old x (RM1,500— RM7,400) 76,000 40,6f1 yr old x (RM660 —RM350) 12,400 -30 of 1 yr old x (RMBG0—RMAQ0) 7,800 36,200 = FE, poo The fair value of sheep ai 31 Dec 2013 ——— 160 of 4 yr old x RM7,800" __| 288,000; 40 of 2 yr old x RM1,100, _ 44,001 Boot 1% old x RMBO0 24,000 [~~ iz “| _ 356,000 | b) Statement Profit or loss for the year ended 31 December 2013. ‘Statement of Profit or Loss for the year ended 31 December 2014 _ RM ‘Sales due to meat sold x RM1§00) 60,060 Less: Purchase of 40 sheep x RM350 (14,000) Purchase of 30 sheep x RM400 412,000) 34,000 Inerease in fair value due to physical changes: | _ 69,800 Increase in fair value due to price changes: 36,200, Total income 140,000 Less: Expenses Chemical, fertilizer) 7 (2,500) Cost of feedings ~ (40,000) Direct labor and supervision (15,000) } depreciation (7,000), Other operating expenses (4,500) | Net profit 401,000 Question 5 fewe RM RM eu Wi Price Change: 50,000/x (RM1604RM150) 500 15, M12 /RMI20¥ 330 830 Physical Change: 50,000 x (RMI 80/1 RML160Y, 1,000 15,000 x (RM1 pL neo’ 180 1,180 Revenué for the year x5 2,010 Carrying value as at 31/12/x5: 31/12/x5 50.0094 RMA 9,000 15,000) RM154¢ 2.310 11,310QUESTION 6 f a, The lambs are asséf that are resources controlled by Peladang Pertama Bhd as a result of past event that were acquired through purchase’from which future economic benefits are expected to flow to it, / b. The sheep are also asset that are resources controlled by Peladang Pertama Bhd as a result of past events that were acquired through purchase/from which future economic benefits are expected to flow toit./ c. The lambs satisfy the definition of biological sesai a living animal in accordance with MFRS 141 Agriculture, because related to agricultural activity. The lambs go through biological transformation through the process of growth into sheep, / d. The sheep satisfy the definition of biological assets /a living animal in accordance with MFRS 141 Agriculture, related to agricultural activity that is breeding actly Other sheep that are not involve in the breeding activity and are ready for’sale will be classified in accordance to MFRS 102 Inventories, . Agricultural activity is the management by an entity / of the biological transformation iarvest of biological assets / for sale or for conversion into agricultural produce or into additional biological assets. / Agricultural produce is the harvested product of the entity's biological assets, f. The lambs and sheep as biological assets shall be measured on initial recognition at the fair valueless costs to soy g. At 1 January 2013, the fair value less costs to sell of the biological assets are as follows: Lamb Sheop Total RM RM RM Price at cost SOx RM2,000“ 100,000 70 X RM3,500,/ 245,000 345,000 Less; Costs to-sell 50 X RM300" (15,000) 70 yRMB00/ (21,000) (36,000) Fair value less cost to sell 85,000 224,000 309,000 QUESTION 7 (Test FAR460, Mar 2015) a. Outline the objective of MFRS 141 Agriculture. To prescribe the accounting treatment and disclosures related to agricultural activity. ” b. State any two examples of biological assets and its related agricultural produce (other than in the question above). Biological assets Agricultural produce 3Sheep Woo! Trees in a timber plantation _—Felled trees Dairy cattle Milk Sugarcane Harvested cane Or any other answer Are the vegetable trees in the farm at Johor an asset of SH Berhad? Vegetable trees owned by the company are an asset. The company has controll over them. Iisa result of past event, which is transaction of purchase of an asset. Furthermore, there is future economic benefit on an asset will low to the company. The company will be able to generate cash from selling of vegetable to \the eusiomersy?” Identify the classification of the vegetable trees. Since the vegetable tree is a plant, it can be classified as biological assét in accordance with MFRS 141 State the recognition criteria of a biological asset. The company shall recognise a biological asset when and only when: a. The company controls the asset as a result of past coat b. Itis probable that future economic benefits associated with the asset will flowy to the company 6. The fair valus’f the asset can be measured reliably Explain physical change and price change. Physical changes are attributable to the biological transformation which results in growth, degeneration, production and procreation of the biological assets” While price changes are unrelated to the physical changes, but are attributable to changes in the per-unit fair value due to market forse,” For some biological assets, the two components are observable and measurable however, in some circumstances; the two components cannot be separated with reliability. Compute the fair value as at 31 December 2014 (showing physical change and price change) for both farms. Farm at Johor RM Fair value at the beginning 460,000 ‘Add: Physical changes _ 830,000 yao 190,000 Less: Price changes {40,000 ~469;000 __180,000 Fair value at the end . 4 830,000 «sv Farm at Melaka Fair value at the beginning 520,000 Less: Price changes ,000 520,000 __ 150,000 ‘Add: Physical changes Fron ~970,000 210,000 0, Fair value at the end 880,000 «iv Prepare the Statement of Profit or Loss for the year ended 31 December 2014. 4Statement of Profit or Loss for the year ended 31 December 2014 Increase in fair value due to physical changes 190,000./ 210,000 ,/ 400,000 Increase in fair value due to price changes 180,000 \/ 150,000 | 330,000 Total income Less: Expenses Farm at Johor: Chemicals, fertiizer and other supplies 140,000" 5 Farm labour and supervision 50,000./ ( 190,000 | Farm at Melaka: Chemicals, fertilizer and other supplies 100,000 Farm labour and supervision 45,000. 145,000) Profit from operations 395,000. QUESTION 8 (Test Q2, Sept 2015) a) Biological asset Is defined as ‘living animals and plants that are controlled by an entity as a result of past events. b) Treatment for the following assets: 4) i) Goats and kids ‘Goats and kids will be recognized as biological asset because it's met the definition of MFRS 141 and there are subjected to the management of biological transformation. Biological transformation comprises of the processes of growth, degeneration, production, and procreation that cause qualitative or quantitative changes in a biological asset . Palm trees Palm trees will be recognized under MFRS 116 because it is bearer plant based on the amendment of IAS 16 and IAS 41. A bearer plant defined as a living plant that is used in the production or supply of agricultural produce is expected to bear produce for more than one accounting period and-has a remote likelihood of being sold as agricultural produce except for incidental sorap sales. Recognition criteria of biological assets are: i) ii) ill) In The enterprise controls the asset as a result of past events; Itis probable that future economic benefits associated with the asset will flow to the enterprise ; and The fair value/cost of the asset can be measured reliably the absent of active market, fair value of the biological asset can be determined using: i) ‘The most recent market transaction price ,ji) Market price for similar assets with adjustment to reflect differences iii) Sector benchmarks OR alternative There is @ presumption that fair value can be measured reliably for a biological asset. However, that presumption can be rebutted only on initial recognition for a biological asset for which quoted market prices are not available and for which alternative fair value measurements are determined to be clearly unreliable. In such a case, that biological asset shall be measured at its cost less any accumulated depreciation and any accumulated impairment losses . (Paragraph 30, MFRS141) Date RM RM 01-01-14 14,700,000 1,312,500 840,000 Decrease due to sales 9450,| x 350 (3,307,500) ~ 13,545,000 CPie- apy) ‘Change in Price 32,550| x _| (379350) 813,750 40,500) x_| (165412! 420,000 8,400] x | (165,100) 546,000 | 1,779,750 Change in Physical_| _32,550|x_| (459-3754 2,441,250 10,500] x_| (275-475)! 1,155,001 8,400 |X | (200-165) 294,000 | 3,890,250 Fair Value Gain 5,670,000 C/SFairValue_|_32,650] x 450 | 14,647,500 10,500,] x. 275 |, 2,887,500 | 8,400 | x 200} _ 1,680,000 | 49,215,000 | | [ Fair Value Gain I 5,670,000 | Or alternative: Date Qty RM RM sii2iia | ___ 4-year old 32,550 450 14,647,500 [___2-year old 10,500 275 [__ 2,887,500 4% year old 8,400 200 [7,680,000 Fair value i] [19,215,000 Date, Quantity _ RM RM RMAa year old 2,000 350 74,700,000 2-year old 10,500 125 1,312,500 7H year old 8,400 700 | 840,000 | 16,852,500 Decrease due to 9,450 350 (3,307,500) sale Change in Price 32,550 | (375 - 350) 813,750 _ 40,500 | (165 - 125) 420,000 8,400 | (165-100) 546,000 | __ 1,779,750 Change in Physical 32,550 | (450-375) 2,447,250 40,500 | _(275- (75) 5 1,755,000 8.400 | (200 - 165) 294.000 | 3,890,250 31/12/14 | Fair value 19,215,000 ) Extract of Financial Statement for the year ended 31 December 2014 | T_T RM Sales 9,450 | 4,100 10,305,000 Increase in FV - Price 4,779,750) Increase in FV-Physical 3,690,250. 16,065,000 125 | 4,312,500. 100] 840,000) 2,152,500 Cost of feeding 25,000 Labor cost 24,006 15,000, I I 6,000, | 5,000 L 13,837,500