BIOLOGICAL

ASSETS
IAS 41
IAS16
IFRS 13
IAS 2
 Capability to change

Management of
Agricultural Activity change

Measurement of
change

Ex. Cropping,forestry,Floriculture,Aquaculture X Ocean Fishing

IFRS 13

LVL 1- unadjusted quoted price in an active market marked for identified asset
LVL2- Observable Inputs
Quoted price of similar asset
Quoted price of non active market
LVL3 Unobservable Inputs
2 yr old pig at Jan.’16 Price change- Same
-P69,000 characteristic different
dates
2 yr old pig at Dec.’16
-P79,000

Physical change- Different

3 yr old pig at Dec.’16 characteristic
-P89,000
Illustration:
A herd of twenty 2 year old animal was held on Jan. 1 2016. Five animals aged 2.5yrs old,
were purchased on July 1, 2016. On the same date 4 animals were born. Ten animals were
sold at Dec 31, 2016,aged 3 yrs old, at fair value. Per Unit FV less estimated cost to sell
were as follows:

Jan 1, 2016
2 yr old animal -----------------------------------15,000
July 1 ,2016
Newborn animal---------------------------------8,000
2.5 yr old animal---------------------------------20,000
December 31,2016
Newborn animal---------------------------------8,500
0.5 yr old animal----------------------------------9,500
2yr old animal------------------------------------16,500
2.5yr old animal----------------------------------23,000
3yr old animal-------------------------------------28,000
What is the FV of Bioasset on Dec 31?
What is the gain from change inFV due to price change?
What is the gain from change in FV due to physical change?
What amount of gain from change in FV of bioassets should be recognized in the current
year?
Piplup company provided the following assets in a forest plantation
and farm:

Freestanding tress---------------------------------------5,000,000
Land under trees-----------------------------------------600,000
Roads in forest--------------------------------------------300,000
Animals related to recreational activities----------1,000,000
Bearer plants---------------------------------------------1,500,000
Bearer animals--------------------------------------------2,000,000
Agri-produce growing in bearer plant---------------800,000
Agri-produce harvested---------------------------------1,200,000
Plants with dual use -------------------------------------1,400,000

What amount should be reported as biological asset?

What amount should be included in PPE?

Answer:
Piplup company provided the following assets in a forest plantation and
farm:

Freestanding tress---------------------------------------5,000,000
Land under trees-----------------------------------------600,000
Roads in forest--------------------------------------------300,000
Animals related to recreational activities----------1,000,000
Bearer plants---------------------------------------------1,500,000
Bearer animals--------------------------------------------2,000,000
Agri-produce growing in bearer plant---------------800,000
Agri-produce harvested---------------------------------1,200,000 (invty)
Plants with dual use -------------------------------------1,400,000

What amount should be reported as biological asset? (all blue)

9,200,000

What amount should be included in PPE?

3,400,000
On January 1, 2012, Sableye Company Planted trees on its land. The entity purchased
land two years ago at a cost of 1,000,000
The trees were considered bearer plants and had an accumulated cost of 500,000
onDec. 31 2016
By Jan 1 2017, the trees had matured and were expected to bear produce for a
period of 5 years.
On Dec 31 2017, the trees produced fruits and FV-CTS on such date was 50,000.There
was no harvest during 2017.
On Dec 31,2018 the fruits were harvested and FV-CTS on such date was 75,000

What is the carrying amount of the PPE on Dec 31 2017?

What is the Carrying amount of the bioasset on Dec 31 2017?

What amount of gain from change in FV is recognized for agricultural produce for
year ended Dec. 31 2018?
ANSWER:
On January 1, 2012, Sableye Company Planted trees on its land. The entity purchased
land two years ago at a cost of 1,000,000
The trees were considered bearer plants and had an accumulated cost of 500,000 onDec.
31 2016
By Jan 1 2017, the trees had matured and were expected to bear produce for a period of
5 years.
(remember that we will start to depreciate our bearer plants once it matures)
On Dec 31 2017, the trees produced fruits and FV-CTS on such date was 50,000.There
was no harvest during 2017.
On Dec 31,2018 the fruits were harvested and FV-CTS on such date was 75,000

What is the carrying amount of the PPE on Dec 31 2017?

Land ----------------------------------1,000,000
Bearer plants-------------------------500,000
Deprn(500K/5)----------------------(100,000)
CA 1,400,000
What is the Carrying amount of the bioasset on Dec 31 2017?
50,000 FV-CTS of fruits
What amount of gain from change in FV is recognized for agricultural produce for year
ended Dec. 31 2018?
FV-CTS dec ‘17--------------75,000
FV-CTS dec ‘18-------------(50,000)
Gain---------------------------25,000
At the beginning of the current year, Hydreigon Company had a herd of 10 2-yr old animals

One animal aged 2.5 yrs was purchased on July 1 for P108 and one animal was born on
July 1.
No animal were sold or disposed of during the year.

Fair value less cost of disposal per unit

2yr old animal on Jan 1-------------------------------------------------------100
2.5yr old animal July-----------------------------------------------------------108
New born animal on Dec 31-------------------------------------------------70
2yr old animal on Dec 31------------------------------------------------------105
2.5 yr old animal on Dec 31---------------------------------------------------111
Newborn animal Dec 31--------------------------------------------------------72
3yr old animal on Dec 31-------------------------------------------------------120
.5yr old animal Dec 31-----------------------------------------------------------80

What is the FV of bioasset on Dec 31?

What is the gain from change in FV due to price change?
What is the gain from change in FV due to physical change?
What amount of gain from change in FV of bioassets should be recognized in the current
year?
Intangible
Assets
-Non Current Assets
 IAS 38
IAS 16
Arcanine Company reported the following data at year end:

Patent----------------------------------------------------------------------2,500,000
Trademark-----------------------------------------------------------------900,000
Copyright-------------------------------------------------------------------700,000
Franchise------------------------------------------------------------------1,000,000
Leasehold------------------------------------------------------------------2,000,000
Licenses---------------------------------------------------------------------2,000,000
Customer List Purchased------------------------------------------------500,000
Computer Software-----------------------------------------------------1,500,000

What total amount should be reported as intangible asset?

Answer:
Patent----------------------------------------------------------------------2,500,000
Trademark-----------------------------------------------------------------900,000
Copyright-------------------------------------------------------------------700,000
Franchise------------------------------------------------------------------1,000,000
Leasehold------------------------------------------------------------------2,000,000
Licenses---------------------------------------------------------------------2,000,000
Customer List Purchased------------------------------------------------500,000
Computer Software-----------------------------------------------------1,500,000
PATENT:
-exclusive legal right granted by government for an invention to prevent
others from making, selling or distributing the invention without
permission from the patentee.

Useful life: minimum of 20yrs

 Finite
 Amortizable

Acquired by Purchase;
COST=Purchase Price
Import duties
Non refundable purchase taxes
Any Directly attributable cost
Trademark
-a symbol,sign,slogan or name used to mark a product to
distinguish it from other products.
(trademark,tradename,brandname)

COST= PP + Cost Directly Attributable to acq.

Internally development TM, Cost includes

 filing fees
Registry fees and other expenses
Like patent Litigation costs is an outright expenses

Useful life: legal life of 10yrs and renewable for another 10yrs
In Substance?
X Amortize
 Test for impairment
Research- gain technical or scientific knowledge
-Expense

Development-application of research
-generally EXPENSE, Except

P-Probable future econ. Benefits

I-Intention to complete/sell/use
R-Resources, adequate and avalibale
A- Ability to use/sell
T-Technical Feasibility (most important)
E-Expenditures, measured reliably
Research & Dev Advertising etc.
P---------I-------R--------A--------T---------E
-Expense -Expense

CAPITALIZE

Technical Commercial
Feasibility Production
Gengar Company developed a trademark to distinguish its products from those of the
competitors.

Marketing research to study consumer tastes---------------------400,000

Design cost of trademark------------------------------------------------1,500,000
Legal Fee of Registering trademark------------------------------------150,000
Advertising to establish recognition of trademark-----------------200,000
Registration fee with Intellectual Property Office------------------50,000

What amount should be capitalized as cost of trademark?

ANSWER:
Gengar Company developed a trademark to distinguish its products from those of
the competitors.

1. Marketing research to study consumer tastes---------------------400,000

2. Design cost of trademark------------------------------------------------1,500,000
3. Legal Fee of Registering trademark------------------------------------150,000
4. Advertising to establish recognition of trademark-----------------200,000
5. Registration fee with Intellectual Property Office------------------50,000

What amount should be capitalized as cost of trademark?

1,700,000

1. 2. 3. 5. 4.
At the beginning of current year, Psyduck Company signed an agreement to operate
as a franchise of Ace Company for an initial franchise fee of 12,000,000

Psyduck Company Paid 4,000,000 down and agreed to pay the balance in four equal
annual payments of 2,000,000 at the end of each year

Psyduck Company can borrow at 14% for a loan of this type. The PV factor at 14% are
as follows:
PV 0f 1 at 14% for 4 periods--------------------------0.59
PVOA of 1 at 14% for 4 periods----------------------2.91

What is the acquisition cost of franchise?

ANSWER

Downpayment 4,000,000--------------------------------------4000000
Annual payments 2,000,000 x 2.91-----------------------------5,820,000
9,820,000
Magikarp Company bought a franchise at the beginning of the current year for
2,040,000. An independent consultant estimated that the remaining useful life of the
franchise was 50yrs.

The unamortized cost of franchise was 680,000. The entity decided to amortize over
the maximum period allowed.

What amount should be recorded as amortization franchise for the current year?

ANSWER: 2,040,000/50yrs= 40,800

Dragonair Company purchased an entity for 6,000,000 cash at the beginning of the
current year.

The carrying amount and fair value of assets of the acquiree on the date of acuisition
are as follows:
CA FV
Cash 50,000 50,000
AR 500,000 500,000
Inventory 1,000,000 1,500,000
Patent 0 250,000
PPE 2,000,000 3,000,000
Total 3,550,000 5,300,000

In addition, the acquiree had a liabilities totaling 2,000,000 at the time of

acquisition. The acquiree had no other separately identifiable intangible assets.

What is the goodwill arising from the acquisition?

GOODWILL= Acquisition Cost - FV of NET ASSETS

ACQ. COST-------------------------------------------6,000,0000
CA FV
Cash 50,000 50,000
AR 500,000 500,000
Inventory 1,000,000 1,500,000
Patent 0 250,000
PPE 2,000,000 3,000,000
Total 3,550,000 5,300,000
Total Liab----------------------------------------------(2,000,000)
FV of NET ASSETS------------------------------------3,300,000

ANSWER:6M-3.3M=2,700,000
One of the cash generating units of Houndour Company is the production of liquor.
The entity believed that the assets of the cash generating unit (CGU) are impaired
based on an analysis of economic indicators.
The assets and liabilities of the cash generating unit at Carrying amount at the year-
end are:

Cash------------------------------------------------4,000,000
Accounts Receivable---------------------------6,000,000
Allowance for doubtful accounts-----------1,000,000
Inventory------------------------------------------7,000,000
PPE--------------------------------------------------22,000,000
Accumulated Depreciation--------------------4,000,000
Goodwill--------------------------------------------3,000,000
Accounts payable---------------------------------2,000,000
Loans Payable--------------------------------------1,000,000

The entity determined that the value in use of the CGU is 30,000,000
The accounts receivable is considered collectible except those considered doubtful
What is impairment loss on goodwill?
What is impairment loss on inventory?
What is impairment loss on PPE?
Cash------------------------------------------------4,000,000
Accounts Receivable-net-----------------------5,000,000
Inventory------------------------------------------7,000,000
PPE-net---------------------------------------------18,000,000
Goodwill--------------------------------------------3,000,000
Total CGU------------------------------------------37,000,000

CGU---------------------------------------------------37M
Value in Use-----------------------------------------30M
Impairment------------------------------------------7M
(3M is attributable to goodwill and the excess, which is 4M,will be shared proportionately by
other items in CGU)

Invty 4Mx(7/25)-----------------1,120,000
PPE 4Mx(18/25)---------------2,880,000
AR not impaired because it is still collectible and besides it is already net of doubtful accounts
GOODLUCK SA QUALIFYING EXAM

-kuya pao