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Biological Assets: SAMPLE PROBLEMS With Answers

This document provides information about a dairy company's biological assets (cows and heifers) and sample problems to calculate the increase in value of those assets over the year due to physical changes and price changes, as well as the carrying amount as of the end of the year. It also provides information about a company's biological assets balances and transactions to calculate the amount to recognize in the statement of financial position and income statement.

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Mary Yvonne Ares
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2K views1 page

Biological Assets: SAMPLE PROBLEMS With Answers

This document provides information about a dairy company's biological assets (cows and heifers) and sample problems to calculate the increase in value of those assets over the year due to physical changes and price changes, as well as the carrying amount as of the end of the year. It also provides information about a company's biological assets balances and transactions to calculate the amount to recognize in the statement of financial position and income statement.

Uploaded by

Mary Yvonne Ares
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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BIOLOGICAL ASSETS

SAMPLE PROBLEMS with Answers


Use the following information for the next three questions.
A public limited company, Cromwell Dairy Products, produces milk on its farms. As of
January 1, Cromwell has a stock of 1,050 cows (average age, 2 years old) and 150 heifers
(average age, 1 year old). Cromwell purchased 375 heifers, average age 1 year old, on
July 1. No animals were born or sold during the year. The unit values less estimated
costs to sell were
1 - year old animal at December 31 P3,200
2 - year old animal at December 31 4,500
1.5 - year old animal at December 31 3,600
3 - year old animal at December 31 5,000
1 - year old animal at Jan. 1 and July 1 3,000
2 - year old animal at January 1 4,000

1. The increase in value of biological assets in the current period due to price changes
a. P1,500,000 c. P555,000
b. P 630,000 d. P460,000

2. The increase in value of biological assets in the current period due to physical changes
a. P870,000 c. P590,000
b. P720,000 d. P780,000

3. The carrying amount of the biological assets as of December 31 is


a. P7,325,000 c. P6,825,000
b. P7,275,000 d. P6,150,000

Use the following information for the next two questions.


An entity has these balances in its financial records:

Value of biological assets at cost, 12/31/19 P1,200,000


Fair valuation surplus on initial recognition at fair value, 12/31/19 1,400,000
Change in fair value to 12/31/20 due to growth and price fluctuations 200,000
Decrease in fair value due to harvest 2020 180,000

4. How much should be recognized in the statement of financial position as of December


31, 2020 related to these biological assets?
a. P1,200,000 c. P2,800,000
b. P2,600,000 d. P2,620,000

5. How much should be recognized in the income statement for the year ended
December 31, 2020 related to these biological assets?
a. P1,420,000 c. P200,000
b. P 20,000 d. P 0

Answers: 1. B 2. A 3.B 4. D 5. B

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