BIOLOGICAL ASSETS

1. GOAT Company provided the following assets in a forest plantation and farm:
Freestanding trees 5,000,000
Land under trees 600,000
Roads in forests 300,000
Animals related to recreational activities 1,000,000
Bearer plants 1,500,000
Bearer animals 2,000,000
What total amount of the assets should be classified as biological assets?
a. 7,000,000 c. 5,000,000
b. 8,500,000 d. 8,000,000

2. What is the carrying amount of the biological assets on December 31, 2019?
a. 1,400,000 c. 1,310,000
b. 1,490,000 d. 1,300,000

3. What is the gain from change in fair value of biological asset that should be reported in the 2019 income
statement?
a. 100,000 c. 710,000
b. 10,000 d. 800,000

4. SHEEP Company is engaged in raising dairy livestock. The entity provided the following information
during the current year:
Carrying amount on January 1 5,000,000
Increase due to purchases 2,000,000
Gain arising from change in fair value less cost of disposal
Attributable to price change 400,000
Gain arising from change in fair value less cost of disposal
Attributable to physical change 600,000
Decrease due to sales 850,000
Decrease due to harvest 200,000
What is the carrying amount of the biological asset on December 31?
a. 7,150,000 c. 6,000,000
b. 6,950,000 d. 8,000,000

5. What amount of gain on change in fair value should be recognized for biological asset in the current year?
a. 2,250,000 c. 2,650,000
b. 2,500,000 d. 2,900,000

6. What amount of gain on change in fair value should be reported for agricultural produce in the current
year?
a. 2,250,000 c. 0
b. 400,000 d. 150,000

HONEY Company has a herd of 10 2-year old animals on January 1, 2019. One animal aged 2.5 years was
purchased on July 1, 2019 for 108, and one animal was born on July 1, 2019.

No animals were sold or disposed of during the year. The fair value less cost of disposal per unit is as
follows:
2 – year old animal on January 1 100
2.5 – year old animal on July 1 108
New born animal on July 1 70
2 – year old animal on December 31 105
2.5 – year old animal on December 31 111
New born animal on December 31 72
3 – year old animal on December 31 120
0.5 – year old animal on December 31 80

7. What is the fair value of the biological assets on December 31?

a. 1,320 c. 1,440
b. 1,400 d. 1,360
8. What amount of gain from change in fair value of biological assets should be recognized in the current
year?
a. 222 c. 292
b. 332 d. 300

9. What is the gain from change in fair value due to price change?
a. 292 c. 237
b. 222 d. 55

10. DOG Company is a producer of coffee. The entity is considering the valuation of harvested coffee beans.
Industry practice is to value the coffee beans at market value and uses as reference a local publication
“Accounting for Successful Farms”.
On December 31, 2018, the entity has harvested coffee beans costing 3,000,000 and with fair value less
cost of disposal of 3,500,000 at point of harvest.
Because of long aging and maturation process after harvest, the harvested coffee beans were still on hand
on December 31, 2019.
On such date, the fair value less cost of disposal is 3,900,000 and the net realizable value is 3,200,000.
What is the measurement of the coffee beans inventory on December 31, 2017?
a. 3,000,000 c. 3,200,000
b. 3,500,000 d. 3,900,000

Dwyane Company purchased 100 beef cattle at an auction for P800,000 on July 1, 2018. Transportation
cost were P8,000. Dwyane Company would have to incur the same transportation cost if it had sold its
cattle in the auction. In addition there would be 2% auctioneer’s fee on the market price of the cattle
payable by the seller. Dwyane Company also incurred P 4,000 veterinary expenses. On December 31,
2018, the value of the cattle in the most relevant market increases to P880,000. On May 2, 2019, Dwyane
Company sold 18 cattle at Auction for P160,000 and incurred transportation charges of P1,200.

On June 15, 2019, the fair value of the remaining cattle was P 662,560 but on the same day, 42 cattle were
slaughtered with total cost of P33,600. The fair value of the carcasses on that day was P386,400 and the
estimated transportation cost to sell is P3,360. No other selling cost are expected.

11. What amount should the biological asset be initially recognized on July 1, 2018?
a. P776,000 c. P792,000
b. P784,000 d. P800,000

12. What amount should the biological asset be reported on December 31,2018?
a. P854,400 c. P872,000
b. P862,400 d. P880,000

13. What amount of gain as a result in the change in value of the biological asset to be reported in the statement
of comprehensive income for the year ended December 31, 2018?
a. None c. P80,000
b. P78,400 d. P96,000

14. What is the net proceeds from the sale of cattle on May 2, 2019?
a. P155,600 c. P158,800
b. P156,800 d. P160,000

15. What is the fair value of the inventory (carcasses) June 15, 2019?
a. P358,848 c. P383,040
b. P376,992 d. P386,400