CHAPTER 9

BIOLOGICAL ASSETS

PROBLEMS

9-1.
1. A 6. D 11. E (Land Impr) 16. C
2. C 7. C 12. A 17. B
3. D 8. C 13. C 18. C
4. B 9. D 14. D 19. A
5. A 10. A 15. D 20. D

9-1. (ABC Farms)

(a) Carrying value of Biological Assets, 12/31/14 P2,800,000

Cost of biological assets purchased during 2015 3,200,000
Fair valuation loss on initial recognition ( 150,000)
Change in fair value due to biological transformation and
price fluctuations 2,000,000
Decrease in fair value due to harvest (1,000,000)
Biological Assets, 12/31/15 P6,850,000

(b) Loss on initial recognition at FV less cost to sell P 150,000

Increase in FV less costs to sell P2,000,000

9-2. (Ranchero Corporation)

(a) Balance of Biological Assets at December 31, 2014

3 years old = 2,000 x P44,000 P88,000,000
2 years old = 1,500 x P35,000 52,500,000 P140,500,000
Increase in fair value
2,000 x (P55,000 – P44,000) P22,000,000
1,500 x (P47,000 – P35,000) 18,000,000 40,000,000
Balance, December 31, 2015 (at FV less cost to sell) P180,500,000

(b) Increase in FV less cost to sell due to

(1) Price Change :
3 year old cows 2,000 x (P47,000 – P44,000) P6,000,000
2 year old heifers 1,500 x (P37,500 – P35,000) 3,750,000
Increase in FV due to Price Change P9,750,000

(2) Physical Change

4 year old cows 2,000 x (P55,000 – P47,000) P16,000,000
3 year old cows 1,500 x (47,000 – P37,500) 14,250,000
Increase in FV due to Physical Change P30,250,000

(c) FV less costs to sell at December 31, 2015

4 year old cows 2,000 x P55,000 P110,000,000
3 year old cows 1,500 x P47,000 70,500,000
FV less cost to sellat December 31, 2015 P180,500,000

(d) Entry at year-end

Biological Assets 40,000,000
Gain – Increase in FV less CTS due to Price Change 9,750,000
Gain – Increase in FV less CTS due to Physical Change 30,250,000
Chapter 9 – Biological Assets

9-3. (a) Price Change

2 year-old animals on Jan. 1 10 x (P10,500 – P10,000) P5,000
2.5 year-old animal on July 11 x (P11,100 – P10,800) 300
Animal born on July 1 1 x (P7,200 – P7,000) 200
Change in FV less CTS due to Price Change P5,500

Physical Change
3 year-old animals on 12/31 10 x (P12,000 – P10,500) P15,000
3 year old animal on 12/31 1 x (P12,000 – P11,100) 900
Born on July 1 (upon birth) 7,000
On December 31 P8,000 – P7,200 800
Change in FV less CTS due to Physical Change P23,700

(b) Entries for the Year

2015
July 1 Biological Assets 10,800
Cash 10,800
Purchased one animal.

1 Biological Assets 7,000

Increase in FV less CTS due to Physical Change 7,000

Dec 31 Biological Assets 22,200

Increase in FV less CTS due to Price Change 5,500
Increase in FV less CTS due to Physical Change
(23,700 – 7,000) 16,700

31 Cash {2 x (13,500 – 1,500) 24,000

Biological Assets 24,000

(c) Balance, 1/1/15 10 animals x P10,000 P100,000

Purchase 10,800
Change in FV less CTS due to Price Change 5,500
Change in FV less CTS due to Physical Change
(including the birth of one animal) 23,700
Sale at FV less CTS (24,000)
Balance, December 31, 2015 P116,000

(d) The balance at December 31, 2015 is composed of the following:

3 year old animals 9 animals x P12,000 P108,000
1 year old animal 1 animal x P8,000 8,000
Total P116,000

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Chapter 9 – Biological Assets

MULTIPLE CHOICE QUESTIONS

Theory

MC1 b MC9 b
MC2 d MC10 a
MC3 c MC11 b
MC4 d MC12 b
MC5 d MC13 b
MC6 b MC14 c
MC7 b MC15 a
MC8 b

Problems

MC15
MC16 c 450,000 + 250,000 + 220,000 + 64,000 – 290,000 = 694,000
MC17 c 220,000 + 64,000 = 284,000
MC18 c {(15,000-13,000) x 25} +{ (7,000-5,000) x 5 } + (4,000 x 5) = 80,000
MC19 a {13,000 – 12,000) 25 + (5,000 – 4,000) x 5 = 30,000
MC20 d (25 x 15,000) + (5 x 7,000) = 410,000
MC21 b 30,000 + 80,000 = 110,000
MC22 b 5,000,000 – 50,000 = 4,950,000
MC23 a 10M + 4M + 800,000 + 1.5M – 2M – 0.5M =
MC24 c 350,000-10,000 = 340,000
MC25 c 330,000 – 10,000 = 320,000
MC26 ----- 345,000 – 9,500 = 335,500; 335,500 – 320,000 = 15,500

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