Biological Assets Quizzer

Problem 1

Forest Hill Company reclassified certain assets as biological assets. The

total value of the forest assets is P6,000,000 which comprises:

Freestanding trees 5,100,000

Land under trees 600,000
Roads in forest 300,000
6,000,000

In the statement of financial portion, what total amount of the forest

assets should be classified as biological assets?

a. 5,100,000
b. 5,700,000
c. 5,400,000
d. 6,000,000

Solution: A

Only the freestanding trees shall be classified as biological assets.

The land under the trees and roads in forests shall be included in
property, plant and equipment.
Problem 2

Majo Company provided the following data:

Value of biological asset at acquisition cost on

December 31, 2017 600,000
Fair valuation surplus on initial recognition at
Fair value on December 31, 2017 700,000
Change in fair value to December 31, 2018 due
To growth and price fluctuation 100,000
Decrease in fair value due to harvest 90,000

What is the carrying amount of the biological asset on December 31,

2018?

a. 1,400,000
b. 1,310,000
c. 1,300,000
d. 1,490,000

What is the gain from changing in fair value of biological asset that
should be reported in the 2018 income statement?

a. 100,000
b. 800,000
c. 710,000
d. 10,000
Solution:

Acquisition cost – December 31, 2017 600,000

Increase in fair value on initial recognition 700,000
Change in fair value in 2018 100,000
Decrease in fair value due to harvest (90,000)
Carrying amount – December 31, 2018 1,310,000 C.

Change in fair value in 2018 100,000

Decrease in fair value due to harvest (90,000)
Net gain 10,000 D.

Problem 3

Noemi Company has a herd of 10 2-year old animals on January 1,

2016. One animal aged 2.5 years was purchased on July 1, 2016 for
P108, and one animal was born on July 1, 2016. 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
Newborn animal on July 1 70
2 – year old animal on December 31 105
2.5 – year old animal on December 31 111
Newborn animal on December 31 72
3 – year old animal on December 31 120
0.5 – year old animal on December 31 80
What is the fair value of the biological assets on December 31, 2016?
a. 1,400
b. 1,320
c. 1,440
d. 1,360

What is the gain from change in fair value of biological assets that
should be recognized in 2016?
a. 222
b. 292
c. 300
d. 332

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

Solution:

Fair value of 3-year old animals on December 31

(11 X P120) 1,320
Fair value of 0.5 – year old animal on December 31,
The newborn (1 X P80) 80
Total fair value – December 31, 2016 1,400 A.
Fair value of 10 animals on January 1 (P10 X 100) 1,000
Acquisition cost of one animal on July 1 108
Total carrying amount of biological assets – December 31 1,108

Fair value on December 31, 2016 1,400

Carrying amount 1,108
Gain from change in fair value 292 B.

Gain from change in fair value due to price change

10 2-year old animals (105 - 100 = 5 X 10) 50

1 2.5-year old animal (111 – 108 = 3 X 1) 3
1 newborn on July 1 (72 – 70 = 2 X 1) 2
Total 55

Gain from change in fair value due to physical change:

10 3-year old animals acquired 1/1/16

(120 – 105 = 15 X 10) 150
1 3-year old animal acquired 7/1/16
(120 – 111 = 9 X 1) 9
1 0.5-year old born on 7/1/16
(80 – 72 = 8 X 1) 8
1 Newborn (70 X 1) 70
Total 237

Price change 55 D.
Physical change 237
Total gain from change in fair value 292