FORESTER COMPANY AFRICA COMPANY

Forester Company has reclassified certain assets as
biological assets. The total value of forest assets is
P6,000,000 which comprises P5,100,000
freestanding trees, P600,000 land under trees and
P300,000 roads in forest .
What amount should be reported as biological
assets?
a.) 5,100,000
b.) 5,700,000
c.) 5,400,000
Africa Company purchased 2000 llamas at the
begging of current year. These llamas will be
sheared semiannually and their wool sold to
specialty clothing manufactures. The llamas were
purchased for P5,000,000. During the current year,
the change in fair value due to growth and price
changes is P350,000, the wool harvested but not
yet sold is valued at net realizable value of
P100,000, and the decrease in fair value due to
harvest is P50,000.
What is the carrying amount of the biological asset
at year-end?

d.) 6,000,000 a.) 5,300,000

Land under trees and roads in forest should be b.) 5,400,000

classified as property, plant, and equipment.
c.) 5,400,000

d.) 5,100,000

SOLUTION

Llamas purchased P5,000,000

Change in fair value 350,000
Wool harvested but not yet sold 100,000
Decrease in fair value (50,000)

Biological assets 5,400,000

TEMERITY COMPANY
Temerity Company has different kinds of farm
animals on January 1, 2015.
1. What is the carrying amount of the biological
During the current year, several acquisitions assets on December 31?
occurred related to these farm animals.
a.) 3,160,000
A detailed of these transactions is as follows: b.) 2,350,000
c.) 2,800,000
Carrying amount on January 1: d.) 2,380,000

15 Horses (1 year old) 1,000,000 15 Horses 1,000,000

10 Dairy Cattle (2 years old) 400,000 10 Dairy cattle 400,000
8 Carabaos (2.5 years old) 200,000 8 Carabaos 200,000
20 Hogs (3 years old) 500,000 20 Hogs 500,000
Carrying amount-Jan 1 2,100,000
Purchases on June 30: Purchases
4 Dairy Cattle 150,000
4 Dairy Cattle (1 year old) 150,000 6 Carabaos 100,000
6 Carabaos (6 months old) 100,000 Total Biological Assets 2,350,000
Fair value less cost of disposal on December 31:
2. What is the gain from change in fair value
15 Horses (1 year old) 1,200,000 attributable to price change?
10 Dairy cattle (2 years old) 520,000
8 Carabaos (2.5 years old) 250.000 a.) 810,000
20 Hogs (3 years old) 550,000 b.) 450,000
4 Dairy cattle (1 year old) 170,000 c.) 360,000
6 Carabaos (6 months old) 110,000 d.) 0
Fair value less cost of disposal in December 31:
3.) What is the gain from changes in fair value
15 Horses (2 years old) 1,350,000 attributable to physical change?
10 Dairy cattle (3 years old) 580,000
8 Carabaos (3.5 years old) 290.000 a.) 810,000
20 Hogs (4 years old) 600,000 b.) 450,000
4 Dairy cattle (1.5 years old) 200,000 c.) 360,000
6 Carabaos (1 year old) 140,000 d.) 700,000
There were no farm animals sold during the year
and neither wee there any neither newborns nor
deaths.