Biological Assets
1. It is the management by an entity of the biological
transformation and harvest of biological asset for sale
or for conversion into agricultural produce or into
additional biological asset
 Agricultural activity
2. Which of the following is not dealt with by PAS 41?
 The processing of agricultural produce after
harvesting
3. A gain or loss arising on the initial recognition of a
biological asset and from a change in the fair value less
cost to sell of a biological asset shall be included in
 The profit or loss for the period
4. Under IAS 41 Agriculture, which among the following
is not included in cost to sell of an agricultural produce?
 Cost of getting the assets to market
5. An active market is a market where all of the
following conditions exist, except
 The items traded are heterogeneous
6. The biological assets are
 Both living animals and living plants
7. A gain or loss arising on the initial recognition of a
biological asset and from a change in the fair value less
costs to sell of a biological asset shall be included in
 The profit or loss for the period
8. Which of the following is unlikely to be used in fair
value measurement?
 External independent valuation
9. Regarding the choice of measurement basis used for
measuring biological assets. PAS 41
 Sets out several ways of measuring fair value
10. If a government grant related to a biological asset is
conditional on certain events, the grant shall be
recognized as
 Income when the conditions attaching to the
grant are met
11. Land that is related to agricultural activity is
measured
 In accordance with PAS 16, Property, plant and
equipment or PAS 40 Investment property
12. Farm lots held by an entity engaged in agriculture
are classified on the entity’s statement of financial
position as
 Property, Plant and Equipment
13. Which of the following statements in relation to
agricultural produce is correct?
I: In all cases, an entity shall measure agricultural
produce at the point of harvest at fair value less cost to
sell
II: PAS 41 reflects the view that the fair value of
agricultural produce at the point of harvest can always
be measured reliably
 Both 1 and 2
14. If the fair value of the biological asset, previously
measured at cost less accumulated depreciation,
becomes reliably measurable, the entity must
 Switch to the fair value less cost to sell
measurement basis, the amount of adjustment
taken to profit or loss
15. An entity owns a number of hers of cattle. Where
should changes in the fair value of a herd of cattle be
recognized in the financial statements?
 In profit or loss only
16. Biological transformation
I: Comprises the processes of growth, degeneration,
production and procreation that cause qualitative or
quantitative changes in a biological asset (true)
II: Is the detachment of produce from a biological asset
or the cessation of a biological asset’s life processes
(false)
 1 only
17. Which of the following information shall be
disclosed under PAS/IAS 41?
 The aggregate gain or loss arising on the initial
recognition of biological assets and agricultural
produce and from the change in fair value less
cost to sell of biological assets
18. Where there is a long aging or maturation process
after harvest, the accounting for such products shall be
dealt with by
 PAS 2: Inventories
19. Agricultural produce is measured at
 Fair value less costs to sell at the point of
harvest
20. Where there is a production cycle of more than one
year for a biological asset, PAS 41 encourages separate
disclosure of
 Physical change and price change
21. According to IASB, bearer plants should be
accounted for as
 Property, Plant and Equipment
22. It is the harvested product of the entity’s biological
assets
 Agricultural Produce
23. Generally speaking, biological assets should be
measured using
 A fair value approach
24. Biological transformation results from asset changes
through all of the following except
 Production of agricultural produce
25. An entity had a plantation forest that is likely to be
harvested and sold in 30 years. The income should be
accounted for in which of the following way?
 Income should be measured annually and
reported using a fair value approach that
recognizes and measures biological growth
26. When the fair value of the biological asset cannot be
determined reliably, the biological asset shall be
measured at
 Cost less accumulated depreciation and
accumulated impairment losses
27. All of the following criteria must be satisfied before
a biological asset can be recognized in an entity’s
financial statements, except?
 An active market for the asset exists
28. Animals related to recreational activities shall be
accounted for under what standard?
 IAS 16: Property, Plant and Equipment
29. Which of the following is unlikely to be used in fair
value measurement?
 External independent valuation
30. Which of the following statements is true about
biological assets?
 Biological assets are living animals or plants and
must be disclosed as a separate item in the
statement of financial position
31. When agricultural produce is harvested, the harvest
shall be accounted for by using PAS 2: Inventories, or
another applicable PFRS. For the purpose of that
standard, cost at the date of harvest is deemed to be
 The fair value less costs to sell at the point of
harvest
32. Agricultural activity includes all of the following,
except
 Ocean fishing
33. An unconditional government grant related to a
biological asset that has been measured at fair value
less cost to sell shall be recognized as
 Income when the grant becomes receivable
34. Which of the following costs should not be included
in costs to sell?
 Transport costs
35. Biological assets are measured at
 Fair value less costs to sell
36. According to IASB, bearer plants should be
accounted for as
 Property, Plant and Equipment
37. Mature bearer plant is measured using
 Either cost model or revaluation model
38. According to IASB, bearer animals are accounted for
as
 Biological assets
39. According to PAS 41, all of the following would be
classified as biological assets, except?
 Eggs
40. Which of the following statements is true about
agricultural produce?
 All of these statements are true
41. Which of the following would be classified as a
product that is the result of processing after harvest?
 Cheese
42. A living plant that is used in the production or
supply of agricultural produce is expected to bear
produce for more than 1 period, and has a remote
likelihood of being sold, except for incidental scrap
sales, is most appropriately presented in the statement
of financial position as part of?
 Property, plant and equipment
COMPUTATION:
1. Dayag Farm:
If the bearer plants are considered to have dual purpose
and assuming 80% of the fruits were harvested on
December 28, 2018, what is the net effect in the profit
or loss of dayag farms in relation to the bearer plants
and agricultural produced in its December 31, 2018
statement of comprehensive income?
 3,880,000
If the bearer plants are considered to have a dual
purpose, by what amount of the change in the fair value
of the bearer plants that pertains to price during the
year?
 1,680,000
2. Braum Dairy: On braum dairy’s income statement for
the year ending December 31, 2027, what amount of
unrealized gain on biological assets will be reported?
 214,000
3. CL Farms:
At what amount shall the harvested corn be initially
recognized?
 340,000
How much profit (loss) did the company realize from
the sale of the corn in 2029?
 15,500
The inventory of corn shall be presented at the yearend
statement of financial position?
 320,000
4. Martian:
At what amount should be bearer plants be reported in
the statement of financial position of Martian at the
end of the first quarter?
 2,500,000
What is the net effect in the profit or loss statement of
Martian related to the vineyard and the harvest?
 1,500,000 increase
5. A group of twenty 2-year-old cattle:
Assume that ten 3-year old cattle were sold realizing net
proceeds of 15,000 on each cattle. How much gross
income shall be reported on the company’s profit or
loss for the year ended December 31, 2029?
 110,000
How much shall be taken to profit or loss as a gain
arising from change in fair value due to price change?
 30,000
How much shall be taken to profit or loss as a gain
arising from change in fair value due to physical
change?
 80,000
What amount shall be presented on the statement of
financial position on December 31, 2029 under the
heading, Biological Assets?
 410,000
6. Fortune Company:
What amount should the biological assets be reported
in the December 31, 2024 statement of financial
position?
 487,000
What amount of gain or loss should the company
include in the statement of comprehensive income due
to the change in the fair value of the biological asset?

 196,000

What amount should the biological assets be initially

recognized?

 291,000

7. Tiffany Company:

What is the gain from changes in fair value that should

be reported for 2022?

 292,000

What is the carrying amount of the biological assets on

December 31, 2022?

 1,400,000

8. R Farms:

What amount shall be included in gross income of R

Farms as a result of the transactions on its dairy
livestock?

 284,000

At what amount should the biological assets be carried

on the statement of financial position at December 31,
2029?

 694,000

9. Maisie Company: What is the carrying amount of the

biological asset on December 31, 2026?

 6,950,000

10. Rainbow Company:

How much of the increase in the fair value of the

biological assets due to physical change?

 118,500

How much of the increase in the fair value of the

biological assets due to price change?

 27,500

What is the fair value of the biological assets as of

December 31, 2024?

 700,000