PROBLEM 1

The Basic Company, Inc. seeks your advice on the classification or reclassification of its biological
assets. The total value of the biological assets, per their records, is P17,800,000 composed of the
following:

Forest Assets:
Freestanding trees 5,000,000
Land on which the trees were planted 3,000,000
Roads in orchard 2,000,000
Palay Farm:
Palay stalks (not yet harvested) 1,500,000
Land on which the palay stalks were planted 2,500,000
Poultry:
Growing stocks - to be sold to meat dealers in one to three months from balance sheet date 1,800,000
Poultry hatching eggs 500,000
Breeding stocks 860,000
Poultry housing, net of accumulated depreciation 540,000
Eggs (for sale, as agricultural produce) 100,000

You verified that each of the foregoing is properly valued.

1. How much shall be classified as biological assets under PAS 41? 9760000 - 9660000 (9760000 -
100000)
2. How much of the foregoing shall be classified as Property, Plant and Equipment under PAS 16?
8040000
3. How much of the foregoing shall be classified as Inventory under PAS 2? 0 - 100000