Biological Assets–Problem Solving

1. Indolent Company provided the following data for the current 4. Dairy Company provided the following balances for the
year: current year:

Value of biological asset at acquisition cost Cash 500,000

on January 1 P600,000 Trade and other receivables 1,500,000
Fair valuation surplus on initial recognition Inventories 100,000
at fair value on January 1 700,000 Dairy livestock – immature 50,000
Change in fair value on December 31 due Dairy livestock – mature 400,000
to growth and price fluctuation 100,000 Property, plant and equipment, net 1,400,000
Decrease in fair value due to harvest 90,000 Trade and other payables 520,000
Decrease due to sale of biological asset 400,000 Note payable – long-term 1,500,000
Share capital 1,000,000
Required: Retained earnings – January 1 800,000
A. Prepared journal entries for the current year. Fair value of milk produced 600,000
B. Determine the carrying amount of the biological asset Gain from change in fair value 50,000
on December 31. Inventories used 140,000
Staff costs 120,000
2. On January 1, Query Company has a herd of 10 2-year old Depreciation expense 15,000
animals. One animal aged 2.5 years was purchased on July Other operating expenses 190,000
1 for P108, and one animal was born on July 1. Income tax expense 55,000

No animals were sold or disposed of during the year. The Prepare a statement of financial position and an income
active market price provided the following fair value less cost statement for Dairy Company.
of disposal:

2-year old animal on January 1 100

2.5-year old animal on July 1 108
New born animal July 1 70
2-year old animal on December 31 105
2.5-year old animal on December 31 111
New born animal o December 31 72
3-year old animal on December 31 120
0.5 –year old animal on December 31 80

Required:
A. Prepare journal entries for the current year to recognize
the transactions relating to the biological asset.
B. Determine the price change and physical change in fair
value.

3. Savvy Company is engaged in raising dairy livestock. The

entity provided the following information regarding activities
relating to the dairy livestock during the current year:

Carrying amount on January 1 5,000,000

Increase due to purchases 2,000,000
Gain arising from change in fair value less
cost of disposal attributable to price change 400,000
Gain arising from change in fair value less cost
of disposal attributable to physical change 600,000
Decrease due to sales 850,000
Decrease due to harvest 200,000

Determine the carrying amount of the biological asset on

December 31.