INTERMEDIATE ACCOUNTING 2

BIOLOGICAL ASSET

1. An entity produces milk for local ice cream producers. The entity began operations at the beginning of current year
by purchasing milking cows for P5,000,000. The entity provided the following information at year-end relating to the
milking cows:

Carrying amount- beginning of year 5,000,000

Change in fair value due to growth and price change 2,000,000
Decrease in fair value due to harvest 250,000
Newborn calf at year-end at fair value 400,000
Milk harvested during the year but not yet sold 850,000

1. What amount of gain on biological asset should be reported in the current year?

a. 2,400,000
b. 2,150,000
c. 3,000,000
d. 3,250,000
2. What amount of gain on agricultural produce should be recognized in the current year?
a. 1,250,000
b. 1,000,000
c. 850,000
d. 0
3. What is the carrying amount of the biological asset at year-end?
a. 8,000,000
b. 8,250,000
c. 7,150,000
d. 7,600,000

2. An entity provided the following assets in a forest plantation forest:

Freestanding trees 5,000,000
Land under trees 600,000
Roads in forests 300,000
Animals related to recreational activities 1,000,000
Bearer plants 1,500,000
Bearer animals 2,000,000
Agricultural produce growing on bearer plants 800,000
Agricultural produce harvested 1,200,000
1. What total amount should be classified as biological assets?
a. 7,800,000
b. 7,000,000
c. 7,500,000
d. 8,500,000
2. What total amount should be included in property, plant and equipment?
a. 5,400,000
b. 3,400,000
c. 2,900,000
d. 1,900,000
3. On January 1, 2021, an entity has a herd of 100 2-year-old animals.
Ten animals aged 2.5 years were purchased on July 1, 2021 for P10,800 each.
Ten animals were born on July 1, 2021
No animals were sold or disposed of during the year
The fair values less cost of disposal per unit were:

2-year-old animal on January 1 10,000

2.5-year-old animal on July 1 10,800
New born animal on July 11 7,000
2-year-old animal on December 31 10,500
2.5-year-old animal on December 31 11,100
Newborn animal on December 31 7,200
3-year-old animal on December 31 12,000
0.5-year-old animal on December 31 8,000

1. What is the carrying amount of the biological assets before adjustment on December 31, 2021?
a. 1,178,000
b. 1,108,000
c. 1,000,000
d. 1,070,000
2. What is the adjusted carrying amount of the biological assets on December 31, 2020?
a. 1,400,000
b. 1,440,00
c. 1,392,000
d. 1,320,000
3. What is the total gain from change in fair value of biological asset?
a. 292,000
b. 222,000
c. 400,000
d. 152,000
4. What is the gain from biological asset attributable to price change?
a. 237,000
b. 292,000
c. 222,000
d. 55,000
5. What is the gain from biological asset attributable to physical change?
a. 167,000
b. 222,000
c. 292,000
d. 237,000