Alam, Siti Azrina

Ateneo de Zamboanga University 5/3/2024

School of Management and Accountancy
Accountancy Department

Financial Accounting and Reporting (FINACC1)

6th Long Quiz
May 1, 2024

Theory: Choose the letter of the correct answer (2 points each)

1. Biological assets are:
a. Living animals only
b. Living plants only
c. Both living animals and living plants
d. Neither living animals nor living plants

2. Biological assets are measured at

a. Cost
b. Lower of cost or net realizable value
c. Net realizable value
d. Fair value less cost to sell

3. Agricultural produce is measured at

a. Fair value
b. Fair value less cost to sell at the point of harvest
c. Net realizable value
d. Net realizable value less normal profit margin

4. Which of the following is correct regarding the applicability of PAS 41?

a. PAS 41 applies to biological assets and agricultural produce at the point of
harvest even if they do not relate to agricultural activities.
b. PAS 41 applies to unconditional government grant related to biological assets
measured at cost.
c. PAS 41 applies to land on which tree recognized as biological assets are planted.
d. PAS 41 applies to living plants and animals only when such items relate to
agricultural activity.

5. Changes in fair value of a biological asset or an agricultural produce are

a. Ignored
b. Include in profit or loss of the current period
c. Included in equity
d. Included in retained earnings

6. Which of the following costs is not considered as a cost to sell?

a. Commissions to brokers and dealers
b. Levies by regulatory bodies
c. Transfer taxes and duties
d. Transport and other costs necessary to get the asset to a market

7. Where the fair value of biological assets cannot be determined reliably, the
biological assets should be measured at
a. Cost
b. Cost less accumulated depreciation
c. Net realizable value
d. Cost less accumulated depreciation and accumulated impairment losses

8. The following relate to bearer biological assets

I. livestock from which milk is produced
II. grape vines
III. fruit trees
IV. trees from which firewood is harvested while the tree remains
V. trees being grown for lumber
VI. fish in farms

a. I, II, III, IV
b. II, IV, V, VI
c. I, II, III, IV, V
d. all of these

9. Which of the following is an incorrect combination?

Biological asset/
Bearer plant Agricultural produce Product after harvest
a. Trees Felled trees Logs, lumber
b. Dairy cattle Cheese Milk
c. Pigs Carcass Sausage
d. Tobacco plants Picked tobacco leaves Cured tobacco

10. Which of the following is not an encouraged disclosure under PAS 41?
a. Disclosure of consumable and bearer biological assets.
b. Disclosure of mature and immature biological assets.
c. Disclosure of principal and most advantageous market.
d. Disclosure of breakdown of total Gain/Loss from changes in Fair Value less cost to
sell during the period attributable to price change and physical change.

Problem Solving: Choose the letter of the correct answer. Provide your solution on
a separate sheet. (5 pts each)

FOR NUMBERS 1-3:

Diwata Inc. produces milk on its farms located in the Mindanao region. On December
31, 2022, the herds of cows are as follows:
• 1,000 cows (3 years old) all purchased in prior years.
• 500 heifers (1.5 years old when purchased on June 30, 2022)
• 250 heifers (2 years old) purchased on December 31, 2022

No animals were born or sold during 2023. The per unit values less costs to sell of
the animals were as follows:

On December 31, 2022

1.5 years old P14,500
2 years old P17,500
3 years old P19,000

On December 31, 2023

1.5 years old P16,000
2 years old P20,000
3 years old P23,500
4 years old P27,500

1. What amount of gain from changes in fair value due to physical change should be
recognized in the current year?
a. 5,875,000 b. 6,375,000 c. 6,625,000 d. 13,000,000

2. What amount of gain from changes in fair value due to price change should be
recognized in the current year?
a. 5,875,000 b. 6,375,000 c. 6,625,000 d. 13,000,000

3. What is the total gain from changes in fair value less costs to sell during 2023?
a. 5,875,000 b. 6,375,000 c. 6,625,000 d. 13,000,000

FOR NUMBERS 4-5:

Tito Mars Company provided the following assets in a forest plantation and farm:
Freestanding trees 5,000,000
Land under trees 600,000
Roads in forest 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
Plants with dual use 1,400,000

4. What amount should be reported as biological assets?

a. 7,800,000 b. 7,200,000 c. 8,400,000 d. 9,200,000

5. What amount should be reported as property, plant, and equipment?

a. 4,600,000 b. 3,400,000 c. 1,800,000 d. 4,200,000

6. Jamal Murray is in business of deer farming. A herd of one hundred deer is held
throughout the financial year of 2019. The only change during the year is the increase
in their physical attributes due to aging from two to three years. The relevant data
are as follows:

Fair value of a 2-year old deer at January 1, 2019 P3,000

Fair value of a 2-year old deer at December 31, 2019 3,300
Fair value of a 3-year old deer at December 31, 2019 4,800

How much is the increase in the fair value of the biological asset due to physical
change?
a. P30,000
b. P150,000
c. P180,000
d. P480,000

7. Jokic Co. is engaged in raising dairy livestock. The entity provided the following
information during the current year:

Carrying amount on Jan. 1 5,000,000

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

What is the carrying amount of the biological asset on December 31?

a. 6,950,000 b. 6,000,000 c. 8,000,000 d. 7,150,000

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