FORESTER COMPANY
AFRICA COMPANY
Forester Company has reclassified certain assets as
biological assets. The total value of forest assets is
P6,000,000 which comprises P5,100,000
freestanding trees, P600,000 land under trees and
P300,000 roads in forest .
Africa Company purchased 2000 llamas at the
begging of current year. These llamas will be
sheared semiannually and their wool sold to
specialty clothing manufactures. The llamas were
purchased for P5,000,000. During the current year,
the change in fair value due to growth and price
changes is P350,000, the wool harvested but not
yet sold is valued at net realizable value of
P100,000, and the decrease in fair value due to
harvest is P50,000.
What amount should be reported as biological
assets?
a.) 5,100,000
b.) 5,700,000
c.) 5,400,000
What is the carrying amount of the biological asset
at year-end?
d.) 6,000,000
a.) 5,300,000
Land under trees and roads in forest should be
classified as property, plant, and equipment.
b.) 5,400,000
c.) 5,400,000
d.) 5,100,000
SOLUTION
Llamas purchased
P5,000,000
Change in fair value
350,000
Wool harvested but not yet sold
100,000
Decrease in fair value
(50,000)
Biological assets
5,400,000
TEMERITY COMPANY
Temerity Company has different kinds of farm
animals on January 1, 2015.
During the current year, several acquisitions
occurred related to these farm animals.
A detailed of these transactions is as follows:
Carrying amount on January 1:
15 Horses
10 Dairy Cattle
8 Carabaos
20 Hogs
(1
(2
(2.5
(3
year old)
years old)
years old)
years old)
1,000,000
400,000
200,000
500,000
Purchases on June 30:
4 Dairy Cattle
6 Carabaos
(1
(6
year old)
months old)
150,000
100,000
1. What is the carrying amount of the biological
assets on December 31?
a.) 3,160,000
b.) 2,350,000
c.) 2,800,000
d.) 2,380,000
15 Horses
10 Dairy cattle
8 Carabaos
20 Hogs
Carrying amount-Jan 1
Purchases
4 Dairy Cattle
6 Carabaos
Total Biological Assets
1,000,000
400,000
200,000
500,000
2,100,000
150,000
100,000
2,350,000
Fair value less cost of disposal on December 31:
15 Horses
10 Dairy cattle
8 Carabaos
20 Hogs
4 Dairy cattle
6 Carabaos
(1
(2
(2.5
(3
(1
(6
year old)
years old)
years old)
years old)
year old)
months old)
1,200,000
520,000
250.000
550,000
170,000
110,000
2. What is the gain from change in fair value
attributable to price change?
a.) 810,000
b.) 450,000
c.) 360,000
d.) 0
Fair value less cost of disposal in December 31:
15 Horses
10 Dairy cattle
8 Carabaos
20 Hogs
4 Dairy cattle
6 Carabaos
(2
(3
(3.5
(4
(1.5
(1
years old)
years old)
years old)
years old)
years old)
year old)
1,350,000
580,000
290.000
600,000
200,000
140,000
There were no farm animals sold during the year
and neither wee there any neither newborns nor
deaths.
3.) What is the gain from changes in fair value
attributable to physical change?
a.) 810,000
b.) 450,000
c.) 360,000
d.) 700,000