Biological Assets
Biological Assets
Agricultural Produce
Product after Harvest - Inventory
FV less cost of disposal
Bearer plant
Tim Company has different kinds of farm animals on January 1, 2024.
During the current year, several acquisitions occurred related to these farm animals.
A detailed summary of these transactions is as follows:
Carrying amount on January 1:
15Horses
(1 year old)
1,000,000
10 dairy cattle (2 years old)
400,000
8 Carabaos
(2.5 years old)
200,000
20 Hogs
(3 years old)
500,000
Purchases on June 30:
4 Dairy cattle (1 year old)
150,000
6 Carabaos (6 months old)
100,000
Fair value less cost of disposal on December 31:
15 Horses (1 year old)
1,200,000
10 Dairy cattle (2 years old)
520,000
8 Carabaos (2.5 years old)
250,000
20 hogs (3 years old)
550,000
4 Dairy Cattle (1 year old)
170,000
6 Carabaos (6 months old)
110,000
Fair value less cost of disposal on December 31:
15 horses (2 years old)
1,350,000
10 Dairy Cattle (3 years old)
580,000
8 Carabaos (3.5 years old)
290,000
10 Hogs (4 years old)
600,000
4 Dairy Cattle (1.5 years old)
200,000
6 Carabaos (1 year old)
140,000
There were no farm animals sold during the year and neither were there any new borns nor deaths.
What is the carrying amount of the biological assets on December 31?
3,160,000
What is the gain from change in fair value attributable to price change?
FV Dec. 31 (same age) 2,800,000
CA
2,350,000
Price Change
450,000
What is the gain from change in fair value attributable to physical change?
3,160,000 – 2,800,000 = 360,000
Problem 2
On January 1, Queen Company has a herd of 10 2-year old animals. One animal aged 2.5 years was
purchased on July 1 for P108, and one animal was born on July 1. No animals were sold or disposed of
during the year. The active market provided the following fair value less cost of disposal:
2-year old animal on January 1
100
2.5 – year old animal on July 1
108
New born animal on July 1
70
2 -year old animal on December 31
105
2.5 year old animal on December 31
111
New born animal on December 31
72
3 – year old animal on December 31
120
0.5 – year old animal on December 31
80
Required:
1.Prepare journal entries for the current year to recognize the transactions relating to the biological
asset.
2.Determine the price change and physical change in fair value.
Price Change 55,000
Physical Change 237,000
105-100 = 5 x 10 = 50,000
111-108
3,000
72-70
2,000
55,000
120-105= 15 x 10 = 150
120-111
=9
80-72
8
70
70
= 237,000