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Biological Assets Chapter Exam Intermediate Accounting 1
Accountancy 21 (Silliman University)
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Question 1
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Braum Dairy produces milk to sell to local and
national ice cream producers. Braum Dairy began
operations on January 1, 2015 by purchasing 650 milk
cows for P780,000. The company controller had the
following information available at year end relating to
the cows:
Milking cows
Carrying value, January1, 2015
P780,000
Change in fair value due to growth and price
changes
242,000
Decrease in fair value due to harvest
(28,000)
sold
Milk harvested during 2015 but not yet
P36,200
1. On Braum Dairy’s income statement for the year
ending December 31, 2015, what amount of unrealized
gain on biological assets will be reported?
P242,000P -0-P36,200P214,000
2. On Braum Dairy’s income statement for the year
ending December 31, 2015, what amount of unrealized
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gain on harvest milk will be reported?
P36,200P205,800P8,200No gain is reported until
the milk is sold.
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Braum Dairy produces milk to sell to local and national ice cream
producers. Braum Dairy began operations on January 1, 2015 by
purchasing 650 milk cows for P780,000. The company controller had
the following information available at year end relating to the cows:
Milking cows
Carrying value, January1, 2015
P780,000
Change in fair value due to growth and price changes
242,000
Decrease in fair value due to harvest
(28,000)
Milk harvested during 2015 but not yet sold
P36,200
1. On Braum Dairy’s income statement for the year ending December
31, 2015, what amount of unrealized gain on biological assets will be
reported? [P214,000]
2. On Braum Dairy’s income statement for the year ending December
31, 2015, what amount of unrealized gain on harvest milk will be
reported? [P36,200]
Question 2
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Pacifica Agribusiness has a herd of ten 2-year old
animals on January 1, 2020. One animal aged 2.5
years was purchased on July 1, 2020 for P108, and
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one animal was born on July 1, 2020. No animals
were sold or disposed of during the year. The fair
value less cost of disposal per unit is as follows:
1
2.0 - year old animal on January
P100
1
2.5 - year old animal on July
P108
1
Newborn animal on July
P 70
31
2.0 - year old animal on December
P105
31
2.5 - year old animal on December
P111
31
Newborn animal on December
P 72
31
3.0 - year old animal on December
P120
31
0.5 - year old animal on December
P 80
1.
What is the fair value of the biological assets on
December 31? P1,440P1,320P1,360P1,400
2.
What amount of gain from change in fair value
of biological assets should be recognized in the
current year? P300P332P292P222
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3.
What is the gain from change in fair value due
to price change? P222P292P55P237
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Pacifica Agribusiness has a herd of ten 2-year old animals on January
1, 2020. One animal aged 2.5 years was purchased on July 1, 2020 for
P108, and one animal was born on July 1, 2020. No animals were sold
or disposed of during the year. The fair value less cost of disposal per
unit is as follows:
2.0 - year old animal on January 1
P100
2.5 - year old animal on July 1
P108
Newborn animal on July 1
P 70
2.0 - year old animal on December 31
P105
2.5 - year old animal on December 31
P111
Newborn animal on December 31
P 72
3.0 - year old animal on December 31
P120
0.5 - year old animal on December 31
P 80
1.
What is the fair value of the biological assets on December 31?
[P1,400]
2.
What amount of gain from change in fair value of biological
assets should be recognized in the current year? [P292]
3.
What is the gain from change in fair value due to price change?
[P55]
Question 3
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A group of biological assets is an aggregation of
dissimilar living animals or plants.
Select one:
True
False
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The correct answer is 'False'.
Question 4
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Lenny’s Llamas purchased 1,500 llamas on January 1,
2015. These llamas will be sheared semiannually and
their wool sold to specialty clothing manufacturers.
The llamas were purchased for P222,000. During
2015 the change in fair value due to growth and price
changes is P14,100, the wool harvested but not yet
sold is valued at net realizable value of P27,000, and
the change in fair value due to harvest is (P1,750).
1. What is the value of the llamas on Lenny’s Llamas
statement of financial position on June 30, 2015?
P193,250P222,000P234,350P220,250
2. On Lenny’s Llamas income statement for the year
ending December 31, 2015, what amount of unrealized
gain on biological assets will be reported?
P14,100P12,350P41,100P39,350
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Lenny’s Llamas purchased 1,500 llamas on January 1, 2015. These
llamas will be sheared semiannually and their wool sold to specialty
clothing manufacturers. The llamas were purchased for P222,000.
During 2015 the change in fair value due to growth and price changes
is P14,100, the wool harvested but not yet sold is valued at net
realizable value of P27,000, and the change in fair value due to harvest
is (P1,750).
1. What is the value of the llamas on Lenny’s Llamas statement of
financial position on June 30, 2015? [P234,350]
2. On Lenny’s Llamas income statement for the year ending
December 31, 2015, what amount of unrealized gain on biological
assets will be reported? [P12,350]
Question 5
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Lucy’s Llamas purchased 1,000 llamas on January 1,
2015. These llamas will be sheared semiannually and
their wool sold to specialty clothing manufacturers.
The llamas were purchased for P148,000. During
2015 the change in fair value due to growth and price
changes is P9,400, the wool harvested but not yet sold
is valued at net realizable value of P18,000, and the
change in fair value due to harvest is (P1,150).
1. What is the value of the llamas on Lucy’s Llamas
statement of financial position on June 30, 2015?
P148,000P128,850P156,250P146,850
2. On Lucy’s Llamas income statement for the year
ending December 31, 2015, what amount of unrealized
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gain on biological assets will be reported?
P8,250P26,250P9,400P27,400
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Lucy’s Llamas purchased 1,000 llamas on January 1, 2015. These
llamas will be sheared semiannually and their wool sold to specialty
clothing manufacturers. The llamas were purchased for P148,000.
During 2015 the change in fair value due to growth and price changes
is P9,400, the wool harvested but not yet sold is valued at net
realizable value of P18,000, and the change in fair value due to harvest
is (P1,150).
1. What is the value of the llamas on Lucy’s Llamas statement of
financial position on June 30, 2015? [P156,250]
2. On Lucy’s Llamas income statement for the year ending December
31, 2015, what amount of unrealized gain on biological assets will be
reported? [P8,250]
Question 6
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The measurement of biological assets involved in
agricultural activities should be based on
a.
Historical cost
b.
Net realizable value
c.
Fair value approach
d.
Replacement cost
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The correct answer is:
Fair value approach
Question 7
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This is the detachment of produce from a biological
asset.
a.
Agricultural produce
b.
Bearing
c.
Harvest
d.
Cessation
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The correct answer is:
Harvest
Question 8
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What is the title of IAS 41?
a.
Biological Assets
b.
Biological Asset
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c.
Agricultural Activity
d.
Agriculture
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Agriculture
Question 9
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A gain or loss arising on initial recognition of a
biological asset at fair value less costs to sell and from
a change in fair value less costs to sell of a biological
asset shall be included in the other comprehensive
income for the period in which it arises.
Select one:
True
False
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Question 10
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Under International Financial Reporting Standards
(IFRS), agricultural activity can result in the
production of both agricultural produce and biological
assets.
Select one:
True
False
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Question 11
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Dolphins, which are used for recreational purposes in
water parks, should be classified in accordance with
a.
IAS 40
b.
IAS 2
c.
IAS 16
d.
IAS 41
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IAS 16
Question 12
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Biological assets, such as milking cows, are reported
as non-current assets at fair value less costs to sale
(net realizable value).
Select one:
True
False
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The correct answer is 'True'.
Question 13
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Under International Financial Reporting Standards
(IFRS), agricultural activity results in which of the
following types of assets?
I.
Agricultural produce
II.
Biological assets
a.
I and II
b.
I only
c.
Neither I nor II
d.
II only
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The correct answer is:
I and II
Question 14
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Which of the following is not an agricultural activity?
a.
Tuna fishing from ocean
b.
Farming of fish
c.
Farming of mollusks
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d.
Raising domesticated animals in an agricultural setting to produce
commodities
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Tuna fishing from ocean
Question 15
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Which of the following does not result in biological
transformation?
a.
Growth
b.
Degeneration
c.
Procreation
d.
Production
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Production
Question 16
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Which of the following is not a bearer plant?
a.
Rubber tree
b.
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Coconut tree
c.
Forest tree to be harvested and sold as lumber
d.
Apple tree
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Forest tree to be harvested and sold as lumber
Question 17
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A gain arising from the initial recognition of a
biological asset should
a.
Not be recognized
b.
Be recognized as prior period adjustment
c.
Be recognized in profit or loss
d.
Be recognized in other comprehensive income
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The correct answer is:
Be recognized in profit or loss
Question 18
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Entities often enter into contracts to sell their
biological assets or agricultural produce at a future
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date. Contract prices may be used in measuring fair
value.
Select one:
True
False
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The correct answer is 'False'.
Question 19
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Dub Dairy produces milk to sell to local and national
ice cream producers. Dub Dairy began operations on
January 1, 2015 by purchasing 840 milk cows for
P1,176,000. The company controller had the following
information available at year end relating to the cows:
Milking cows
Carrying value, January1,
2015
P1,176,000
Change in fair value due to growth and price
changes
365,000
Decrease in fair value due to
harvest
(42,000)
Milk harvested during
2015
P54,000
1. At December 31, 2015, what is the value of the
milking cows on Dub Dairy’s statement of financial
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position?
P1,134,000P1,499,000P1,541,000P1,176,000
2. On Dub Dairy’s income statement for the year
ending December 31, 2015, what amount of unrealized
gain on biological assets will be reported? P -0P54,600P365,000P323,000
3. On Dub Dairy’s income statement for the year
ending December 31, 2015, what amount of unrealized
gain on harvested milk will be reported?
P54,000P12,000P311,000No gain is reported until
the milk is sold.
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Dub Dairy produces milk to sell to local and national ice cream
producers. Dub Dairy began operations on January 1, 2015 by
purchasing 840 milk cows for P1,176,000. The company controller
had the following information available at year end relating to the
cows:
Milking cows
Carrying value, January1, 2015
P1,176,000
Change in fair value due to growth and price changes
365,000
Decrease in fair value due to harvest
(42,000)
Milk harvested during 2015
P54,000
1. At December 31, 2015, what is the value of the milking cows on
Dub Dairy’s statement of financial position? [P1,499,000]
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2. On Dub Dairy’s income statement for the year ending December
31, 2015, what amount of unrealized gain on biological assets will be
reported? [P323,000]
3. On Dub Dairy’s income statement for the year ending December
31, 2015, what amount of unrealized gain on harvested milk will be
reported? [P54,000]
Question 20
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Which of the following is an agricultural produce?
a.
Sugar
b.
Margarine
c.
Bush
d.
Apple
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Apple
Question 21
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Which of the following is an agricultural produce?
a.
Tea
b.
Wool
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c.
Sheep
d.
Tobacco plants
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Wool
Question 22
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Costs to sell are the incremental costs directly
attributable to the disposal of an asset, excluding
finance costs and income taxes.
Select one:
True
False
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Question 23
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Agricultural produce is
a.
Harvested from biological assets.
b.
Valued at the time of harvest at its cost to produce.
c.
Valued at each reporting period at its fair value less costs to sell.
d.
All of the choices are correct regarding agricultural produce.
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The correct answer is:
Harvested from biological assets.
Question 24
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Not a biological asset
a.
Egg
b.
Cow
c.
Tree
d.
Pig
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Egg
Question 25
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Broiler shall be accounted for using
a.
IAS 16
b.
IAS 41
c.
IAS 2
d.
IAS 38
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The correct answer is:
IAS 41
Question 26
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Which of the following is a biological asset?
a.
Carcass
b.
Sugar
c.
Oil palms
d.
Milk
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Oil palms
Question 27
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Grapes, after harvest, will need significant time before
it can be sold as wine. This product should be
accounted for in accordance with
a.
IAS 2
b.
IAS 41
c.
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IAS 40
d.
IAS 16
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IAS 2
Question 28
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Which of the following is not a feature of agricultural
activity?
a.
Freedom of change
b.
Management of change
c.
Capability of change
d.
Measurement of change
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The correct answer is:
Freedom of change
Question 29
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Gilbert Lacson realized his lifelong dream of
becoming a vineyard owner when he was able to
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purchase the Negros Vineyard at an estate auction in
August 2019 for P750,000. Gilbert retained the
Negros name for his new business. The purchase was
risky because the growing season was coming to an
end, the grapes must be harvested in the next several
weeks, and Gilbert has limited experience in carrying
off a grape harvest. At the end of the first quarter of
operations, Gilbert is feeling pretty good about his
early results. The first harvest was a success: 300
bushels of grapes harvested with a value of P30,000
(based on current local commodity prices at the time
of harvest). And, given the strong yield from area
vineyards during this season, the net realizable value
of Gilbert’s vineyard increased by P15,000 at the end
of the quarter. After storing the grapes for a short
period of time, Gilbert was able to sell the entire
harvest for P35,000. What is the total effect on
income for the quarter related to the Negros biological
asset and agricultural produce?
a.
P50,000
b.
P35,000
c.
P5,000
d.
P45,000
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The correct answer is:
P50,000
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Question 30
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IAS 41 is applicable to
a.
Agricultural produce at the point of harvest.
b.
Land related to agricultural activity.
c.
Bearer plants related to agricultural activity
d.
Intangible assets related to agricultural activity.
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The correct answer is:
Agricultural produce at the point of harvest.
Question 31
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This is the management of the biological
transformation and harvest of biological assets for
sale or for conversion into agricultural produce or into
additional biological assets.
a.
Biological transformation
b.
Biological management
c.
Agricultural management
d.
Agricultural activity
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The correct answer is:
Agricultural activity
Question 32
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The unrealized gains and losses related to recording
biological assets at their correct valuation are reported
as part of other comprehensive income on the
statement of comprehensive income.
Select one:
True
False
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The correct answer is 'False'.
Question 33
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In all cases, an entity measures agricultural produce
at the point of harvest at its fair value less costs to sell.
Select one:
True
False
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The correct answer is 'True'.
Question 34
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Agricultural produce is harvested from biological
assets and is measured at fair value less costs to sell at
the point of harvest.
Select one:
True
False
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The correct answer is 'True'.
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