lOMoARcPSD|12190272 Biological Assets Chapter Exam Intermediate Accounting 1 Accountancy 21 (Silliman University) Studocu is not sponsored or endorsed by any college or university Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 Question 1 Correct Mark 6.00 out of 6.00 Flag question Question text 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 Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 gain on harvest milk will be reported? P36,200P205,800P8,200No gain is reported until the milk is sold. Feedback Your answer is correct. The correct answer is: 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 Correct Mark 15.00 out of 15.00 Flag question Question text 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 Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 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 Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 3. What is the gain from change in fair value due to price change? P222P292P55P237 Feedback Your answer is correct. The correct answer is: 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 Correct Mark 1.00 out of 1.00 Flag question Question text Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 A group of biological assets is an aggregation of dissimilar living animals or plants. Select one: True False Feedback The correct answer is 'False'. Question 4 Correct Mark 6.00 out of 6.00 Flag question Question text 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 Feedback Your answer is correct. The correct answer is: Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 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 Correct Mark 6.00 out of 6.00 Flag question Question text 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 Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 gain on biological assets will be reported? P8,250P26,250P9,400P27,400 Feedback Your answer is correct. The correct answer is: 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 Correct Mark 1.00 out of 1.00 Flag question Question text 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 Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 Feedback Your answer is correct. The correct answer is: Fair value approach Question 7 Correct Mark 1.00 out of 1.00 Flag question Question text This is the detachment of produce from a biological asset. a. Agricultural produce b. Bearing c. Harvest d. Cessation Feedback Your answer is correct. The correct answer is: Harvest Question 8 Incorrect Mark 0.00 out of 1.00 Flag question Question text What is the title of IAS 41? a. Biological Assets b. Biological Asset Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 c. Agricultural Activity d. Agriculture Feedback Your answer is incorrect. The correct answer is: Agriculture Question 9 Incorrect Mark 0.00 out of 1.00 Flag question Question text 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 Feedback The correct answer is 'False'. Question 10 Correct Mark 1.00 out of 1.00 Flag question Question text Under International Financial Reporting Standards (IFRS), agricultural activity can result in the production of both agricultural produce and biological assets. Select one: True False Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 Feedback The correct answer is 'True'. Question 11 Incorrect Mark 0.00 out of 1.00 Flag question Question text 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 Feedback Your answer is incorrect. The correct answer is: IAS 16 Question 12 Correct Mark 1.00 out of 1.00 Flag question Question text 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 Feedback The correct answer is 'True'. Question 13 Incorrect Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 Mark 0.00 out of 1.00 Flag question Question text 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 Feedback Your answer is incorrect. The correct answer is: I and II Question 14 Incorrect Mark 0.00 out of 1.00 Flag question Question text Which of the following is not an agricultural activity? a. Tuna fishing from ocean b. Farming of fish c. Farming of mollusks Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 d. Raising domesticated animals in an agricultural setting to produce commodities Feedback Your answer is incorrect. The correct answer is: Tuna fishing from ocean Question 15 Incorrect Mark 0.00 out of 1.00 Flag question Question text Which of the following does not result in biological transformation? a. Growth b. Degeneration c. Procreation d. Production Feedback Your answer is incorrect. The correct answer is: Production Question 16 Correct Mark 1.00 out of 1.00 Flag question Question text Which of the following is not a bearer plant? a. Rubber tree b. Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 Coconut tree c. Forest tree to be harvested and sold as lumber d. Apple tree Feedback Your answer is correct. The correct answer is: Forest tree to be harvested and sold as lumber Question 17 Correct Mark 1.00 out of 1.00 Flag question Question text 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 Feedback Your answer is correct. The correct answer is: Be recognized in profit or loss Question 18 Correct Mark 1.00 out of 1.00 Flag question Question text Entities often enter into contracts to sell their biological assets or agricultural produce at a future Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 date. Contract prices may be used in measuring fair value. Select one: True False Feedback The correct answer is 'False'. Question 19 Correct Mark 9.00 out of 9.00 Flag question Question text 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 Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 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. Feedback Your answer is correct. The correct answer is: 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] Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 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 Correct Mark 1.00 out of 1.00 Flag question Question text Which of the following is an agricultural produce? a. Sugar b. Margarine c. Bush d. Apple Feedback Your answer is correct. The correct answer is: Apple Question 21 Correct Mark 1.00 out of 1.00 Flag question Question text Which of the following is an agricultural produce? a. Tea b. Wool Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 c. Sheep d. Tobacco plants Feedback Your answer is correct. The correct answer is: Wool Question 22 Correct Mark 1.00 out of 1.00 Flag question Question text 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 Feedback The correct answer is 'True'. Question 23 Incorrect Mark 0.00 out of 1.00 Flag question Question text 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. Feedback Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 Your answer is incorrect. The correct answer is: Harvested from biological assets. Question 24 Incorrect Mark 0.00 out of 1.00 Flag question Question text Not a biological asset a. Egg b. Cow c. Tree d. Pig Feedback Your answer is incorrect. The correct answer is: Egg Question 25 Correct Mark 1.00 out of 1.00 Flag question Question text Broiler shall be accounted for using a. IAS 16 b. IAS 41 c. IAS 2 d. IAS 38 Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 Feedback Your answer is correct. The correct answer is: IAS 41 Question 26 Incorrect Mark 0.00 out of 1.00 Flag question Question text Which of the following is a biological asset? a. Carcass b. Sugar c. Oil palms d. Milk Feedback Your answer is incorrect. The correct answer is: Oil palms Question 27 Correct Mark 1.00 out of 1.00 Flag question Question text 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. Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 IAS 40 d. IAS 16 Feedback Your answer is correct. The correct answer is: IAS 2 Question 28 Correct Mark 1.00 out of 1.00 Flag question Question text 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 Feedback Your answer is correct. The correct answer is: Freedom of change Question 29 Correct Mark 5.00 out of 5.00 Flag question Question text Gilbert Lacson realized his lifelong dream of becoming a vineyard owner when he was able to Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 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 Feedback Your answer is correct. The correct answer is: P50,000 Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 Question 30 Correct Mark 1.00 out of 1.00 Flag question Question text 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. Feedback Your answer is correct. The correct answer is: Agricultural produce at the point of harvest. Question 31 Correct Mark 1.00 out of 1.00 Flag question Question text 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 Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 Feedback Your answer is correct. The correct answer is: Agricultural activity Question 32 Incorrect Mark 0.00 out of 1.00 Flag question Question text 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 Feedback The correct answer is 'False'. Question 33 Correct Mark 1.00 out of 1.00 Flag question Question text 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 Feedback The correct answer is 'True'. Question 34 Correct Mark 1.00 out of 1.00 Flag question Question text Downloaded by Keizer Silang (kzrsilang@gmail.com) lOMoARcPSD|12190272 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 Feedback The correct answer is 'True'. Downloaded by Keizer Silang (kzrsilang@gmail.com)