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Biological-Assets - Biological Asset
Accountancy (De La Salle University)
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Problem 1
Identify the proper classification of each items:
PAS 41 – A (Agricultural produce)
PAS 41 – B (Biological Assets)
PAS 2 – Inventory
PAS 16 – PPE
The following information pertains to Quack Quack Bibe Co., a company operating in a diverse agricultural
activity.
Sheep
400,000 PAS 41 BA
Felled trees
2,680,000 PAS 41 AP
Harvested cane
1,160,000 PAS 41 AP
Coconut trees
4,800,000 PAS 16 PPE
Dairy cattle
4,000,000 PAS 41 BA
Cigarette (Marlboro)
41,000 PAS 2 I
Sausages
20,000 PAS 2 I
Cured hams
36,000 PAS 2 I
Pig carcass
230,000 PAS 41 AP
Fruit pickles
120,000 PAS 2 I
Trees in a plantation forest
12,000,000 PAS 41 BA
Harvested cabbage
40,000 PAS 41 AP
Carpet
260,000 PAS 2 I
Grape vines
1,500,000 PAS 16 PPE
Picked grape fruit
180,000 PAS 41 AP
Wool
160,000 PAS 41 AP
Tea
38,200 PAS 2 I
Harvested Cotton
1,360,000 PAS 41 AP
Plants
1,400,000 PAS 41 BA
Thread
80,000 PAS 2 I
Carrots due to be harvested next week
200,000 PAS 41 BA
Low fat milk
520,000 PAS 2 I
Wine
6,000,000 PAS 2 I
Picked fruit
49,400 PAS 41 AP
Frozen Lechon
120,000 PAS 2 I
Mango tree with ripe mango not yet harvested
1,400,000 PAS 16 PPE
Guard dogs
300,000 PAS 16 PPE
Animals in zoo
24,000,000 PAS 16 PPE
Dinosaur statue in zoo
1,000,000 PAS 16 PPE
Tomato vines (with fruit ready for harvest)
500,000 PAS 16 PPE
Strawberry plants
1,500,000 PAS 16 PPE
How much is classified as:
1.) Biological assets __________________
2.) Agricultural produce _______________
3.) Inventory ________________________
4.) Property, plant and equipment __________
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Problem 2
Since Angelito is already tired and sick of teaching, he decided to migrate to Australia. After two years of
working in Australia, Angelito bought a land and decided to form a farming entity to be called “Boy Macho
Farming Co.”
On December 31, 2018, Boy Macho Farming Co has a herd of dairy cattle whose fair value less cost to sell at
the reporting date was 400,000 bucks. The equivalent value of the herd at the beginning of the year was
350,000 bucks. The increase was due partly to purchases of animals made during April 1, 2018 at a cost of
20,000 bucks.
Questions:
1. Does PAS41 apply in this situation? Yes
2. At what amount is the herd carried on the statement of financial position? P400,000, its FVLCS at the
reporting date
3. What is the overall gain from this activity during the year? P30,000.
FVLCS, Beg
P350,000
FVLCS, End
400,000
Increase
P 50,000
Less: Purchases
20,000
Overall Gain
P 30,000
4. Does the gain have to be disaggregated under PAS 41’s disclosure requirements? The gain of P30,000 is
not required to be disaggregated under PAS 41 due to physical change or change in fair value, but it is
only encouraged.
Problem 3
Boy Macho Farming Co. also has a flock of sheep which were born shortly before year end. On November 1,
2018, time of shearing, the fair value of the wool less costs to sell was determined to be 15,000 bucks, and this
value had risen to 16,500 bucks by December 31, 2018. The financial statement was authorized for issue on
April 1, 2019.
Questions:
1. At the point of harvest, is this wool covered under PAS 41? Yes, wool is classified as agricultural produce
under PAS41.
2. Under PAS 41, at what point is the wool measured? It is measured at its fair value less costs to sell at
the time of harvest (shearing).
3. It is necessary for the wool to be subsequently revalued under PAS41? No, after the point of harvest
(shearing), the wool should be dealt under PAS 2 Inventories (Initially measured at cost; subsequently
measured at LCNRV)
4. At what value is this agricultural produce carried on the statement of financial position? P15,000 bucks.
Since the wool is subsequently measured under PAS 2, it should be measured at lower of cost or net
realizable value. The value of 16,500 which is assumed to be indication of NRV, is ignored since it is
higher than its cost of 15,000 bucks.
5. Ignoring the fair value at December 31, 2018, at what value is this agricultural produce carried on the
statement of financial position assuming the wool was subsequently sold on February 18, 2019 at
14,500 bucks (after deducting cost to sell of 1,500 bucks)? P14,500 bucks. If no fair value or NRV was
provided on December 31, 2018, the selling price of the wool on February 28, 2019 (which is before the
FS are authorized for issue) is considered an indication of the NRV of the wool as of the reporting date
under PAS10, therefore it should be considered in measuring the NRV of the inventory on December
31, 2018. Therefore, the wool is measured at 14,500 bucks, which is lesser than its cost of 15,000.
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Problem 4
As well as the wool from its own sheep, at December 31, 2018, Boy Macho Farming Co. also held wool that it
had purchased from three other farms at a cost of 30,000 bucks. The fair value less costs to sell of this wool
was determined to be 32,000 bucks at December 31, 2018. This wool was subsequently sold for 29,000 bucks
(after deducting costs to sell) on March 2, 2019.
Questions:
1. Is the wool purchased from third party covered under PAS 41? No. The purchased wool is included
within the scope of PAS2, not PAS41, because the wool was purchased, rather than harvested by the
entity.
2. At what value is the purchased wool carried on the balance sheet? The inventory (wool) should be
measured at LCNRV of 29,000 bucks.
Problem 5. Biological assets
Mervin Co, has three, 1-year old animals with total carrying amount of P3,000 on January 1, 20X1. On March
31, Mervin acquired two animals aged 2.25 years old each, for P2,000 each, the fair value less costs of the
animals on this date. Six animals were born on October 1, 20X1. The fair value less costs to sell of a newborn
animal on this date is P500.
Mervin determined the following fair values less costs to sell on December 31, 20X1:
Newborn
P600
.25 year old
800
1 year old
1,200
2 years old
2,400
2.25 years old
3,000
3 years old
3,500
QUESTIONS:
1. How much is the total gain (loss) from the change in FVLCS during the period?
2. How much is the change in FVLCS due to price change
3. How much is the change in FVLCS due to physical change
Problem 6. Biological assets SW
A herd of 10 2-year old animals was held at January 1, 2018. One animal aged 2.5 years was purchased on July
1, 2018 for P1,080, and one animal was born on July 1, 2018. No animals were sold or disposed of during the
period. Per unit fair value less costs to sell were as follows:
Jan 1, 2018
July 1, 2018
Dec. 31, 2018
New born animal
P700
P720
½ year old animal
800
2-year old animal
P1,000
1,050
2 ½ year old animal
1,080
1,110
3 year old animal
1,200
1.
2.
3.
4.
How much is the total gain (loss) from the change in FVLCS during the period?
How much is the change in FVLCS due to price change
How much is the change in FVLCS due to physical change
How much is the FVLCS of herd at December 31, 2018?
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