2014 Vol 1 Ch 9 Answers

Chapter 9 – Biological Assets

CHAPTER 9 BIOLOGICAL ASSETS

9-1.

(ABC Farms) (a) Carrying value of Biological Assets, 12/31/12 Cost of biological assets purchased during 2013 Fair valuation loss on initial recognition Change in fair value due to biological transformation and price fluctuations Decrease in fair value due to harvest Biological Assets, 12/31/13 (b)

9-2.

Loss on initial recognition at FV less cost to sell Increase in FV less costs to sell

(Ranchero Corporation) (a) Balance of Biological Assets at December 31, 2012 3 years old = 2,000 x P44,000 P88,000,000 2 years old = 1,500 x P35,000 52,500,000 Increase in fair value 2,000 x (P55,000 – P44,000) P22,000,000 1,500 x (P47,000 – P35,000) 18,000,000 Balance, December 31, 2013 (at FV less cost to sell)

P2,800,000 3,200,000 ( 150,000) 2,000,000 (1,000,000) P6,850,000 P 150,000 P2,000,000

P140,500,000

40,000,000 P180,500,000

(b) Increase in FV less cost to sell due to (1) Price Change : 3 year old cows 2,000 x (P47,000 – P44,000) 2 year old heifers 1,500 x (P37,500 – P35,000) Increase in FV due to Price Change (2) Physical Change 4 year old cows 2,000 x (P55,000 – P47,000) 3 year old cows 1,500 x (47,000 – P37,500) Increase in FV due to Physical Change (c) FV less costs to sell at December 31, 2013 4 year old cows 2,000 x P55,000 3 year old cows 1,500 x P47,000 FV less cost to sell at December 31, 2013

P6,000,000 3,750,000 P9,750,000

P16,000,000 14,250,000 P30,250,000

P110,000,000 70,500,000 P180,500,000

(d) Entry at yearend Biological Assets 40,000,000 Gain – Increase in FV less CTS due to Price Change 9,750,000 Gain – Increase in FV less CTS due to Physical Change 30,250,000 9-3. (a)

Price Change 2 year-old animals on Jan. 1 10 x (P10,500 – P10,000) 2.5 year-old animal on July 1 1 x (P11,100 – P10,800) Animal born on July 1 1 x (P7,200 – P7,000) Change in FV less CTS due to Price Change

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P5,000 300 200 P5,500

Chapter 9 – Biological Assets

Physical Change 3 year-old animals on 12/31 10 x (P12,000 – P10,500) 3 year old animal on 12/31 1 x (P12,000 – P11,100) Born on July 1 (upon birth) On December 31 P8,000 – P7,200 Change in FV less CTS due to Physical Change (b) Entries for the Year 2013 July 1 Biological Assets Cash Purchased one animal.

P15,000 900 7,000 800 P23,700

10,800

1 Biological Assets 7,000 Increase in FV less CTS due to Physical Change

10,800

7,000

Dec 31 Biological Assets 22,200 Increase in FV less CTS due to Price Change 5,500 Increase in FV less CTS due to Physical Change (23,700 – 7,000) 16,700 31 Cash {2 x (13,500 – 1,500) Biological Assets (c)

24,000

Balance, 1/1/13 10 animals x P10,000 Purchase Change in FV less CTS due to Price Change Change in FV less CTS due to Physical Change (including the birth of one animal) Sale at FV less CTS Balance, December 31, 2013

(d)

24,000

P100,000 10,800 5,500 23,700 (24,000) P116,000

The balance at December 31, 2013 is composed of the following: 3 year old animals 9 animals x P12,000 P108,000 1 year old animal 1 animal x P8,000 8,000 Total P116,000

MC1 MC2 MC3 MC4 MC5 MC6 MC7

B D C D D B B

MC15 MC16 MC17 MC18

C C C A

MULTIPLE MC8 MC9 MC10 MC11 MC12 MC13 MC14

CHOICE B A B B B C A

450,000 + 250,000 + 220,000 + 64,000 – 290,000 = 694,000 220,000 + 64,000 = 284,000 {(15,000-13,000) x 25} +{ (7,000-5,000) x 5 } + (4,000 x 5) = 80,000 {13,000 – 12,000) 25 + (5,000 – 4,000) x 5 = 30,000

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Chapter 9 – Biological Assets MC19 MC20 MC21 MC22 MC23 MC24 MC25

D B B A C A

(25 x 15,000) + (5 x 7,000) = 410,000 30,000 + 80,000 = 110,000 5,000,000 – 50,000 = 4,950,000 10M + 4M + 800,000 + 1.5M – 2M – 0.5M = 350,000-10,000 = 340,000 330,000 – 10,000 = 320,000 345,000 – 9,500 = 335,500; 335,500 – 320,000 = 15,500

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