At what amount should be bearer plant be reported

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Question - Martian realized his lifelong dream of becoming a vineyard owner when he was able to purchase the Hillside Vineyard at an estate auction in October 1, 2018 for P2,000,000. The fair value of the land being the contributory asset is P800,000. Martian retained the Hillside 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 Martian has limited experience in carrying off a grape harvest. At the end of the first quarter of operations, Martian is feeling pretty good about his early results. The first harvest was a success; 300 bushels of grapes were harvested with a value of P1,200,000 (based on current commodity prices at the time harvest). And given the strong yield from area vineyards during the season, the net realizable value of Martian's vineyard has increased to P2,500,000 at the end of the first quarter. The contributory asset has increased by P200,000. After storing the grapes for a short period of time, Martian was able to sell the entire harvest for P1,400,000 on December 28,2018.

1) At what amount should be bearer plant be reported in the statement of financial position of Martian at the end of the first quarter?

a. 1,200,000

b. 1,500,000

c. 2,000,000

d. 2,500,000

2) What is the net effect in the profit or loss statement of Martian related to the vineyard and the harvests?

a. 200,000 increase

b. 1,400,000 increase

c. 1,500,000 increase

d. 1,700,000 increase

Reference no: EM132805219

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