Reference no: EM132795789
Question - State whether the following statements are TRUE or FALSE. Write the word TRUE if the statement is correct and the word FALSE if the statement is INCORRECT. Write the answer on the space provided before each item. Use only CAPITAL LETTERS.
-Lumber Is an agricultural produce.
-Wool is a product after harvest.
-Harvesting from unmanaged sources e.g. ocean fishing and deforestation is not agricultural activity.
-Change in quality or quantity brought about by biological transformation or harvest cannot be measured and monitored as a routine management function.
-Processes of growth, degeneration, production and procreation that causes qualitative and quantitative changes in biological assets is called biological transformation.
-Increase in quantity or improvement in quality of biological asset is called growth.
-In agricultural activity, control may be evidenced by legal ownership.
-Transport cost, finance cost and income tax are included in the cost of disposal of biological asset.
-A presumption that Fair Value can be measured reliably for biological assets is rebutted only on initial recognition.
-If fair value becomes clearly measurable, reclassification to fair value less cost top dispose is not needed if biological asset was originally recorded at cost.
-In all cases, an entity shall measure agricultural produce at point of harvest at fair value less cost to dispose.
-The journal entry to record harvested product is debit inventory, credit gain from change in FV of agricultural produce.
-The first in fair value hierarchy of biological asset is the fair value of the identical asset in the active market and then followed by the fair value of the similar asset in the active market and identical or similar assets in inactive market.
-Gain or loss may rise in initial recognition of agricultural produce as a result of harvesting.
-Agricultural land is a biological asset.
-Managing animal related recreational activities is agricultural activity.
-Bearer plants are accorded with PAS 16 but their agricultural produce shall remain accorded with PAS 41.
-It is required by PAS 41 to disclose separation between change in fair value attributable to price change and physical change.
-Biological assets are living animals and living plants.
-A group of biological assets is an aggregation of different living animals or plants.
INSTRUCTIONS: Separate figures with commas. Indicate a negative balance , loss or deduction operation with parentheses.
On December 24, 2019, the BSA Farms harvested apples with fair value of P 200,000 and an estimated cost to sell of P5,000. The apples were not recorded as biological assets while it grew on trees. At year-end, the fair value declined slightly to P390,000 and no apples had been sold at year-end. The net realizable value of the meat at year-end is P210,000. On January 1, 2020, all of the apples had been sold for P200,000, the company paid selling cost of P 1,000.
Required: Compute for the initial value of the agricultural produce.
Compute for the subsequent measurement of agricultural produce.
Compute for the net income or loss on sale.