Reference no: EM132737271
Agriculture
PT Palugada is the largest and most integrated agricultural company. As of December 31, 2020, the entity has the following biological assets:
1. Own 10 dairy cows that have produced. The entity receives benefits in the form of fresh milk from the cow.
2. Owns 100 chickens which are sold as sliced ??chickens. As many as 30 of them have been harvested and stored in the warehouse.
3. Have a mango plantation of 50 hectares with a total plant population of 100 immature trees and 200 mature trees (already bearing fruit). A mango tree will bear fruit in year 3 of initial planting, and thereafter will produce mangoes for the next 7 years.
Apart from these three biological assets, the Entity also owns 100 buffalo which are intended to be harvested for their meat and sold to third parties. The following are transactions that occurred throughout 2020 related to the buffalo biological assets:
Issuance Transaction Date
January 1, 2020, the cost of purchasing a calf buffalo is IDR 100,000
June 30 2020, The cost of the buffalo flu vaccine is 15,000,000
July 1, 2020, Cost of maintenance and fattening during semester 1, 50,000,000
November 1 2020, The cost of renting land for pasture. The lease is valid for the next 24 months. 24,000,000
Based on the results of an independent assessment, the value of 100 buffalo owned by the entity is worth IDR 3 million per head. And based on the estimate, the cost incurred to sell the buffalo is IDR 500 thousand per piece.
Instructions:
Question a. Explain the accounting treatment for each of the company's biological assets including the associated agricultural products! (Hint: Identify whether biological assets and related agricultural products fall within the scope of IAS 41)
Question b. Keep a journal throughout 2020 related to the entity's buffalo biological assets! (Hint: Can use the asset or expense approach)
Question c. If the buffalo was harvested by the entity on January 1, 2021 and sold to third parties on January 15, 2021 for IDR 3.5 million per head, make a journal related to the transaction during 2021!
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