Reference no: EM132938492
Question - Angsana Plantation Bhd (APB) owns an oil palm plantation in Melaka. As at the end of the reporting period, the fair value of the plantation including the land was RM30 million. The fair value of the land was RM13 million.
APB also owns and manages a durian orchard in Bentong, Pahang. The company has incurred the following costs in establishing the orchard in the year 2018.
Cost RM
Land 2,000,000
Seedlings 90,000
Plant and Equipment 160,000
Fertilizers 30,000
Salaries and Wages 20,000
The company expected its first harvest in 2023 and the orchard is expected to have a life of 30 years from the date of its first harvest. On 1 January 2018, APB had diversified its business by purchasing 500 sheep at cost of RM250,000. It is estimated the fair value of sheep in the market on 31 December 2018 is RM257,500. APB estimated that the commission to dealers is about RM1,500 if they decide to sell the sheep. The company has to incur transportation cost of RM1,000 to market the sheep.
Required -
Explain how APB account for its oil palm plantation in Melaka.
Discuss how to determine the fair value of the durian orchard in Bentong.
Determine how APB shall account the costs incurred for the durian orchard.
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