Reference no: EM132754977
Problem - Fair Value Less Cost to Sell/Gain from Price and Physical Change
On January 1, 2016, the biological assets of ABC Co. consists of ten 2 year old animals with fair value less cost to sell of P10,000 each for a total of P 100,000.
Transactions during the year include the following:
One animal aged 2.5 years was purchased on July 1, 2016 for P10,800.
One animal was born on July 1, 2016.
No animals were sold or disposed of during the period.
Per unit fair values less costs to sell are as follows:
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New born animal on July 1
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P7,000
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2 - year old animal on July 1
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10,300
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2.5 - year old animal on July 1
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10,800
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3 - year old animal on July 1
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13,000
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New born animal on December 31
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7,200
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0.5 - year old animal on December 31
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8,000
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2 - year old animal on December 31
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10,500
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2.5 - year old animal on December 31
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11,100
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3 - year old animal on December 31
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12,000
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Required -
1. Prepare the necessary journal entries to record these transactions.
2. What is the fair value of the biological assets on December 31, 2016?
3. What is the gain from change in fair value of biological assets to be recognized in 2016?
4. What is the gain from change in fair value due to price change in 2016?
5. What is the gain from change in fair value due to physical change in 2016?
6. What is the amount of realized loss to be reported in profit or loss in 2016?
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