Reference no: EM132906415

Biological Assets

• In 2010, Stone Beauty Limited established and commenced the operation of a Flower business in Suva. The trees were planted in 2017 and began producing saleable flowers in 2019.
• In 2020, 75% of the flowers were sold immediately, as they were picked, for a sale price of $145 000. Selling costs are assumed to be immaterial. The remaining 25% of the chosen flowers are recognized as inventories at the end of the reporting period.
• The fair value less the estimated point of sale costs of the flower trees on 30th June 2019 (the end of the previous reporting period) was $85 000, and on 30th June 2020, $100 000. During the reporting period ending 30th June 2020, employee expenses, fertilizers, lease expense, and other expenses amount to $30 000.
• The fair value less estimated point of sale costs of the flowers immediately after picking and packing to $50 000. Picking and packaging cost amount to $15 000.

Required:

Problem 1: Prepare the journal entries to record:

a) The cost incurred to maintain the biological assets;

b) The harvesting of the agricultural produce from the biological asset;

c) The sale of the agricultural produce and

d) The change in fair values for the biological assets between ends of the two reporting periods