Reference no: EM132839624

An entity produces milk for local ice cream producers. The entity began operations at the beginning of current year by purchasing milking cows for P5,000,000. The entity provided the following information at year-end relating to the milking cows:

Carrying amount- beginning of the year 5,000,000

Change in fair value due to growth and price change 2,000,000

Decrease in fair value due to harvest 250,000

Newborn calf at year-end at fair value 400,000

Milk harvested during the year but not yet sold 850,000

Problem 1: What amount of gain on biological asset should be reported in the current year?

a. 2,400,000

b. 2,150,000

c. 3,000,000

d. 3,250,000

Problem 2: What amount of gain on agricultural produce should be recognized in the current year?

a. 1,250,000

b. 1,000,000

c. 850,000

d. 0

Problem 3: What is the carrying amount of the biological asset at year-end?

a. 8,000,000

b. 8,250,000

c. 7,150,000

d. 7,600,000