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What amount of unrealized gain on harvest milk

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Reference no: EM132887733

Braum Dairy produces milk to sell to local and national ice cream producers. Braum Dairy began operations on January 1, 2015 by purchasing 650 milk cows for P780,000. The company controller had the following information available at year end relating to the cows:

                                                                                                Milking cows

Carrying value, January1, 2015                                      780,000
Change in fair value due to growth and price changes        242,000
Decrease in fair value due to harvest                              (28,000)
Milk harvested during 2015 but not yet sold                      36,200

Problem 1. On Braum Dairy's income statement for the year ending December 31, 2015, what amount of unrealized gain on biological assets will be reported?

a. 214,000
b. 36,200
c. 242,000
d. 0

Problem 2. On Braum Dairy's income statement for the year ending December 31, 2015, what amount of unrealized gain on harvest milk will be reported?

a. 205,800
b. 36,200
c. 8,200
d. no gain is reported until the milk is sold

Reference no: EM132887733

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