Reference no: EM132835483

On January 1, 2018, 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 P100,000. Transactions during the year include the following:

a. One animal aged 2.5 years was purchased on July 1, 2018 for P10,800
b. One animal was born on July 1, 2018
c. No animals were sold or disposed of during the period.

Per unit fair values less cost to sell are as follows:

1. New-born animal on July 1 7,000
2. 2-year-old animal on July 1 10,300
3. 2.5-year-old animal on July 1 10,800
4. 3-year-old animal on July 1 13,000
5. New-born animal on December 31 7,200
6. 0.5-year-old animal on December 31 8,000
7. 2-year-old animal on December 31 10,500
8. 2.5-year-old animal on December 31 11,100
9. 3-year-old animal on December 31 12,000

Requirements:

Problem 1. Prepare the necessary journal entries to record these transactions

Problem 2. What is the fair value of the biological assets on December 31, 2018?

Problem 3. What is the gain from change in fair value of the biological assets to be recognized in 2018?

Problem 4. What is the gain from change in fair value due to price change in 2018?

Problem 5. What is the gain from change in fair value due to physical change in 2018?