What is the net effect in the profit or loss of dayag farms

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Reference no: EM132784264

Dayag Farms is into cultivating agricultural lands. As of January 1, 2018, the company has a farm located in the province of Cagayan that consist of two age group of bearer trees, 3-year old and 4-year old. The following are relevant information:

5-year old trees started to bear fruit during the last quarter of the year. As of December 31, 2018, only 5-year old trees bear fruits that are ready to be harvested. The estimated fair value less cost to sell for the fruits is P500,000. There was no change in the fair value of the contributory asset (land) as of December 31, 2018.

Problem 1: If the bearer plants are considered to have dual purpose, and assuming 80% of the fruits were harvested on December 28, 2018, what is the net effect in the profit or loss of Dayag Farms in relation to the bearer plants and agricultural produced in its December 31, 2018 statement of comprehensive income?

A. P3,980,000

B. P3,880,000

C. P3,480,000

D. P1,000,000

Attachment:- dayag.zip

Reference no: EM132784264

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