Biological Assets

FINANCIAL ACCOUNTING AND REPORTING /RGP, CPA.
BIOLOGICAL ASSETS
MULTIPLE CHOICE THEORIES
1. Determine which of the following is outside the scope of PAS 41 assuming all are related to agriculture.
I. Land where the consumable plants are growing.
II. Government grant related to bearer animals.
a. I only c. Both I and II

b. II only d. Neither I nor II
2. Which of the following best describes agriculture?

a. The management by an entity of the biological transformation and harvest of biological assets for sale or for
conversion into agricultural produce or into additional biological assets.
b. Comprises the process of growth, degeneration, production and procreation that cause qualitative or quantitative
changes in a biological asset.
c. Is the detachment of produce from a biological asset or the cessation of a biological asset’s life processes.
d. Is the harvested product of the entity’s biological assets.
3. Agricultural activity includes which of the following:

I. Fishing in the open sea
II. Logging on forest or plantation
a. I only c. Both I and II

b. II only d. Neither I or II
4. Evaluate whether the following statements are true or false in relation to PAS 41 Agriculture
I. All animals related to agricultural activity is within the scope of PAS 41.
II. It is presumed that the fair value of an agricultural produce can always be measured reliably.
III. Biological assets may be initially and subsequently measured at cost.
a. False, false, true c. True, true, false

b. True, false, false d. False, true, true
5. Which of the following statements are true?

I. Consumable plants are accounted for as biological assets
II. Consumable plants are accounted for as property, plant and equipment
III. Consumable animals are accounted for as biological assets
IV. Consumable animals are accounted for as property, plant and equipment
a. I and III c. I and IV

b. II and III d. II and IV
6. Agricultural produce harvested from bearer plant is accounted for as

a. Biological assets c. Investment property
b. Property, plant and equipment d. Inventory
7. Which of the following statements are correct concerning biological assets?

I. Biological assets are measured at fair value less cost to sell
II. When the fair value of a biological asset cannot be reliably measured, that biological asset shall be measured at
cost less accumulated depreciation and impairment losses
III. PAS 41 encourages the separate disclosure of the physical change and price change of biological assets
IV. PAS 41 requires the separate disclosure of the physical change and price change of biological assets
a. I only c. I, II and III

b. I and II only d. I, II and IV
FINANCIAL ACCOUNTING AND REPORTING /RGP, CPA. 1

PROBLEM 1
The following information pertains to the agricultural activity of RAIJIN CORP. for the year ended December 31, 2022:
Fruit trees P300,000

Picked fruit 100,000
Animals related to recreational activities 350,000
Dairy cattle 200,000
Bottled milk 120,000
Lumber and logs 180,000
Land used in agricultural activity 600,000
Coffee plants 170,000
Harvested coffee beans 60,000
Peanut plants 160,000
Plants with dual use 450,000
Wooden furniture 130,000
Oil palms 200,000
Palm oil 70,000
Sheep 90,000
Wool 40,000
Pigs 150,000
Carcasses 85,000
Cured ham 70,000
Maize plants 175,000
Trees in lumber plantation 420,000
Roads to gain access in the lumber plantation 550,000
REQUIRED: Determine the total amount of the following: (a) Biological Assets under PAS 41 (b) Agricultural Produce under PAS 41
(c) Property, Plant and Equipment under PAS 16 (d) Inventory under PAS 2
PROBLEM 2
INAI CORP. is engaged in producing milk which are later sold to various ice cream manufacturers. Information regarding activities
relating to its milking cows during the current year is as follows:
Carrying amount on January 1 P500,000

Increase due to purchases 330,000
Gain arising from change in fair value less cost
to sell attributable to price change 80,000
Gain arising from change in fair value less cost
to sell attributable to physical change 100,000
Decrease due to sales 125,000
Decrease due to harvest 30,000
Milk harvested during the year but not yet sold 88,000
REQUIRED: What is the carrying amount of the biological assets on December 31?
PROBLEM 3
On January 1, 2023 the biological assets of LEORIC CORP. 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:

 One animal aged 2.5 years was purchased on July 1, 2023 for P10,800.
 One animal was born on July 1, 2023.
 No animals were sold or disposed during the period.

Per unit fair values less costs to sell are as follows:
JULY 1, 2023
New-born animal P 7,000
2.5 years old animal 10,800
DECEMBER 31, 2023

New-born animal 7,200
0.5 year old animal 8,000
2 years old animal 10,500
2.5 years old animal 11,100
3 year old animal 12,000
REQUIRED: Compute for the following:

(a) Change in fair value less cost to sell attributable to price change
(b) Change in fair value less cost to sell attributable to physical change
-END OF HANDOUTS-

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FINANCIAL ACCOUNTING AND REPORTING /RGP, CPA.

MULTIPLE CHOICE THEORIES

a. I only c. Both I and II

2. Which of the following best describes agriculture?

3. Agricultural activity includes which of the following:

a. I only c. Both I and II

a. False, false, true c. True, true, false

5. Which of the following statements are true?

a. I and III c. I and IV

6. Agricultural produce harvested from bearer plant is accounted for as

7. Which of the following statements are correct concerning biological assets?

a. I only c. I, II and III

FINANCIAL ACCOUNTING AND REPORTING /RGP, CPA. 1

Fruit trees P300,000

Carrying amount on January 1 P500,000

Transactions during the year include:

FINANCIAL ACCOUNTING AND REPORTING /RGP, CPA. 2

DECEMBER 31, 2023

REQUIRED: Compute for the following:

FINANCIAL ACCOUNTING AND REPORTING /RGP, CPA. 3

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