San Sebastian College Recoletos

Canlubang Campus

Financial Management II

BIOLOGICAL ASSETS

1. Bernadette Company reclassified certain assets as biological assets. The total value of the forest
assets is 6,000,000 which comprised the following:

Freestanding trees 5,100,000

Land under trees 600,000
Roads in forest 300,000

What total amount of the forest assets should be classified as biological assets?
a. 5,100,000
b. 5,700,000
c. 5,400,000
d. 6,000,000

2. Jennylyn Diary produces milk for local ice cream producers. The entity began operations on
January 1, 2013 by purchasing milking cows for 5,000,000. The entity provided the following
information at year-end relating to the milking cows:

Carrying amount January 1 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

1. What amount of gain on biological asset should be reported in 2013?

a. 2,400,000
b. 2,150,000
c. 3,000,000
d. 3,250,000

2. What amount of gain on agricultural produce should be recognized in 2013?

a. 1,250,000
b. 1,000,000
c. 850,000
d. 0

3. What is the carrying amount of the biological asset on December 31, 2013?
a. 8,000,000
b. 8,250,000
c. 7,150,000
d. 7,600,000

3. Marine Company is a producer of coffee. On December 31, 2013, the entity had harvested coffee
beans with fair value less cost of disposal of 3,500,000 at the point of harvest. Because of long aging
and maturation process after harvest, the harvested coffee beans were still on hand on December 31,
2014.On such date, the fair value less cost of disposal was 3,900,000 and the net realizable value is
3,200,000.What is the measurement of the coffee beans inventory on December 31, 2014?

a. 3,000,000
b.3,500,000
c. 3,200,000
d. 3,900,000
4. Candice Company has a herd of 100 2-year old animals on January 1, 2013. Ten animals aged 2.5
years were purchased on July 1, 2013 for P10,800 each and ten animals were born on July 1, 2013.
No animals were sold or disposed of during the year. The fair values less cost of disposal per unit
were:

2-year old animal on January 1 10,000

2.5-year old animal on July 1 10,800
New born animal on July 1 7,000
2-year old animal on December 31 10,500
2.5-year old animal on December 31 11,100
New born animal on December 31 7,200
3-year old animal on December 31 12,000
0.5-year old animal on December 31 8,000

1. What is the carrying amount of the biological assets on December 31, 2013?
a. 1,400,000
b. 1,440,000
c. 1,178,000
d. 1,320,000

2. What is the total gain from biological asset for 2013?

a. 292,000
b. 237,000
c. 400,000
d. 222,000

3. What is the gain from biological asset attributable to price change?

a. 237,000
b. 292,000
c. 222,000
d. 55,000

4. What is the gain from biological asset attributable to physical change?

a. 167,000
b. 237,000
c. 229,000
d. 70,000

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