Charies O.

Cimanes

BSAIS 2B

BIOLOGICAL ASSETS

Activity 7

Question 1

Statement I: Biological assets are living animals or plants.

Statement II: Agricultural produce is the harvested produce of the entity’s biological assets.

a. True, True

b. True, False
c. False, True
d. False, False

Question 2

PAS 41, Agriculture applies to

a. accounting of all biological assets

b. accounting of all biological assets sold in the ordinary course of business
c. accounting for bearer plants
d. accounting for biological assets, except bearer plants, and agricultural produce at the point
of harvest, provided they relate to agricultural activity

Question 3

The following are considered as agricultural activities, except

 a. management by an entity of the biological transformation
b. harvest of biological assets for sale or conversion into agricultural produce or into
additional biological assets
c. both A and B
d. neither A nor B

Question 4

The following are the features of agricultural activity, except

a. Capability to change
b. Management of change
c. Measurement of change
d. All of the above are the features of agricultural activity

Question 5

Biological transformation causes qualitative or quantitative change in a biological asset. Which of

the following is considered as biological transformation?

a. Growth and degeneration

b. Procreation
c. Production of agricultural produce
d. All of the above are considered as biological transformation

Question 6

Bearer plant is a living plant with the following characteristics, except

a. used in the production or supply of agricultural produce

b. expected to bear produce for more than one period
c. annual crops
d. has a remote likelihood of being sold as agricultural produce, except for incidental scrap
sales
Question 7

The following are examples of biological assets, except

a. Sheep
b. Sugarcane
c. Pigs
d. Milk

Question 8

Which of the following is covered by the accounting requirements of PAS 41, Agriculture?

a. Land on which the coconut trees were planted

b. Animals on display in a zoo
c. Pet animals held for sale in a pet shop
d. Corn plants cultivated for maize

Question 9

Which of the following is considered as agricultural produce?

a. Trees in timber plantation

b. Carcasses
c. Dairy cattle
d. Cheese

Question 10

On the initial recognition and on subsequent reporting dates, biological assets shall be measured at

a. Fair value
b. Fair value less costs to sell
c. Cost or fair value less costs to sell, whichever is lower
d. Cost of fair value, whichever is lower
Question 11

Changes in the carrying amount of biological assets shall be recognized in

a. Other comprehensive income

b. Retained earnings
c. Profit or loss
d. Profit or loss from discontinued operations

Question 12

Agricultural produce shall initially be measured at

a. Fair value less costs to sell at the point of harvest

b. The costs of tending the animals and/or plants producing the agricultural produce
c. Fair value at the point of harvest
d. Nil amount

Question 13

Subsequent to point of harvest, the agricultural produce shall be measured at

a. fair value less costs to sell at the point of harvest

b. fair value less costs to sell as of the reporting date
c. average of fair value less costs to sell during the year
d. lower of cost and net realizable value

Question 14

Statement I: Disclosure of changes in the fair value less costs to sell as classified to price and
physical changes is required by PAS 41.

Statement II: Procreation and harvesting are considered as physical changes.

a. True, True
 b. True, False
c. False, True
d. False, False

Question 15

Statement I: An entity is required to distinguish its biological assets between consumable and
bearer classifications.

Statement II: An entity is encouraged to distinguish its biological assets between mature and
immature classifications.

a. True, True
b. True, False

c. False, True
d. False, False

Question 16

Forester Company provided the following assets in a forest plantation and farm:

Freestanding trees 5,000,000

Land under trees 600,000

Roads in forests 300,000

Animals related to recreational activities 1,000,000

Bearer plants 1,500,000 Bearer animals 2,000,000

What total amount of the assets should be classified as biological assets?

a. 7,000,000
b. 8,500,000
c. 5,000,000
d. 8,000,000
Question 17

Colombia Company is a producer of coffee. The entity is considering the valuation of harvested
coffee beans. Industry practice is to value the coffee beans at market value and uses as reference a
local publication “Accounting for Successful Farmers”.

On December 31, 2021, the entity has harvested coffee beans costing P3,000,000 and with fair
value less cost of disposal of P3,500,000 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, 2022.

On such date, the fair value less cost of disposal is P3,900,000 and the net realizable value is
P3,200,000.

What is the measurement of the coffee beans inventory on December 31, 2022? a.

3,000,000

b. 3,500,000
c. 3,200,000
d. 3,900,000

Question 18

Joan Company provided the following data:

Value of biological asset at acquisition cost on December 31, 2021 600,000 Fair

valuation surplus on initial recognition at fair value on December 31, 2021 700,000

Change in fair value to December 31, 2022 due to growth and price fluctuation 100,000

Decrease in fair value due to harvest in 2022 90,000

What is the carrying amount of the biological asset on December 31, 2022?

a. 1,400,000
b. 1,310,000
 c. 1,300,000
d. 1,490,000

Question 19

What is the gain from change in fair value of biological asset that should be reported in the 2022
income statement?

a. 100,000
b. 800,000
c. 710,000
d. 10,000

Question 20

Salve Company is engaged in raising dairy livestock. The entity provided the following
information during the current year:

Carrying amount on January 1 5,000,000 Increase due to purchases 2,000,000

Gain arising from change in fair value less cost of disposal

attributable to price change 400,000

Gain arising from change in fair value less cost of disposal

attributable to physical change 600,000

Decrease due to sales 850,000

Decrease due to harvest 200,000

What is the carrying amount of the biological asset on December 31?

a. 6,950,000
b. 6,000,000
c. 8,000,000
d. 7,150,000
Question 21

Bear Company produced milk for sale to local and national ice cream producers. The entity began
operations at the beginning of current year by purchasing 650 milk cows for P8,000,000.

The entity provided the following information for the current year:

Acquisition cost, January 1 8,000,000

Change in fair value due to growth and price changes 2,500,000

Decrease in fair value due to harvest 250,000 Milk

harvested during the year but not yet sold 400,000

What amount of gain on change in fair value should be recognized for biological asset in the
current year?

a. 2,500,000

b. 2,250,000
c. 2,900,000
d. 2,650,000

Question 22

What amount of gain on change in fair value should be reported for agricultural produce in the
current year?

a. 2,250,000
b. 400,000
c. 150,000
d. 0

Question 23

Honey Company has a herd of 10 2-year old animals on January 1, 2021. One animal aged 2.5
years was purchased on July 1, 2021 for P108, and one animal was born on July 1, 2021.

No animals were sold or disposed of during the year. The fair value less costs of disposal per unit
as follows:
2 – year old animal on January 1 100

2.5 – year old animal on July 1 108

New born animal on July 1 70 2 –

year old animal on December 31 105

2.5 – year old animal on December 31 111

Newborn animal on December 31 72

3 – year old animal on December 31 120

0.5 – year old animal on December 31 80

What is the fair value of the biological assets on December 31?

a. 1,400
b. 1,320
c. 1,440

d. 1,360

Question 24

What amount of gain from change in fair value of biological assets should be recognized in the
current year?

a. 222
b. 292
c. 300
d. 332

Question 25

What is the gain from change in fair value due to price change?

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