BIOLOGICAL ASSETS

1. An entitry provided the following assets in plantation forest:

Freestanding Trees P5,000,000
Land under trees 600,000
Roads in the forest 300,000
Animals related to recreational activities 1,000,000
Bearer Plants 1,500,000
Bearer Animals 2,000,000
Agricultural Produce growing on bearer plant 800,000
Agricultural produce harvested 1,200,000
What total amount should be classified as biological assets? 7.8M
What total amount should be included in property, plant, and equipment? 3.4M

2. Del Monte on adoptation of PAS 41 has reclassified certain assets as biological assets. The total value
of the forest assets is P6,000,000 which comprises:
Freestanding Trees P5,100,000
Land under Trees 600,000
Roads in the Forest 300,000
In Del Monte’s statement of financial position, how much of the forest assets shall be classified as
biological assets? P5.1M

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

On December 31, 2017, the entity has harvested coffee beans costing P3,000,000 and with fair value
less cost to sell 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, 2018. On such date, the fair value less cost to sell is P3,900,000 and the Net
Realizable Value is P3,200,000.

The coffee beans inventory shall be measured at? 3.2M

4. On November 30, 2018, Coco Martin, Inc. harvested from its plantation forest. Felled trees were
gathered. Total cost of these felled trees amounted to P1,300,000 while fair value at the date of
harvest was P1,700,000. Cost to sell expected to be incurred were P50,000. At December 31, 2018,
half of the harvest remained unsold. Estimated NRV of these items amounted to P830,000 while fair
value less cost to sell amounted to P820,000.

At what amount should the felled trees be measured on December 31, 2018? P830,000
5. An entity has these balances in its financial records:

Value of the Bio Asset at cost – 12/31/2017

Fair Valuation Surplus on Initial Recognition at Fair Value – 12/31/2017
Change in Fair Value to 12/31/2018 due to growth and price flactuations
Decrease in fair value due to harvest – 2018

Carrying amount of biological assets at December 31, 2018 is: P1,310,000

6. H Company has a herd of 10 two-year old animals on January 1, 2018. One animal aged 2.5 years was
purchased in July 1, 2018 for P108, and one animal was born on July 1, 2018. No animals were sold or
disposed of during the year. The fair value less cost to sell per unit os as follows:

2 year old animal on January 1 P100

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
New born 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, 2018? 1400
What is the gain from change in fair value due to price change? 55
What is the gain from change in fair value due to physical change? 237
What is the total change in fair value? 292

Anwers:
1. 7,800,000 and 3,400,000
2. 5,100,000
3. 3,200,000
4. 830,000
5. 1,310,000
6. 1400
55
237
292