1. Fia Company sold some of their biological assets to Gray for P200,000 on July 1, 2014.

The sale as made at Fia’s

farm. However, if the biological assets are being sold at an auction they could have been sold at a higher price
but the company has to incur transportation costs of P2,000. Fia Company paid P6,000 commission in relation to
the sale. Gray Company incurred P3,000 as transport cost in bringing the asset to their own farm.

Question 1: At what amount should Gray Company recognize the assets initially?

Question 2: At what amount of loss should the Gray Company recognize on initial recognition related to the
asset?

2. Lucky Company purchased Dairy cattle at an auction for P300,000 on July 1, 2014. Cost of transporting the cattle
back to the company’s farm was P3,000 and the company would have to incur cost similar transportation cost if
it was to sell the cattle in the auction, in addition an auctioneer’s fee of 2% of sales price. On December 31,
2014, after taking into account and location, the fair value of the biological assets had increased to P500,000
(that is, the market price including the auctioneer’s fee of P10,00 and transportation cost of P5,000). What
amount of net gain or loss should the company disclosed in the statement of comprehensive income related to
the biological assets?

3. The following information pertains to the bearer plant and agricultural produced of Kianzy Company. On January
1, 2015, the cost/ carrying value of the company’s bearer plant was P25,000,000 and estimated remaining life is
25 years. As of December 31, 2015 Vina Company determines the following:

Fair value of the grapes harvested at December 31, 2015 P5,000,000

Estimated point-of-sale costs of the grapes 100,000

With the assistance of valuation experts, Kianzy Company determines that the recoverable amount of
the bearer plants as of December 31, 2015 is P22,000,0000. What total amount should Kianzy Company report
in its December 31, 2015 statement of comprehensive income related to the bearer plant?

4. Gee dairy produces milk to sell to local and national ice cream producers. Gee Dairy began operation on January
1, 2014 by purchasing 840 milk cows for P1,176,000. The company controller had the following information
available at year end relating to the cows:
Milking cows
Carrying value, January 1, 2014 P1,176,000
Change in fair value due to growth and price change 365,000
Decrease in fair value due to harvest (42,000)
Milk harvested during 2014 54,000

At December 31, 2014, what is the value of the milking cows on Gee Dairy’s statement of financial position?

5. Jane Company is in business of Deer Framing. A herd of 100 2-year old and 50 3year old deer are held
throughout the financial year of 2015. The only change during the year is the increase in their physical attributes
due to aging. The relevant data are as follows:

Fair value of a 2-year old deer at 1 January 2015 P3,000

Fair value of a 3-year old deer at 1 January 2015 4,000
Fair value of a 2-year old deer at 31 December 2015 3,300
Fair value of a 3-year old deer at 31 December 2015 4,500
Fair value of a 4-year old deer at 31 December 2015 5,800

Question 1: How much is the increase in the fair value of the biological asset due to physical change?

Question 2: How much is the increase in the fair value of the biological asset due to price change?

6. Paris Company commences cultivation of oil palm crop on January 1, 2014. Costs (panting materials, labor and
other planting costs) were incurred in 2014 to develop a 10-hectare oil palm crop amounted to P4,000,000. On
 December 31, 2014 the fair value of the land with a one-year old crop was valued at P24,000,000. The fair value
of an equivalent raw agricultural land was valued at 18,000,000. What is the amount of profit from plantation
operation for the year ended December 31, 2014?

7. On January 2, 2015, Ben acquired a transferrable nine-year taxi license by way of government grant when the
fair value of the license was P180,000. The license is given free of charge to the entity on the basis of Ben’s
performance and there are no future performance condition attached to the grant.
Question 1: How should Ben account for the government grant?
a. Debit Intangible asset for P180,000 and credit Other Income for P180,000.
b. Debit Intangible asset for P180,000 and credit Deferred Income for P180,000 and amortized over 9 years.
c. Debit Intangible asset for P180,000 and credit Retained Earnings for P180,000.
d. Debit Intangible asset for P180,000 and credit Revaluation Surplus for P180,000.

Question 2: Assuming, that Ben is required to operate at least 10 taxis in the deprived neighborhood of the
capital city during that nine-year period and failure to do so will result in the license being revoked immediately,
how should Ben account for the government grant?
a. Debit Intangible asset for P180,000 and credit Other Income for P180,000.
b. Debit Intangible asset for P180,000 and credit Deferred Income for P180,000 and amortized over 9 years.
c. Debit Intangible asset for P180,000 and credit Retained Earnings for P180,000.
d. Debit Intangible asset for P180,000 and credit Revaluation Surplus for P180,000.

8. Jam Company is an ultimate holding company of a diverse group of entities, with a reporting date of December
31. On January 1, 2014, Jam Company decided to build a nursery school for its employees’ children. Government
approved a cash grant of P1,000,000 provided the building is completed by march 31, 2015 and is used as
nursery school for at least 10 years. A pro-rata portion is refundable if the building is not used as a nursery
school for ten years. Jam Company received the cash grant on November 1, 2014. It completed the school on
January 31, 2015 at a total cost of P2,000,000 and immediately started to use the building as a nursery.
P1,600,000 of the amount was incurred on December 31, 2014. What amount of deferred income should Jam
Company recognized in its December 31, 2015 statement of financial position?

9. On January 2, 2014, RK Company received a grant related to a factory building. The total amount of the grant
was P18,000,000. Chris Company acquired the building from an industrialist identified by the government. If RK
Company did not purchase the factory building, which was located in the slums of the city; it would have been
reposed by a government agency. RK Company purchase the building for P54,000,000. The useful life of the
building is not considered to be more than three years, mainly due to the fact that the previous owner did not
properly mention it. Assuming the grant is treated as a reduction of the carrying amount of the asset, what is the
carrying value in the December 31, 2014 statement of financial position?