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    CE On Agriculture T1 AY2020-2021

    Uploaded by

    Luna Meow
    The document provides information about Mango Torte Corporation, a company that maintains a mango plantation. It details transactions that occurred in 20A1 related to the plantation's mango trees, fruits, inventories, expenses, and government grants. Key information includes: - Mango Torte received a government grant of P3 million for locating its plantation in an underdeveloped area, with requirements to maintain the plantation for 3 years and produce a minimum amount of mangoes annually. - Transactions in 20A1 included purchases and costs related to mango trees and fruits, harvesting of fruits, sales of fruits, expenses incurred, and changes in fair values of assets. - Journal entries need to be prepared

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    CE On Agriculture T1 AY2020-2021

    Uploaded by

    Luna Meow
    288 views2 pages
    The document provides information about Mango Torte Corporation, a company that maintains a mango plantation. It details transactions that occurred in 20A1 related to the plantation's mango trees, fruits, inventories, expenses, and government grants. Key information includes: - Mango Torte received a government grant of P3 million for locating its plantation in an underdeveloped area, with requirements to maintain the plantation for 3 years and produce a minimum amount of mangoes annually. - Transactions in 20A1 included purchases and costs related to mango trees and fruits, harvesting of fruits, sales of fruits, expenses incurred, and changes in fair values of assets. - Journal entries need to be prepared

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    CE on Agriculture T1 AY2020-2021

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    The document provides information about Mango Torte Corporation, a company that maintains a mango plantation. It details transactions that occurred in 20A1 related to the plantation's mango trees, fruits, inventories, expenses, and government grants. Key information includes: - Mango Torte received a government grant of P3 million for locating its plantation in an underdeveloped area, with requirements to maintain the plantation for 3 years and produce a minimum amount of mangoes annually. - Transactions in 20A1 included purchases and costs related to mango trees and fruits, harvesting of fruits, sales of fruits, expenses incurred, and changes in fair values of assets. - Journal entries need to be prepared

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    288 views2 pages

    CE On Agriculture T1 AY2020-2021

    Uploaded by

    Luna Meow
    The document provides information about Mango Torte Corporation, a company that maintains a mango plantation. It details transactions that occurred in 20A1 related to the plantation's mango trees, fruits, inventories, expenses, and government grants. Key information includes: - Mango Torte received a government grant of P3 million for locating its plantation in an underdeveloped area, with requirements to maintain the plantation for 3 years and produce a minimum amount of mangoes annually. - Transactions in 20A1 included purchases and costs related to mango trees and fruits, harvesting of fruits, sales of fruits, expenses incurred, and changes in fair values of assets. - Journal entries need to be prepared

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    ADDITIONAL CLASSROOM EXERCISE ON

    AGRICULTURE
    _____________________________________________________________________________________

    PROBLEM 1: Bearer plants; changes in fair value less costs to sell; agricultural produce; government
    grants

    Mango Torte Corporation maintains a mango plantation in a remote locality. It has a number of mango trees
    which bear bruits which are subsequently harvested and sold. As of January 1, 20A1, it has the following
    inventories and biological assets:

    Mango inventories P8,000,000


    Mango fruits 2,300,000
    Mature mango trees (excluding fruits) 5,500,000
    Immature mango trees 4,200,000

    Mango fruits represent agricultural produce growing on mature mango trees. Bearer mango trees have an
    average useful life of ten years, starting from date of maturity. It is the policy of Mango Torte to recognize
    a full year depreciation in the year of initial recognition of any depreciable assets.

    The following transactions transpired in 20A1:


    a. Purchased seedlings worth P1,000,000 and initially incurred planting costs of P1,500,000.

    b. Incurred cleaning, maintenance, utilities, and labor costs subsequent to planting as follows:
    Mature P2,900,000
    Immature 3,600,000

    c. Fair value less costs to sell of the following assets increased during the year:
    Mango fruits P5,000,000
    Mature 1,700,000
    Immature 4,200,000

    d. Certain immature mango trees are already capable of bearing fruits with accumulated cost of
    P3,700,000.

    e. Harvested agricultural produce with fair value less costs to sell of P6,000,000 at the time of harvest.

    f. Sold mango fruits for P20,000,000 during the year with carrying amount of P12,000,000.

    g. Incurred the following expenses:


    Selling expenses P1,350,000
    Administrative expenses 1,200,000

    h. At the end of the year, inventories has net realizable value of P1,750,000.

    Moreover, Mango Torte applied for a government grant for locating its mango plantation in a less-
    developed location. Under existing government rules, companies locating their mango plantation in less-
    developed areas are entitled to government grants and incentives. Mango Torte’s application was granted
    effective January 1, 20A1, with the following incentives:

    a. A government grant of P3,000,000 cash was provided to Mango Torte during 20A1. However, it is
    required to maintain its mango plantation in that area for three years. In the event that Mango Torte
    fails to maintain the plantation for three years, it will have to repay the government an amount in
    proportion to the passage of time calculated based on the nearest month. The repayment should be paid
    in cash to the government.
    Page 1 of 2
    b. The government requires Mango Torte to produce at least 5,000,000 kg. of mangoes every year. If it
    fails to produce such amount, it will repay the government P200,000 for each year of failure. The
    repayment should be paid in cash on January 31 of the subsequent year.

    c. Mango Torte is granted an income tax holiday (ITH) incentive for three years from the date of approval
    of the grant.

    Production for 20A1 totaled 7,000,000 kg. of mangoes.

    Required:
    1. Prepare all the necessary journal entries for 20A1.
    2. Determine the carrying values of Mango Fruits, Mango Inventories, Mature Mango Trees,
    Immature Mango Trees, and Deferred Government Grant as of December 31, 20A1.
    3. Prepare a condensed statement of profit or loss for 20A1.

    October 2020

    Page 2 of 2

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