PRELEC1 Exercise Worksheet Unit 01

Unit 1 Exercise Worksheet
INSTRUCTIONS:
Write the answers for each requirement on a yellow paper or short bond paper, use as many sheets
as needed. Show all supporting computations. Organize your answers and group them by exercise
number.
Submission of your papers may be physical copy or in electronic submission PDF format. If you opt
for the PDF file submission you must contact your instructor first via communications channel in the
welcome page of this module. This is for you to agree on the file name format and what email address
to submit your outputs to.
PROBLEM 1:
Requirement: Identify if the following items will be accounted for as PAS 41 biological assets, PAS 2
inventory or PAS 16 property plant and equipment.
ITEMS ACCOUNTING TREATMENT

Coconut tree
Growing Coconut fruits
Bottled Buko Shake
Grape vines
Growing Grapes
Harvested Grapes
Grape Wines
Palay
Harvested Palay
A living plant with dual
purpose
Rubber tree
Bearer Plants
Bearer Animals
Animal-related recreational
activity
Agricultural land
Pigs
Piglets
PROBLEM 2:
B-Meg Farms Company is engaged in raising dairy livestock. Information regarding its activities of its
dairy livestock is found below:
Carrying value at January 1, 2022 P 10,000,000

FV less cost to sell of biological assets purchased 4,000,000
Gain arising from change in fair value less cost to
sell attributable to price change 800,000
Gain arising from change in fair value less cost to
sell attributable to physical change 1,500,000
Decrease due to sales 2,000,000
Decrease due to harvest 500,000
What is the carrying amount of B-Meg’s biological assets on December 31, 2022 statement of
financial position?
1
PROBLEM 3:
Requirement: Provide the journal entries for each of the following independent scenarios.
1. Keqing Farm acquired 150 1-year old cattle for milk production at P20,000 each. The current fair
value of these animals were P25,000 each; cost to sell of P2,500 for each animal.
2. Signora acquired biological assets for a total price of P2,120,000 the fair value less cost to sell at
the time of purchase was P2,075,000.
3. Scaramouche paid the following in his startup of Dijkstra Farms:
Purchase price of cows P3,030,000. (fair value less cost to sell is P3,175,000)
Cow feeds P425,000.
Supplements 530,000.
Salaries of farm hands P440,000.
4. Kusanali acquired a mango plantation for a total cost of P5,000,000 of which P1,250,000 was
allocated to land. The remainder was to be the cost of the mango trees on the plantation. By the
end of the current year, Kusanali accounted for the cultivation of mango fruits as follows:
Fertilizers used P250,000
Salaries paid to farm workers P150,000
Fair value less costs to sell of mango fruits at point of harvest P1,200,000
Fair value less costs to sell of mango fruits after harvest P1,500,000
Fair value less costs to sell of unripe mango fruits P240,000
PROBLEM 4:
On January 1, 2020, Ningguang acquired a mountain range for P1,550,000 and for a separate price
Ningguang also paid for the 120 timber trees growing on the mountain range for P40,000 each, their
current fair value less cost to sell. By December 31, 2020 the trees have increased to a fair value of
P49,800 each and if all the 120 trees were felled and disposed, Ningguang would incur a total cost to
sell of P110,000. For the entire year, Ningguang also incurred costs related to agricultural activities
amounting to P175,000 inclusive of salaries of caretaker, fertilizers, insecticides and maintenance
costs.
Requirements:
1. Provide the journal entries to record the transactions in 2020.
2. What amount will be presented on Ningguang’s December 31, 2020 statement of financial
position as biological assets?
PROBLEM 5:
On January 1, 2021, Beidou acquire an existing avocado plantation for a price of P5,000,000 of that
amount 1,300,000 was properly recorded as land, the remaining amount is attributed to the 1,000
avocado trees capable of produce for an estimated life of 6 years and a residual value of 700,000.
During the year, Beidou spent P275,000 on fertilizers, 150,000 on supplies and P500,000 on labor
costs directly related to the operation of the farm. By December 31, 2020 the FVLCTS of harvested
avocado fruits at point of harvest was P1,500,000 while unripe unharvested fruits were at a total
FVLCTS of P400,000.
Requirements:
1. Prepare the journal entries to record the above transactions for the year.
2. What amount of biological assets will be presented in the 2021 financial statements?
3. What amount of property, plant and equipment will be presented in the 2021 financial
statements?
4. What amount of expenses if any, shall be presented in the December 31, 2021 financial
statement from the foregoing transactions?
2
PROBLEM 6:
Temerity Company has different kinds of farm animals on January 1, 2021. During the current year,
several acquisitions occurred related to these farm animals.
A detailed summary of these transactions is as follows:

Carrying amount on January 1:
15 Horses (1 year old) 1,000,000
10 Dairy Cattles (2 years old) 400,000
8 Carabaos (2.5 years old) 200,000
20 Hogs (3 years old) 500,000
Purchases on June 30:

4 Dairy Cattle (1 year old) 150,000
6 Carabaos (6 months old) 100,000
Fair value less cost of disposal on December 31:

4 Daily Cattle (1 year old) 170,000
6 Carabaos (6 months old) 110,000

4 Daily Cattle (1.5 year old) 200,000
6 Carabaos (1 year old) 140,000
There were no farm animals sold during the year and neither were there any newborns nor deaths.
Requirements:
1. Prepare journal entries in 2021.
2. What amount will be presented as biological Asset as of December 31, 2021.
3. What will be presented as gain from change in fair value of biological asset in 2021?
4. What will be presented as gain from change in fair value due to price change in 2021?
5. What will be presented as gain from change in fair value due to physical change in 2021?

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Unit 1 Exercise Worksheet

ITEMS ACCOUNTING TREATMENT

Carrying value at January 1, 2022 P 10,000,000

A detailed summary of these transactions is as follows:

Purchases on June 30:

Fair value less cost of disposal on December 31:

15 Horses (2 year old) 1,350,000

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