CHAPTER 9

BIOLOGICAL ASSETS
9-1

(ABC Farms)
(a)
Carrying value of Biological Assets, 12/31/11
Cost of biological assets purchased during 2012
Fair valuation loss on initial recognition
Change in fair value due to biological transformation and
price fluctuations
Decrease in fair value due to harvest
Biological Assets, 12/31/12
(b)

9-2

Loss on initial recognition at FV less Cost to Sell

Increase in FV less Costs to Sell

(Ranchero Corporation)
(a)
Balance of Biological Assets at December 31, 2011
3 years old = 2,000 x P44,000
P88,000,000
2 years old = 1,500 x P35,000
52,500,000
Increase in fair value
2,000 x (P55,000 P44,000)
P22,000,000
1,500 x (P47,000 P35,000)
18,000,000
Balance, December 31, 2012 (at FV less Cost to sell)
(b)

(c)

P2,800,000
3,200,000
( 150,000)
2,000,000
(1,000,000)
P6,850,000
P 150,000
P2,000,000

P140,500,000
40,000,000
P180,500,000

Increase in FV less Cost to sell due to

(1) Price Change :
3 year old cows 2,000 x (P47,000 P44,000)
2 year old heifers 1,500 x (P37,500 P35,000)
Increase in FV due to Price Change

P6,000,000
3,750,000
P9,750,000

(2) Physical Change

4 year old cows 2,000 x (P55,000 P47,000)
3 year old cows 1,500 x (47,000 P37,500)
Increase in FV due to Physical Change

P16,000,000
14,250,000
30,250,000

FV less Costs to sell at December 31, 2012

4 year old cows 2,000 x P55,000
3 year old cows 1,500 x P47,000
FV less POS costs at December 31, 2012

P110,000,000
70,500,000
P180,500,000

(d)

Entry at yearend
Biological Assets
40,000,000
Gain Increase in FV less CTS due to Price Change
9,750,000
Gain Increase in FV less CTS due to Physical Change
30,250,000

(a)

Price Change
2 year-old animals on Jan. 1
10 x (P10,500 P10,000)
2.5 year-old animal on July 1 1 x (P11,100 P10,800)
Animal born on July 1
1 x (P7,200 P7,000)
Change in FV less POS Cost due to Price Change

9-3
P5,000
300
200
P5,500

Chapter 9 Biological Assets

Physical Change
3 year-old animals on 12/31 10 x (P12,000 P10,500)
3 year old animal on 12/31 1 x (P12,000 P11,100)
Born on July 1 (upon birth)
On December 31 P8,000 P7,200
Change in FV less POS Cost due to Physical Change
(b)

Entries for the Year

2012
July 1 Biological Assets
Cash
Purchased one animal.
1 Biological Assets
Increase in FV less POS Cost due to Physical Change

P15,000
900
7,000
800
P23,700

10,800
10,800
7,000
7,000

Dec 31 Biological Assets

22,200
Increase in FV less POS Cost due to Price Change
Increase in FV less POS Cost due to Physical Change
(23,700 7,000)
31 Cash {2 x (13,500 1,500)
Biological Assets
(c)

(d)

MC1
MC2
MC3
MC4
MC5
MC6
MC7
MC15
MC16
MC17
MC18
MC19
MC20
MC21
MC22

Balance, 1/1/12 10 animals x P10,000

Purchase
Change in FV less CTS due to Price Change
Change in FV less CTS due to Physical Change
(including the birth of one animal)
Sale at FV less CTS
Balance, December 31, 2012

5,500
16,700
24,000
24,000
P100,000
10,800
5,500
23,700
(24,000)
P116,000

The balance at December 31, 2012 is composed of the following:

3 year old animals 9 animals x P12,000
P108,000
1 year old animal
1 animal x P8,000
8,000
Total
P116,000
MULTIPLE CHOICE
B
MC8
B
D
MC9
A
C
MC10 B
D
MC11 B
D
MC12 B
B
MC13 C
B
MC14 A
C
450,000 + 250,000 + 220,000 + 64,000 290,000 = 694,000
C
220,000 + 64,000 = 284,000
C
{(15,000-13,000) x 25} +{ (7,000-5,000) x 5 } + (4,000 x 5) = 80,000
A
{13,000 12,000) 25 + (5,000 4,000) x 5 = 30,000
D
(25 x 15,000) + (5 x 7,000) = 410,000
B
30,000 + 80,000 = 110,000
B
5,000,000 50,000 = 4,950,000
A
10M + 4M + 800,000 + 1.5M 2M 0.5M =

89