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Biological assets

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Biological assets

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • June 5, 2021 at 1:04 pm #623279
    Christie9693
    Participant
    • Topics: 25
    • Replies: 8
    • ☆

    Scottson, a farmer, acquired 600 two-year old cows on 1 January 20X1 for $800 each. 100 calves were born in December 20X1. 150 animals were sold during the year for $840 each. The fair value less costs to sell the cows at 31 December 20X1 was: Calves $200 Two-year old cows $850 Three-year old cows $900

    How much should be recognised in profit or loss in total in respect of the cows for the year ended 31 December 20X1?

    I don’t know what is the correct answer.

    I did the sum like this. But I don’t know whether my answer is right or wrong.

    1 January 20X1 2 year old cows (600 * 850) : 510000
    December 20X1 Calves born (100 * 200) : 20000

    Total : 530000

    31 December 20X1 3-year-old cows (450 * 900): 405000 (600 – 150 (sold) = 450)
    Calves (100 * 200): 20000
    Total : 425000

    Gain to SPL : 105000 (530000 – 4250000)

    I also have confusion if I have to take the fair value less cost to sell value of calves to recognize profit or loss.

    June 6, 2021 at 6:58 pm #623522
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6440
    • ☆☆☆☆☆

    Hi,

    You need the FV at 1 January and the FV at 31 December. The FV at 1 January is the 600 2 year old cows at $800.

    The FV at 31 December is 450 3 year old cows (as 150 have been sold) at $900 plus the 100 claves at $200.

    The movement is taken through profit or loss.

    Thanks

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