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    BIOLOGICAL ASSETS (5 Cows X P20,000 Fair Value) Cash

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    Anj Hwan
    The document discusses accounting for biological assets and provides an illustration for Romantic Baboy Company. [1] Biological assets are reported at fair value less cost to sell. [2] Romantic Baboy had various transactions involving its cows in 2019, including purchases, births, and sales. [3] Entries were made on July 1 and December 31 to record these transactions and adjust the biological assets balance for changes in fair value.

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    BIOLOGICAL ASSETS (5 Cows X P20,000 Fair Value) Cash

    Uploaded by

    Anj Hwan
    368 views2 pages
    The document discusses accounting for biological assets and provides an illustration for Romantic Baboy Company. [1] Biological assets are reported at fair value less cost to sell. [2] Romantic Baboy had various transactions involving its cows in 2019, including purchases, births, and sales. [3] Entries were made on July 1 and December 31 to record these transactions and adjust the biological assets balance for changes in fair value.

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    Biological Assets

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    The document discusses accounting for biological assets and provides an illustration for Romantic Baboy Company. [1] Biological assets are reported at fair value less cost to sell. [2] Romantic Baboy had various transactions involving its cows in 2019, including purchases, births, and sales. [3] Entries were made on July 1 and December 31 to record these transactions and adjust the biological assets balance for changes in fair value.

    Copyright:

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

    BIOLOGICAL ASSETS (5 Cows X P20,000 Fair Value) Cash

    Uploaded by

    Anj Hwan
    The document discusses accounting for biological assets and provides an illustration for Romantic Baboy Company. [1] Biological assets are reported at fair value less cost to sell. [2] Romantic Baboy had various transactions involving its cows in 2019, including purchases, births, and sales. [3] Entries were made on July 1 and December 31 to record these transactions and adjust the biological assets balance for changes in fair value.

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    ACCOUNTING FOR BIOLOGICAL ASSETS:

    BIOLOGICAL ASSETS IS TO BE REPORTED AT FAIR VALUE LESS COST TO SELL

    ILLUSTRATION:

    ROMANTIC BABOY COMPANY HAS THE FF. INFORMATION FOR THE YEAR 2019, RELATING TO ITS
    BIOLOGICAL ASSETS.

    20, 2 YEAR- OLD COWS WAS HELD ON JANUARY 1, 2019.


    5, AGED 2.5 YEARS OLD WERE PURCHASED ON JULY 1, 2019.
    ALSO, ON JULY 1, 2019, 4 COWS WERE BORN
    10, COWS AGED 3 YEARS OLD WERE SOLD AT DECEMBER 31, 2019, AT FAIR VALUE.

    THE FAIR VALUE LESS COST TO SELL WERE AS FOLLOWS:


    JANUARY 1, DECEMBER
    2019 JULY 1, 2019 31, 2019
    2 YEAR OLD COW P15,000 P16,500
    NEWBORN COW P8,000 8,500
    0.5 YR. OLD 9,500
    2.5 YR. OLD COW 20,000 23,000
    3 YEAR OLD COW 28,000

    ENTRIES FOR THE YEAR 2019 RELATING TO:


    a. July 1, 2019- To record the purchase of of 5 cows. Aged 2.5 yrs.
    BIOLOGICAL ASSETS ( 5 cows x P20,000 fair value) 100,000
    CASH 100,000

    b. July 1, 2019- To record the birth of 4 cows


    BIOLOGICAL ASSETS (4 X P8,000) 32,000
    INCOME- change in fair value due to birth. 32,000

    d. CASH ( 10 cows x P28,000 fair value) 280,000


    BIOLOGICAL ASSETS 280,000
    To record sale of 10 cows which is 3 years of age.

    e. December 31, 2019- Entry to record the increase in fair value due to price
    change and physical change.
    BIOLOGICAL ASSETS 306,000
    INCOME- Change in FAIR VALUE due to price change 47,000
    INCOME- Change in FAIR VALUE due to physical change 259,000
    To record increase in fair value of biological assets due to price
    change and physical change.

    COMPUTATION OF CHANGE IN FAIR VALUE DUE TO PRICE CHANGE


    NEW BORN: 4 COWS
    Price on December 31 ---------P8,500
    Price on July(birth date) 8,000
    Increase in price P 500 x 4 cows = P2,000

    20 - 2 YR. OLD COWS:


    Price on December 31 ---------P16,500
    Price on January 1, 15,000
    Increase in price P1,500 x 20 cows = 30,000

    5 – 2.5 YR. OLD COWS:


    Price on December 31 ---------P23,000
    Price on January 1, 20,000
    Increase in price 3,000 x 5 cows = 15,000
    TOTAL INCREASE DUE TO PRICE CHANGE P47,000
    COMPUTATION OF CHANGE IN FAIR VALUE DUE TO PHYSICAL CHANGE: (lumaki na yung cows)
    4 – 0.5 YEAR OLD COWS:
    Price on December 31 --------- P9,500
    Price on December 31 of new born---- 8,500
    Increase in price 1,000 x 4 cows = P4,000

    20 - 3 YR. OLD COWS:


    Price on December 31 of 3 yr. old -----------P28,000
    Price on December 31 of 2 yr. old 16,500
    Increase in price 11,500 x 20 cows = 230,000

    5 – 3 YR. OLD COWS:


    Price on December 31 of 3 yr . old -----P28,000
    Price on December 31 of 2.5 yr. old 23,000
    Increase in price 5,000 x 5 cows = 25,000
    TOTAL INCREASE DUE TO PHYSICAL CHANGE P259,000

    COMPUTATION OF BIOLOGICAL ASSETS AT DECEMBER 31, 2019

    BALANCE, JANUARY 1,2019 ( 20 cows at P15,000) P300,000


    Add(Less):
    Purchased on July 1 ( 5 cows at P20,000) 100,000
    Increase in value due to birth of 4 cows ( 4 x P8,000) 32,000
    Sold on Dec. 31 ( 10,000 cows at P28,000) (280,000)
    Increase in value due to price change 47,000
    Increase in value due to physical change 259,000
    BALANCE, DECEMBER 31, 2019 458,000

    ALTERNATIVE COMPUTATION:

    BIOLOGICAL ASSETS HELD ON DECEMBER 31, 2019:


    4 - 0.5 YR. OLD COWS WITH FAIR VALUE OF P9,500 P38,000
    15 – 3 YEAR OLD COWS WITH FAIR VALUE OF P28,000 420,000
    BALANCE, DECEMBER 31, 2019 P 458,000

    ASSIGNMENT (to be submitted)

    A herd of ten 2 year-old animals was held at January 1, 2019, One animal (aged 2.5 years old) was
    purchased on July 1, 2019 for P10,800 and one animal was born on July 1, 2019. Two 3 year old
    animals were sold at December 31, 2019 for P13,500 each, the company incurring P 1,500 on the
    sale of each.

    Per unit fair values less estimated cost to sell were as follows:
    January 1, 2019: 2 yr. old animal P10,000

    July 1, 2019 : New born animal 7,000


    2.5 yr. old animal 10,800

    December 31, 2019: New born animal 7,200


    0.5 yr. old animal 8,000
    2 yr. old animal 10,500
    2.5 yr. old animal 11,100
    3 yr. old animal 12,000

    QUESTIONS: Please show computations


    1. How much is the increase in fair value due to price change? 5,500
    2. How much is the increase in fair value due to physical change? 23,700
    3. What is the balance of biological assets at December 31, 2019? 116,000

    Prepare the entries for year 2019, relating to biological assets transactions.

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