FAR460 – MFRS 141 – AGRICULTURE – BIOLOGICAL ASSETS

REVIEW QUESTIONS – DEC 2020

1) The accountant of Speedy Plantation Bhd reports the following activities of the
company, which include :
 grows tea bushes,
 harvest the tea leaves and
 produces tea

The company exports its tea to Thailand, Singapore and China.

Required :

a) Explain whether the activities reported by Speedy Plantation Bhd are within the
scope of MFRS141 – Agriculture.

grows tea bushes MFRS141 – biological asset

harvest the tea leaves MFRS141 - activity of harvesting tea leaves.

produces tea MFRS 102—Inventory applies

b) Explain which standards are applicable if the activities are not within the scope of
MFRS141

Tea bushes meet the definition of a bearer plant and are within the scope of
MFRS 116— Property, Plant and Equipment.
Tea is the finished product, hence MFRS 102—Inventory applies

c) Explain how the tea bushes and tea leaves are measured

 Growing tea bushes are measured under MFRS141 – Agriculture and

measured at fair value less cost to sell

 Tea bushes are measured in accordance with MFRS 116—Property, Plant

and Equipment. (bearer plant) – either at cost or revalued amount

 Picked tea leaves are agricultural produce and measured in accordance

with MFRS 141— Agriculture, i.e. at its fair value less cost to sell at the
point of harvest.

1
2. Hume Plantation Bhd owns an oil palm plantation in Lahad Datu. At the end of the
reporting period, the fair value of the plantation including the land was RM30 million.
The fair value of the land was RM13 million.

Required: Explain how Hume Plantation Bhd accounts for its oil palm trees.

Answer :

Oil palm trees meet the definition of a bearer plant and are within the scope of MFRS
116— Property, Plant and Equipment. A bearer plant is defined as a living plant that:

(i) is used in the production or supply of agricultural produce;

(ii) is expected to bear produce for more than one period; and
(iii) has a remote likelihood of being sold as agricultural produce, except for incidental
scrap sales.

According to MFRS 116, an entity would be permitted to choose either the cost model
or the revaluation model for bearer plants. Nevertheless, the produce growing on
bearer plants, i.e. oil palm fruit, is within the scope of MFRS 141—Agriculture.
Agricultural produce is measured at its fair value less costs to sell at the point of
harvest.

2
3. Nona Farm Heritage Bhd purchased 5,000 cattle at a cost of RM6,000,000 from JB
Dairy Bhd on 1 June 2016. Nona Farm’s financial year end 31 December. It is
estimated that the fair value of the cattle in the market on 31 December 2016 is
RM6,200,000. The company estimates that commission to dealers is about RM10,000
if they decide to sell the cattle and the transport costs to bring the cattle to the market
is about RM30,000.

Required:

i. Show the journal entries how the above transactions are recorded in the financial
statements of Nona Farm Heritage Bhd for the year ended 31 December 2016.
ii. Show the extract Statement Profit or Loss for the year ended 31 December 2016
and the extract Statement of Financial Position as at 31 December 2016

1/6/2016 5,000 animals at RM6,000,000 (initial cost)

DR Biological asset 6,000,0000

Cr Bank / cash / AP 6,000,000

31/12/2016 FV of the animal = RM6,200,000??? In the market

Commission to dealer = RM10,000
Transportation cost = RM30,000 (cost to sell)

= FV less CTS = 6,200,000 – 40,000 = FVLCTS = 6,160,000

Effect under Changes in FV (CA and FVLCTS)

MFRS141 6,000,000 Vs 6,160,000 = increase in FV 160,000

DR Biological asset = 160,000

Cr SOPL gain on change in FV of BA

Statement of Profit or loss for the year ended 31 Dec 2016

Income RM

Gain on change in FV of BA 160,000

Statement of Financial Position as at 31 Dec 2016

Non Current asset RM

Biological asset 6,160,000

Cost = 6,000,000

+ gain on change in FV = 160,000

3
4. LD Plantation Bhd owns and manages a mango orchard in Bentong, Pahang. The
company incurred the following costs in establishing the orchard in 2015:

Management of Mango Orchard = MFRS141

Mango Trees = MFRS116 Bearer Plant
Mango Fruit = MFRS141 – agricultural produce

RM

Cost of land - PPE 550,000

Cost of seedlings - management of agricultural 45,000

Plant and equipment (Estimated useful life : 10 years) = PPE 170,000

Fertilizers, feed and other costs = management of the 30,000

orchard

Salaries and wages = management of orchard 20,000

The company expected its first harvest in 2020 and the orchard is expected to have a
life of 30 years from the date of harvest.

Required:

Explain the accounting treatment of how LD Plantation Bhd would encounter the above
costs for the year ended 2015.

Cost of seedlings - management of agricultural 45,000

Fertilizers, feed and other costs = management of the 30,000

orchard

Salaries and wages = management of orchard 20,000

Cost of managing the orchard (operating expenses) 95,000

Dr SOPL – 95,000
Cr Bank 95,000

4
5. Delima Rubber Bhd owns 50 acres of land in Kota Tinggi Johor, whereby the land is
used to grow rubber trees. The company produces gloves and mattresses from the
rubber latex and the products are exported to Brunei and Singapore.

Required:

Explain how Delima Rubber Bhd accounts for its land, rubber trees, rubber latex,
gloves and mattresses in its financial statements.

7. Kurnia Plantation Bhd is a company involved in the management of the fruit trees and
breeding of animals for sale. The fruit trees cultivated and managed are rambutan,
grapefruit, sapodilla (ciku), lanzones (langsat), and breadfruit (buah sukun). As for
animal, the company has been long involved in managing and breeding of bees and
fishes in the pond. At the same time the company sells the honey products in the local
markets.

Required :

a Are the rambutan, grapefruit, sapodilla, lanzones and breadfruit trees, assets of
Kurnia Fruit Plantation Bhd? If so, how would the assets be classified?
(4 marks)

b Are the rambutan, grapefruit, sapodilla, lanzones and breadfruit fruits, assets of
Kurnia Fruit Plantation Bhd? If so, how would the assets be classified?
(4 marks)

c How should the trees and the fruits be presented and disclosed in the financial
statements?
(2 marks)

d. Which standards should be applied when accounting for the bees, fishes in the
fish pond and honey products?
(4 marks)

e. What judgements and estimates are made for the recognition and
measurement of the bees, fishes and the honey products above?
(6 marks)

5
8. Tambadau Bhd is a company involved in a much diversified business operation
ranging from palm oil plantation to investment as well as breeding and trading goat
business. The following information was extracted from the books of Tambadau Bhd
on 1 July 2017 :

Details

Owned 50 Goats – 1 month old valued at RM7,500

The following are information related to the goats as at 31 December 2017:

Details RM

The fair value of 50 goats at 1 month old 10,000

The cost to sell of 50 goats at 1 month old 2,000

The fair value of 50 goats at 7 month old 12,500

The cost to sell of 50 goats at 7 month old 1,500

The company adopts fair value model for all its assets and closes its account on 31
December every year.

Required: Calculate the carrying value of the 50 goats on 31 December 2017.

Changes in FV
Due to price changes (show the changes in FV due to changes Gain on
in price of the animal at beginning and year end) change innFV

FVLCTS - 1 month old at beginning = 7,500 500

FVLCTS - 1 month old at year end = (10,000 – 2,000) = 8,000

Due to physical changes (show the changes in FV due to

changes in physical (age) of the animal at beginning and year
end)

FVLCTS - 1 month old at beginning = 7,500 2,500

FVLCTS - 7 month old at year end = (12,500 – 1,500) = 11,000

Revenue Changes in FV of the goat goes to SOPL 3,000

Dr Biological asset 3,000

Cr SOPL gain on change in FV 3,000

Carrying value of the goat

Bal b/d 7,500
Additional purchase -
Add : gain on change in FV 3,000
Carrying amount at year end 10,500

6
9. Mustika Bhd is engaged principally in the breeding and trading of cattle. The company
prepares its financial statements on 31 December each year. On 1 January 2014, the
company owned 100 six (6) months old calves and on 1 July 2014, the company
purchased 50 one (1) year old calves on cash. No animals were sold or disposed
during the year and the cattle matured at the age of one and half (1 ½ ) year old.

The fair value less cost to sell per animal was determined as follows:
6 months 1 year old 1.5 years old

RM RM RM

1 January 2014 120 150 300

1 July 2014 160 200 320

31 December 2014 180 250 350

Owned = bal b/d 1/1/2014 = 100 calves aged 6 months old X RM120 = RM 12,000
1/7/2014 purchase new cattle = 50 calves aged 1 year old X RM200 = RM10,000

Required :

i) Calculate the amount to be recognized in the Statement of Profit or Loss of

Mustika Bhd for the year ended 31 December 2014. (gain or loss on change in
FV)

Gain on change in FV due to price change

6 months old 100 animals x (FV at the end with FV at

beginning)

100 animals x (180 – 120) 6,000

1 year old 50 animals x (250 – 200) 2,500

Gain on change in FV due to physical change (age is

matter)

6 months old 100 x (FV of at year end when they are 1.5 year
 1.5 year old VS FV when they are 6 months old)
old
100 animals x (350 – 180) 17,000

7
 1 year old  50 animals x (350 – 250) 5,000
1.5 year old

Revenue = gain on change in FV of BA (SOPL) 30,500

(4 marks)

ii) Prepare journal entries to record the acquisition of 1 year old calves and
changes in fair values for the year ended 31 December 2014.

Purchase = DR BA 10,000
Cr Bank 10,000

Journal entry end of the year (gain on change in FV)

Dr BA 30,500
Cr SOPL 30,500
(3 marks)

iii) Determine the amount of biological assets of Mustika Bhd as at 31 December

2014.

1/1/2014 Bal b/d 12,000

1/7/2014 Purchase of 50 animals 10,000

31/12/2014 Revenue – gain on change in FV 30,500

Carrying amount end of the year 52,500

Alternatively

31/12/2014 FVLCTS of 100 animals – 1.5 year old 35,000

RM350 x 100

FVLCTS 50 animals – 1.5 year old 17,500

RM350 x 50

Carrying amount end of the year 52,500

(2 marks)

8
10. Sookha Farm Bhd is a beef cattle farm, which is involved in breeding and maturing
cattle for future selling as its main business. The company does not involve in
slaughtering activities. The business was incorporated on 1 January 2014. At that
time, the company acquired 100 6-month old and 40 2-year old cattle.

1/1/2014 acquired: 100 animals , 6-m-o X RM80 = RM8,000

40 animals , 2-y-0 X RM110 = RM4,400

The fair value less cost to sell for these animals are as follows:

Date Details RM per animal

1 January 2014 6-month old 80
1 January 2014 2- year old 110
31 December 2014 6-month old 112
31 December 2014 2- year old 118
31 December 2014 1 ½ - year old 121
31 December 2014 3-year old 130

Required:

a. Calculate the initial cost of the calves and cattle on 1 January 2014.

100 animals , 6-m-o X RM80 = RM8,000

40 animals , 2-y-0 X RM110 = RM4,400
Total initial cost = RM12,400
(6 marks)

b. The gain or loss in fair value for both calves and cattle due to price and physical
changes as at 31 December 2014.

Gain on change in FV due to price change

6 m-o 100 animals x (112 – 80) 3,200
2 y-0 40 animals x (118 – 110) 320

Gain on change in FV due to physical change

6  1.5 100 x (121 – 112) 900
yo
3  3 yo 40 x (130 – 118) 480
Revenue – gain on change in FV 4,900
(10 marks)

9
11. Fresh Bhd had provided the following information regarding to its livestock. Fair value
less cost to sell of livestock as at 1 January 2016:

No. of livestock RM value Per livestock

3 years old 40 950

2 years old 30 650

1 year old 10 420

On 1 July 2016, 5 animals were born. No animal was sold or disposed during the
year. Fair value less cost to sell per animal was as follows:

Recognize new born : Dr BA , CR SOPL (physical change)

2016 RM value per livestock

1 July New-born 150

31 December 4 years old 2,000

31 December 3 years old 1 100

31 December 2 years old 800

31 December 1 year old 490

31 December 6 months old 340

31 December New-born 270

Required:

Calculate the revenues and carrying value for the year ended 31 December 2016.

31/12/2016 Gain on change in FV due to price change

3 years old 40 X (1,100 – 950) 6,000

2 years old 30 X (800 – 650) 4,500

1 year old 10 x (490 – 420) 700

NB 5 x (270 – 150) 600

31/12/2016 Gain on change in FV due to physical change

1/7/2016 5 NB x 150 750

3  4 yo 40 x (2,000 – 1,100) 36,000

2  3 yo 30 x (1,100 – 800) 9,000

10
1  2 yo 10 x (800 – 490) 3,100

NB 6 mo 5 x (340 -270) 350

Revenue – gain on change in FV of BA 61,000

Statement of Profit / Loss for the year ended 31 Dec 2016

RM

Income

Gain on change in FV of BA 61,000

Carrying amount
1/1/2016 3 yo : 40 x 950 = 38,000
Bal b/d
2 yo : 30 X 650 = 19,500

1 yo : 10 x 420 = 4,200 61,700

Add Purchases -

Add Revenue = gain on change in FV 61,000

31/12/2016 Carrying amount (Bal c/d) 122,700

Alternative calculation
31/12/2016 4 yo : 40 x 2000 80,000

3 yo : 30 X 1,100 33,000

2 yo : 10 x 800 8,000

6 mo : 5 animals x 340 1,700

31/12/2016 Carrying amount (Bal c/d) 122,700

Statement of Financial Position as at 31 Dec 2016

11
 RM

Non Current asset

Biological asset 122,700

(16 marks)

12
12. Dear Deer Bhd is in the business of deer farming. They started with 200 of 1 year old
deer. They raised them to their marketable age of about 3 years. The deer will be
slaughtered at the age of 3 years old. The information below is regarding the livestock
for the year ended 31 December 2016:

Date Details
1/1/2016 Hold 200 deer, 1-year-old deer
1/1/2016 Purchased 50 deer, 1.5- year-old deer
30/6/2016 Purchased 30 deer, 2- year-old deer

Below is the information given regarding the fair value less cost to sell per deer:

Date Details RM
1/1/2016 1- year-old deer 90
1/1/2016 1.5- year-old deer 100
30/6/2016 2- year-old deer 115
31/12/2016 1- year-old deer 95
31/12/2016 1.5-year-old deer 110
31/12/2016 2- year-old deer 116
31/12/2016 2.5- year-old deer 118
31/12/2016 3- year-old deer 120

Required:

a. Calculate the carrying amount and the revenue for the year ended 31 December
2016.
(10 marks)

b. Assuming that on 1 January 2016, 1,000 fawns were born. The estimated fair
value of a-day old fawn was RM50. As at 31 December 2016, the fawn was one
year old and had estimated fair value less cost to sell of RM85.

Required: Prepare the relevant journal entries for the above transactions.
(6 marks)

Answer:

a. Calculate the carrying amount and the revenue for the year ended 31 December
2016.

31/12/2016 Increase in FV less cost to sell due to price change

200 x (95-90) 1,00

0

50 x (110-100) 500

30 x (116-115) 30

1,530

13
 Increase in FV less cost to sell due physical change

200 x (116-95) 4,200

50 x (118-110) 400

30 x (118-116) 60

4,660

Revenue 6,190

Date Details SOFP

1/1/2016 Bal b/d 18,000

Purchases 50 x RM 1,000 5,000

30/6/2016 Purchases (30x115) 3,450 26.450

31/12/2016 Revenue 6,190

Carrying value 32,640

Alternative calculation

Carrying value : 200 x 116 = 23,200

50 x 118 = 5,900
30 x 118 = 3,540
32,640

b. Assuming that on 1 January 2016, 1,000 fawns were born. The estimated fair
value of a-day old fawn was RM50. As at 31 December 2016, the fawn was one
year old and had estimated fair value less cost to sell of RM85.

Required: Prepare the relevant journal entries for the above transactions.

1/1/2016
Dr Biological asset 50,000
Cr Gain in SOPL 50,000
(to recognise gain on initial recognition of biological asset)

31/12/2016
Dr Biological asset (85-50) 35,000
Cr Gain in SOPL 35,000
(to recognize gain from a change in FV of biological asset)

14
13. Ternak Maju Bhd is in the business of sheep farming. As at 1 January 2016, the
company owned sheep at different age group attributes as shown below:

Quantity FV per Total

Age group attributes
(unit) animal FVLCTS

One- year old sheep 100 900 90,000

Two-year old sheep 150 1,100 55,000

Three-year old sheep 50 1,350 67,500

On 1 April 2016, the company imported 70 three-month old lambs at a total cost of
RM28,000. (FV per animal = 28,000 / 70 = RM400)
The other operating costs and feeding costs for the year 2016 were RM23,500 and
RM20,500 respectively. (Dr SOPL Cr Bank)

The following information relates to the fair value less cost to sell per animal.

Date Age Fair value less cost to

sell/unit (RM)

1 January 2016 One-year old sheep 900

1 January 2016 Two-year old sheep 1,100

1 January 2016 Three-year old sheep 1,350

31 December 2016 Three-month old sheep 890

31 December 2016 One-year old sheep 1,030

31 December 2016 Two- year old sheep 1,280

31 December 2016 Three-year old sheep 1,520

31 December 2016 Four-year old sheep 2,000

Required:

a. Prepare journal entries to record the acquisition of the biological asset on 1 April
2016.

Dr Biological asset 28,000

Cr Bank 28,000
(2 marks)

b. Determine the amount of fair value changes due to price change and fair value
changes due to physical change.

15
 31/12/2016 Gain on change in FV due to price change

1 yo 100 X (1,030 – 900) 13,000

2 y0 150 x (1,280 – 1,100) 27,000

3 yo 50 x (1,520 – 1,350) 8,500

3 mo 70 X (890 – 400) 34,300

31/12/2016 Gain on change in FV due to physical change

1 yo – 2 yo 100 X (1,280 - 1,030) 25,000

2 y0 – 3 yo 150 x (1,520 – 1,280) 36,000

3 yo – 4 yo 50 x (2,000 – 1,520) 24,000

3 mo – 1 yo 70 X (1,030 – 890) 9,800

Revenue – gain on change in FV of BA 177,600

(7 marks)

c. Determine the carrying value of the sheep as at 31 December 2016.

1/1/2016 Bal b/d

100 x 900 90,000

150 x 1,100 165,000

50 x 1,350 67,500

Add purchases 28,000

Add Revenue – gain on change in FV 177,600

31/12/2016 carrying amount 528,100

OR

31/12/2016

2 yo 100 X 1,280 128,000

3 yo 150 x 1,520 228,000

4 yo 50 x 2,000 100,000

1 yo 70 X 1,030 72,100

16
 31/12/2016 carrying amount 528,100

(3 marks)

d. Prepare the extract of Statement of Profit or Loss of Ternak Maju Bhd for the
year ended 31 December 2016.
(3 marks)

Statement of Profit / Loss for the year ended 31 Dec 2016

RM

Income

Gain on change in FV of BA 177,600

Expenses

Operating exp 23,500

Feeding cost 20,500

17
14. FMB Bhd is principally involved in the business of raising livestock. On 1 January
2017, FMB Bhd has a herd of 150 4-year-old calves. FMB Bhd has furnished the
following information regarding the livestock management of its entity for the year
ended 31 December 2017:

Date Particulars
1 March 2017 Acquired 20 calves, 14-month-old
1 Jul 2017 Acquired 15 calves, 2 ½ - year-old
1 October 2017 4 calves were born

The following are the fair value less cost to sell per calf throughout 2017:

Date Particulars RM
1 January 2017 4- year-old calves 2,000
1 March 2017 14-month-old calves 1,050
1 Jul 2017 2 ½ - year-old calves 1,700
1 October 2017 New-born calves 600
31 December 2017 New-born calves 750
31 December 2017 3-month-old calves 820
31 December 2017 14-month-old calves 1,200
31 December 2017 2- year-old calves 1,600
31 December 2017 2 1/2- year-old calves 2,000
31 December 2017 3-year-old calves 2,200
31 December 2017 4- year-old calves 2,400
31 December 2017 5- year-old calves 3,200

Required:

Compute the following:

a) The amount of changes in fair value to be recognised in the Statement of Profit

or Loss for the year ended 31 December 2017 (showing the effect of price
changes and physical changes clearly).
(11 marks)

b) The carrying amount of biological assets to be recognised in the Statement of

Financial Position as at 31 December 2017.
(5 marks)
Answer

Compute the following:

a) The amount of changes in fair value to be recognised in the Statement of Profit

or Loss for the year ended 31 December 2017 (showing the effect of price
changes and physical changes clearly).

Increase in fair value less costs to sell due to price chance:

150 x (RM2,400 - RM2,000) 60,000

20 x (RM1,200 - RM1,050 3,000

18
 15 x (RM2,000 - RM1,700) 4,500

4 x RM750 - RM600) 600

68,100

Increase in fair value less costs to sell due to physical change:

150 x (RM3,200 - RM2,400) 120,000

20 x (RM1,600 - RM1,200) 8,000

15 x (RM2,200 - RM2,000) 3,000

4 x RM600 2,400

4 x (RM820 - RM750) 280

133,680

Changes in fair value of biological assets (REVENUES) 201 ,780

b) The carrying amount of biological assets to be recognised in the Statement of

Financial Position as at 31 December 2017.

1 January 2017

Brought forward: Fair value (150 x RM2,000 300,000

Purchases: 1 March 2017 - 14month old (20 x RMI 21,000

Purchases: 1 July 2017-2 1/2-year old (15 x RM1,700) 25,500

Changes in fair value of biological assets 201,780 OF

Fair value of biological assets as at 31 December 2017 548,280

Alternative answer to carrying value as at 31 December 2017:

Fair Value Less estimated point-of-sale cost of

herd

150 5-year-old calves (150 x RM3,200) 480,000

20 2-vear-old calves (20 x RM1,600) 32.000

15 3-vear-old calves 15 x RM2,200) 33,000

4 3-month-old claves (4 x RM820 3,280

Fair value of biological assets as at 31 December 2017 548,280

19
15. On 1 January 2018, Farmhouse Bhd actively ventured into dairy cattle farming
business. The company raised them to their marketable age of 4 years. At the
beginning of the year, the company kept its livestock at a different age group attributes
as presented below:

Age group attributes Quantity (unit)

1 ½ year-old cattle 120

2 ½ year-old cattle 80

During the current year, the management of Farmhouse Bhd decided to expand their
farming business in the present location. Consequently, the company acquired an
additional herd of 50 1 ½ -year-old cattle at a market price of RM1,100 each by
cheque from the well-known agriculture supplier in Johor on 1 July 2018.
Furthermore, 10 calves were born on 1 October 2018. No animal was sold or
disposed during the year.

The following is the fair value less cost to sell per cattle throughout 2018:

Date Particulars RM

1 January 2018 1 ½ year-old cattle 1,000

1 January 2018 2 ½ year-old cattle 1,900

1 July 2018 1 ½ year-old cattle 1,100

1 October 2018 New-born calves 600

31 December 2018 New-born calves 750

31 December 2018 3-month-old cattle 840

31 December 2018 1 ½ year-old cattle 1 ,600

31 December 2018 2 - year-old cattle 1 ,800

31 December 2018 2 ½ - year-old cattle 2,200

31 December 2018 3 ½ - year-old cattle 3,200

Required:

a. Prepare the journal entries to record the new-born of the biological assets as at 1
October 2018.
(2 marks)

b. Compute the amount of revenue from the biological assets for the year ended 31
December 2018 (showing the effect of price changes and physical changes
clearly).
(10 arks)

20
 c. Determine the carrying value of biological assets as at 31 December 2018.
(4 marks)

Answer

a. Prepare the journal entries to record the new-born of the biological assets as at 1
October 2018.

Dr biological asset (10 x RM600) 6,000

Cr SOPL (to recognize the newborn) 6,000

b. Compute the amount of revenue from the biological assets for the year ended 31
December 2018 (showing the effect of price changes and physical changes
clearly).

c. Determine the carrying value of biological assets as at 31 December 2018.

(4 marks)

21
Q16. Gagah Perkasa Bhd (GPB) has been engaged in agricultural activities. The company
is the sole supplier of the “Hereford” cow in Kota Kinabalu. The Hereford is the
American Friesian breed of cow imported from the United States of America (USA).

On 1 January 2020, GPB owned 200 Hereford (2-year-old) and imported another 50
Hereford 1-year-old. On 1 July 2020, GPB acquired 20 Hereford of 2-year-old and
10 Hereford were born on 1 October 2020.

The table below shows the fair value per animal. On 31 December 2020, the cost to
sell per animal is RM20.

Fair Value per animal

Age
RM
1 January 2020 1-year-old 1,500
1 January 2020 2-year-old 2,000
1 July 2020 2-year-old 2,500
1 October 2020 Newborn 600
31 December 2020 1 year old 2,800
31 December 2020 2-year-old 3,000
31 December 2020 Newborn 900
31 December 2020 3-month-old 1,000
31 December 2020 2 ½ year old 3,200
31 December 2020 3-year-old 3,600

Required:

a) According to MFRS141 Agriculture, biological transformation comprises the

processes that result in the qualitative or quantitative changes in a biological
asset. State THREE (3) possible outcomes from biological transformation of a
biological asset.
(3 marks)

b) Based on the MFRS141 Agriculture, calculate the following for Gagah Perkasa
Bhd for the year ended 31 December 2020

22
 i. the revenue from Hereford
(11 marks)

ii. the carrying amount of Hereford.

(5 marks)

ANSWER:

a). Biological transformation results in the following types of outcomes:

(i) growth (an increase in quantity or improvement in quality of an animal or

plant),
(ii) degeneration (a decrease in the quantity or deterioration in quality of an
animal or plant),
(iii) procreation (creation of additional living animals or plants); or
(iv) production of agricultural produce such as latex, tea leaf, wool, and milk.
(any 3  x 1 = 3 marks)
b) 1/1/2020 – owned 200 animals (2-year old)
1/1/2020 – purchased 50 animals (1-year-old)
1/7/2020 – purchased 20 animals (2-year old)
1/10/2020 – 10 newborn

i. Revenue
31 Dec 2020 RM RM
Increase in FVLCTS due to price change
2 year old 200 animals x (3000 – 20) – 2000)  196,000
1 year old 50 animals x (2,800 – 20) – 1,500)  64,000
2 year old 20 animals x (3000 – 20) – 2500)  9,600
NB 10 animals x (900 – 20) – 600)  2,800 272,400

Increase in FVLCTS due to physical change

NB recognition 10 animals x 600 6,000 
2  3 yo 200 animals x (3600 – 20) – (3000-20) 120,000
= 200 animals x (3580 - 2980)  
1  2 yo 50 animals x (3000 - 20) – (2800 – 20) 10,000
= 50 animas x (2980 – 2780)  
2  2 ½ yo 20 animals x (3200 – 20) – (3,000 - 20) 4,000
= 20 animals x (3180 – 2980)  
NB  3 mo 10 animals (1000 – 20) – (900 - 20) 1,000 141,000
= 10 animals x (980 – 880)  
Revenue 413,400 
(22  x 0.5 = 11 marks)

ii. Carrying amount

RM
1/1/2020 Opening balance (200 x 2,000) 400,000 
1/1/2020 Purchases (50 x 1,500) 75,000 
1/7/2020 Purchases (20 x 2,500) 50,000 
31/12/2020 Revenue from changes in FV of BA 413,400 

23
 31/12/2020 Carrying amount  938,400

OR

Carrying amount as at 31 December 2020

RM
3 yo 200 animals x (3600 – 20) 716,000 
2 yo 50 animals x (3000 – 20) 149,000 
2 ½ yo 20 animals x (3200 – 20) 63,600 
3 mo 10 animals x (1000 – 20) 9,800 
Carrying amount  938,400
(5  x 1 = 5 marks)

Q17. QUIZ FAR460 JULY 2020

Kobis Dairy Farm (KDF) Bhd has been engaged in agricultural activities. The company is the
sole supplier of the “Lacaune” sheep. The Lacaune is the French Friesian breed of sheep
imported from the United States. The Lacaune sheep produces milk which is responsible for
the famous Roquefort cheese. Besides Lacaune, KDF Bhd also manage the agricultural
activities of the cattle.

On 1 July 2018, the company owned 500 Lacaune sheep (2-year old) and 1,000 cattle (6-
month old). On 1 January 2019, KDF Bhd imported 50 Lacaune sheep, 2-year old. The
company also purchased another 200 cattle, 1 year old, from a local supplier. On 1 April
2019, 10 cattle were born.

The following is fair value less cost to sell per animal of Lacaune and cattle :

Lacaune Cattle

RM RM

1 July 2018 6-month old 950 1,500

1 July 2018 2-year old 1,000 1,600

1 January 2019 1-year old 1,100 1,800

1 January 2019 2-year old 1,200 1,950

1 April 2019 New-born 500 800

30 June 2019 New-born 600 1,000

30 June 2019 3-month old 750 1,500

30 June 2019 6-month old 1,200 2,200

30 June 2019 1 year old 1,500 2,600

30 June 2019 1 ½ year old 1,800 3,000

30 June 2019 2- year old 2,000 3,200

30 June 2019 2 ½ year old 2,300 3,600

24
30 June 2019 3- year old 2,500 4,000

KDF Bhd also owns a 100-hectars of land used to grow dragon fruit trees. KDF Bhd closes
its accounts on 30 June every year.

Required:

a) Based on the MFRS141 Agriculture, calculate the following for the year ended 30 June
2019

i. revenue from the Lacaune

(6 marks)

ii. revenue from the cattle

(7 marks)

b) Prepare the related journal entries for KDF Bhd the year ended 30 June 2019:
(3 marks)

c) Calculate the total carrying value of the biological asset as at 30 June 2019
(6 marks)

d) Briefly discuss the classification of the dragon fruit trees, the dragon fruits and the 100-
hectar land to KDF Bhd in accordance to the relevant accounting standards.
(3 marks)
(Total : 25 marks)

SUGGESTED SOLUTION

b) Based on the MFRS141 Agriculture, calculate the following for the year ended 30 June
2019

iii. revenue from the Lacaune

(6 marks)

1/7/2018 – owned 500 Lacaune sheep (2-year old)

1/1/2019 - 50 Lacaune sheep, 2-year old purchased
30 June 2019 RM RM

Increase in FV due to price change

2 year old 500 animals x (2,000 -1,000) √√√ 500,000

2 -year old 50 animal x (2,000 – 1,200) √√√ 40,000 540,000

Increase in FV due to physical change

2  3 yo 500 animals x (2,500 – 2,000) √√√ 250,000

2  2 ½ yo 50 animals x (2,300 – 2,000) √√√ 15,000 265,000

25
 Revenue - Increase in FV of Lacaune 805,000

(12 √ x 0.5 = 6 marks)

iv. revenue from the cattle

(7 marks)

Cattle
1/7/2018 – owned 1,000 cattle (6-month old)
1/1/2019 – purchased 200 cattle, 1 year old
1/3/2019 – 10 NB
30 June 2019 RM RM

Increase in FV due to price change

6-mo 1000 animas x (2,200 – 1,500) √√√ 700,000

1-yo 200 animals x (2,600 – 1,800) √√√ 160,000

NB 10 animals x (1,000 -800) √√√ 2,000 862,000

Increase in FV due to physical change

NB recognized 10 NB x 800 √√ 8,000

6 mo  1 ½ yo 1000 animals x (3,000 -2,200) √√√ 800,000

1 yo  1 ½ yo 200 animals x (3,000 – 2,600) √√√ 80,000

NB  3 mo 10 animals x (1,500 – 1,000) √√√ 5,000 893,000

Revenue – Increase in FV of cattle √ 1,755,000

(21 √ / 1/3 = 7 marks)

26
b) Prepare the related journal entries for KDF Bhd the year ended 30 June 2019:
(3 marks)

Debit RM Credit RM

Acquisition of animals

Biological asset √ 420,000

Bank 420,000 √ √ OF

Lacaune: (50 x RM1,200) = 60,000 √

Cattle : (200 x RM1,800) = 360,000 √

Total : 420,000

Recognition of NB

Biological asset 8,000

SOPL √ 8,000

Changes in FV
(Revenue)

Biological asset 2,552,000 √ OF

SOPL √ 2,552,000

Price change = 805,000

Physical change = 1,755,000 – 8,000 = 1,747,000

Total = 1,747,000 + 805,000 = 2,552,000

(6 √ x 0.5 = 3 marks)

OR

Debit RM Credit RM

Acquisition of animals

Biological asset √ 420,000

Bank 420,000 √√ OF

Lacaune: (50 x RM1,200) = 60,000

Cattle : (200 x RM1,800) = 360,000

Total : 420,000

27
Changes in FV
(Revenue)

Biological asset 2,560,000 √√ OF

SOPL √ 2,560,000

Price change = 805,000

Physical change = 1,755,000

Total = 2,560,000

28
c) Calculate the total carrying value of the biological asset as at 30 June 2019
(6 marks)

Lacaune Cattle Total (RM)

RM RM
Opening balance
500 animals x 1,000 500,000 √ 2,000,000
1,000 animals x 1,500 1,500,000 √
Add : acquisition 420,000 √
Add : revenue 805,000 √ 1,755,000 √ 2,560,000
Carrying value 4,980,000 √

OR

Lacaune Cattle Total (RM)

RM RM
3y0 – 500 animals x 2,500 1,250,000 √ 1,365,000
2 ½ yo = 50 x 2,300 115,000 √
½ yo = 1,000 x 3,000 3,000,000 √ 3,615,000
½ yo = 200 x 3,000 600,000 √
3 mo = 10 x 1,500 15,000 √
Carrying value 4,980,000 √
(6 √ 1 mark = 6 marks)

d) Briefly discuss the classification of the dragon fruit trees, the dragon fruits and the 100-
hectar land to KDF Bhd in accordance to the relevant standards

Land A PPE under MFRS116 because it is a tangible asset used in

agricultural activities and can be used for more than one reporting
period √

Dragon fruit The dragon fruit trees are the bearer plant under MFRS116 √
trees
Dragon fruits The fruits are the agricultural produce under MFRS141 √

(3 marks)

29
Q18. QUIZ FAR460 JAN 2021

BKI Bhd was incorporated on 1 October 2018 in Permai Meat Valley, Kota Kinabalu. The
business focuses in rearing, breeding and selling livestock animals to fulfil the high demand
in the local market but it is not involved in slaughtering activities. BKI Bhd had provided the
following information regarding the livestock management of its business:

1. On 1 October 2019 the company owned 100 six-month old calves and 150 one-year-
old sheep.
2. On 1 April 2020 BKI Bhd purchased 30 calves 1-year-old and 50 2-year-old sheep
3. On 1 July 2020, 10 sheep were born

BKI Bhd closes its accounts on 30 September every year. The fair value less cost to sell per
animal for the year ended 30 September 2020 are as follows:

1 October 1 April 2020 1 July 2020 30 September

Animals 2019 (RM) (RM) 2020
Calves RM RM RM RM
6-month-old 800 1,200 1,400 1,600
1-year-old 1,500 1,800 2,000 2,400
1 ½ year old 1,900 2,400 2,800 3,100
2-year-old 2,300 2,800 3,000 3,500
3-year-old 2,500 3,000 3,200 3,600

Sheep
New born 300 550 700 850
3-month-old 450 600 750 900
6-month-old 400 600 800 1,000
1-year-old 700 1,100 1,500 1,800
1 ½ year old 1,000 1,200 1,800 2,000
2-year-old 1,200 1,500 1,900 2,200
2 ½ year-old 1,500 1,700 2,000 2,500
3-year-old 2,000 2,300 2,700 3,200

Required:

a) Determine the revenue from biological assets for the year ended 30 September 2020
(12 marks)

b) Provide the journal entries for the transactions on 1 April 2020 and 1 July 2020.
(4 marks)

c) Identify the carrying value of the biological assets at 30 September 2020

(5 marks)

d) Show the Statement of Profit or Loss for the year ended 30 September 2020 (extract)
and the Statement of Financial Position as at 30 September 2020 (extract)
(4 marks)

30
SUGGESTED SOLUTION

BKI BHD
Statement of Profit or Loss for the year ended 30 September 2020 (extract) 
RM
Income 
Gain on change in FV of biological assets  553,000

BKI Bhd
Statement of Financial Position as at 30 September 2020 (extract) 
RM
Non-Current Assets
Biological assets  867,000 

Gain on change in FV 30 September 2020

Due to price change RM RM
Calves
6-m-o 100 animals 1,600 – 800 = 800   80,000
1-y-o 30 animals 2,400 – 1,800 = 600  18,000

Sheep
1-y-o 150 animals 1,800 – 700 = 1,100  165,000
2-y-o 50 animals 2,200 – 1,500= 700  35,000
NB 10 animals 850 -700 = 150  1,500 299,500

Due to physical changes

Calves
6-m-o  1.5-y-o 100 animals 3,100 – 1,600 = 1,500  150,000
1-y-o  1.5-y-o 30 animals 3,100 – 2,400 = 700  21,000

Sheep
NB Recognition 10 animals 700 7,000 
1-y-o  2-y-o 150 animals 2,200 – 1,800 = 400  60,000
2-y-o  2.5-y-o 50 animals 2,500 – 2,200= 300  15,000
NB  3-m-o 10 animals 900 – 850 = 50  500 253,500

Revenue from biological assets  553,000 

(12 marks)

Carrying amount 30 September 2020

1/10/2019 Bal b/d RM
100 6-m-o calves X RM800 80,000 
150 1-y-o sheep x RM700 105,000 
1/4/2020 Purchased
30 1-y-o calves x RM1,800 54,000 
50 2-y-o sheep x RM1,500 75,000 
30/9/2020 Revenue for the year 553,000 

31
30/9/2020 Carrying value 867,000

OR

30/9/2020 RM
Calves
1.5 y-o – 100 animals x RM3,100 310,000 
1.5 y-o – 30 animals x RM3,100 93,000 

Sheep
2-y-o – 150 animals x RM2,200 330,000 
2.5-y-o – 50 animals x RM2,500 125,000 
3-m-o – 10 animals x RM900 9,000 

Carrying value 867,000

Dr BA  (54 + 75) 129,000 

Cr Bank  129,000

Dr BA  7,000 
Cr SOPL  7,000 

32