Question

In: Accounting

ABC Company has the following information pertaining to its biological assets for the year 2020: A...

ABC Company has the following information pertaining to its biological assets for the year 2020:

A herd of 150, 3-year old animals was held at January 1, 2020. Eight animals aged 2.5 years were purchased on July 1, 2020 for P 3,400, and ten animals were born on July 1, 2020. No animals were sold or disposed of during the period. Per unit fair values less estimated point-of-sale costs were as follows:

3.0-year old animal at January 1, 2020	2,000
Newborn animal at July 1, 2020	1,500
2.5-year old animal at July 1, 2020	3,400
Newborn animal at December 31, 2020	2,600

0.5-year old animal at December 31, 2020	3,000
3.0-year old animal at December 31, 2020	2,750
2.5-year old animal at December 31, 2020	3,650
4.0-year old animal at December 31, 2020	3,000

Instructions:

21. How much is the balance of biological assets as of January 1, 2020?

22. How much of the increase in the fair value of the biological asses due to price change?

23. How much of the increase in the fair value of the biological assets due to physical change?

24. What is the fair value of the biological assets as of December 31, 2020?

25. If four 2.5 years old animal was sold on July 1, 2020, how much is the balance of biological assets as of December 31, 2020?

Expert Solution

21. Balance of biological assets as of January 1, 2020--$2000

ie. 3.0-year old animal at January 1, 2020 = 2000

22.Value of increase in the fair value of the biological asses due to price change

Working table	3.0 yr.old	Newborn	2.5 yr.old
Jan 1,2020	2000
Additions,July 1,2020		1500	3400

Dec 31,2020	3000	3000	2750
Additions, Dec 31.2020		2600	3650

so, answering 22 & 23 , reading form the above,

Value of increase in the fair value of the biological asses due to price change

(3000-2000)=

1000

23. Value of increase in the fair value of the biological assets due to physical change

(3000-1500)+(2750-3400)+2600+3650=

7100

24.Fair value of the biological assets as of December 31, 2020
Newborn animal at December 31, 2020	2,600
0.5-year old animal at December 31, 2020	3,000
3.0-year old animal at December 31, 2020	2,750
2.5-year old animal at December 31, 2020	3,650
4.0-year old animal at December 31, 2020	3,000
Total Fair value as of Dec 31, 2020	15,000

25. If four 2.5 years old animal was sold on July 1, 2020, balance of biological assets as of December 31, 2020

15000-(2750/8*4)=

13625

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