You noted the following related to the biological assets owned by Levi Farms, Inc. in connection with your audit.
Carrying amount, January 1, 2018 P800,000
Purchases 230,000
Gain arising from changes in fair value less costs to sell attributable to physical changes 60,000
Gain arising from changes in fair value less costs to sell attributable to price changes 40,000
Sales 110,000
QUESTIONS:
Based on the above information and the results of your computation, answer the following:
1. The carrying amount of the biological assets on December 31, 2018 is
a. P1,030,000 c. P1,020,000
b. P1,130,000 d. P 920,000
2. The amount to be recognized in 2018 profit or loss related to these biological assets is
a. P100,000 c. P 20,000
b. P210,000 d. P110,000
Answers
STARCorporaticnisaCompi]n),invclvedinmanufactLtringcars,onJanuaryl,20l3,theboardofdirectors
of
tire
saidcompanyhas
deci,:1eci
to
acqLrire
the
net
asieis
of
l',lovACorporation
and
RISECorporation'suppliers
of
materials
they
Lrss
in
prorluctir.rn.
The
mergeris
expected
to
result
in
producinghigher
qualitycars
with
lower
total
cost
The dealwasclo:ecl
on
i.ebruary29,2073
anci
the
followinginformationwasgathered
fromthe
books
ofthe
entilies:
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PRACTICALACCOI.';'ITING
PROBLEMS
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dJERR.ERO
1
GERMAN
stY
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ffi.lEsus
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IJM
/
trRRER
BUSINESS
COMBINATION
DATEOF
ACQUISITION
n{ rn nnn
Liabilities
iabilities
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=
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s2opqoj
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earninqsi
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-e1,05o.ooo-1
Star
vrrlil
issue
22,500
of
its
ccr'nnron
stock
in
exchange
for-
the
net
assets
of
Nova
and
11,200
of
itscommon
stock
in
exchange
forthe
net
assets
of
Rise,
tnJ
fair
value
of
Star's
shares
is
P150'
In
addition,
the
followingadjustments
shc'".rlcl
Letriade:
.
Currentassets
of
liluva
ancj
Rischave
a
fair
value
of
tr450,000
and
P230,000respectiveiy'
"
Noncurrentassets
nlve
a
fair
value
of
P2,150,CCO
aridP1,9/5,000
for
NovaandRise,respectively'Ccmpute
for the
folio'win
balances
of
Star
Compan;'on
ihe
date
oi
acquisition:
Stockholders'equlty
A.
P6,
118,5Ci-)
B.
P7.980,00i'
c,
P3,496,500
D.
P9,615,000Assets
A.
P10,290,000
B.
P9,240,000
c.
P10,500,000
D
P9,840,000
PAT-7400
I
I
NOVARISE
DA