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Chapter 9: Q4IFRS (page 500)

Briefly describe the valuation of (a) biological assets and (b) agricultural produce

Short Answer

Expert verified

(a) Biological assets are estimated on initial recognition and recorded at the net realizable value at the end of each year.

(b) Agricultural products are recorded at the net realizable value at the time of harvesting.

Step by step solution

01

Biological assets accounting

(a) Biological assets are related to animals and plants such as cattle, fruits, trees, etc. These are recorded at an initial price, and then after the end of each reporting period, the loss is recorded due to the fluctuations in the net realizable value.

02

Agricultural produce accounting

(b) Agricultural produce is the products harvested after procuring it from biological assets sources. It includes cotton, milk, wool, etc. When harvesting is done, the net realizable value of the asset is treated as a cost and treated like other inventories held for sale by the business.

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Most popular questions from this chapter

The financial statements of ConAgra Foods, Inc.’s 2014 annual report disclose the following information. (in millions) 2014 2013 2012 Year-end inventories \(2,201 \)2,077 \(2,341 Fiscal Year 2014 2013 Net sales \)17,703 $15,427 Cost of goods sold 13,980 11,864 Net income 315 786Instructions Compute ConAgra’s (a) inventory turnover and (b) the average days to sell inventory for 2014 and 2013.

Bell, Inc. buys 1,000 computer game CDs from a distributor who is discontinuing those games. The purchase price for the lot is \(8,000. Bell will group the CDs into three price categories for resale, as indicated below. Group No. of CDs Price per CD 1 100 \) 5 2 800 10 3 100 15 Determine the cost per CD for each group, using the relative sales value method

Corrs Company began operations in 2016 and determined its ending inventory at cost and at lower-of-LIFO cost-or-market at December 31, 2016, and December 31, 2017. This information is presented below. Cost Lower-of-Cost-or-Market 12/31/16 \(356,000 \)327,000 12/31/17 420,000 395,000 Instructions (a) Prepare the journal entries required at December 31, 2016, and December 31, 2017, assuming that the inventory is recorded at market, and a perpetual inventory system (cost-of-goods-sold method) is used. (b) Prepare journal entries required at December 31, 2016, and December 31, 2017, assuming that the inventory is recorded at market under a perpetual system (loss method is used). (c) Which of the two methods above provides the higher net income in each year?

Question:The conventional retail inventory method yields results that are essentially the same as those yielded by the lower-of-cost-or-market method. Explain. Prepare an illustration of how the retail inventory method reduces inventory to market.

Question:Amiras Corporation began operations on January 1, 2017, with a beginning inventory of \(30,100 at cost and \)50,000 at retail. The following information relates to 2017. Retail Net purchases (\(108,500 at cost) \)150,000 Net markups 10,000 Net markdowns 5,000 Sales revenue 126,900 Instructions (a) Assume Amiras decided to adopt the conventional retail method. Compute the ending inventory to be reported in the balance sheet. (b) Assume instead that Amiras decides to adopt the dollar-value LIFO retail method. The appropriate price indexes are 100 at January 1 and 110 at December 31. Compute the ending inventory to be reported in the balance sheet. (c) On the basis of the information in part (b), compute cost of goods sold.
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