TOPIC 3,4,5

• Living animals and plants are always accounted for biological assets

  false
• Biological assets are initially and subsequently measured at fair value less costs to sell.

  true
• Agricultural produce is measured at fair value less costs to sell only at the point of harvest.


  true
• An essential element of agricultural activity is the management of the biological transformation of biological assets.


  true
• Entity A’s dairy cattle gave birth to a calf. The fair value less costs to sell of the new born calf is P10,000. Entity A recognizes a gain of P10,000 from the initial recognition of the calf.

  true
• A loss can arise from the initial measurement of a biological asset.

  true
• Fair value is quoted price in an active market less transaction costs.


  false
• Entity A acquires a biological asset for P100, equal to fair value, and incurs transaction cost of P10 on the purchase. If the asset’s costs to sell is P20, Entity A will recognize a loss of P30 on the initial recognition of the purchased asset.

  true
• Entity A recognizes a gain of P100 from the change in FVLCS of its biological assets during the period. If the change in FVLCS due to price change is P70, the change in FVLCS due to physical change must be P40.

  false
• If there are more than one active markets for a biological asset, the entity shall use the price in the market expected to be used when determining fair value.

  true
• According to the GAM for NGAs, a biological asset is a. an animal or plant b. an asset used in farming c. a living animal or plant d. a harvested product


  c
• The common features of agricultural activities include all of the following except a. capability to change b. management of change c. measurement of change d. wind of change

  d
• Which of the following is an agricultural produce? a. carabao b. harvested palay c. extra rice d. powdered milk

  b
• Biological assets


  Assets that are living plants and animals
• Which of the following are not considered costs to sell? a. commissions to brokers b. levies by regulatory agencies and commodity exchanges c. transfer taxes and duties d. transport costs


  d
• According to the GAM for NGAs, if there is no active market for a biological asset A. the entity shall measure the biological asset at cost less accumulated depreciation. b. the entity shall measure the biological asset at cost less accumulated depreciation and accumulated impairment losses. c. the entity shall use a contract price in determining the fair value. d. the entity shall estimate the market price using the guidance set forth in the GAM for NGAs.


  d
• Agricultural produce after the point of harvest is accounted for as a. Inventory b. PPE c. Prepaid assets d. Investment property


  a
• The carrying amount of a group of biological assets of Entity A is P100,000 before any yearend adjustment. If the year-end fair value is P120,000 while the year-end estimate of costs to sell is P5,000, which of the following statements is correct? a. Entity A will recognize a gain of P15,000 in surplus or deficit. b. Entity A will recognize a gain of P15,000 directly in equity. c. Entity A will recognize a gain of P10,000 in surplus or deficit. d. Entity A will recognize a gain of P25,000 in surplus or deficit.

  a
• Which of the following need not be disclosed in relation to the accounting for biological assets? a. Consumable and bearer biological assets b. Mature and immature biological assets c. The amount of change in fair value less costs to sell due to physical changes and due to price changes d. The gain or loss on initial recognition of agricultural produce separately from that of biological assets


  d
• Entity A is determining the measurement of its biological assets at the end of the period. Entity A’s biological assets consist of trees in a plantation forest. There is no separate active market for these trees. However, Entity A was able to gather the following information:  FVLCS of land, land improvements and trees as a package, P10M.  FVLCS of land, P8M.  FVLCS of land improvements, P500,000 How much is the valuation of the trees in Entity A’s year-end statement of financial position? a. P10,000,000 b. P2,000,000 c. P1,500,000 d. P1,000,000


  c
• Living animals and plants are accounted for as biological assets a. only if they are harvested for sale. b. only if they relate to agricultural activity. c. in all cases. d. all of these.

  b
• The essential element of an agricultural activity is a. the management of the biological transformation of biological assets. b. the assets are alive. c. it involves harvesting activity. d. the conversion of raw materials into finished goods.

  a
• Which of the following is a biological asset? a. Land used in farming b. Picked fruits c. Fruit cocktail d. Trees in a plantation forest

  d
• Which of the following statements is correct regarding the measurement of assets related to agricultural activities? a. Biological assets are initially and subsequently measured at fair value. b. No gain or loss shall be recognized on the initial recognition of a biological asset. c. Agricultural produce is initially and subsequently measured at fair value less costs to sell. d. The gain or loss arising from the initial measurement of biological asset or agricultural produce is recognized in surplus or deficit.


  d
• An entity shall capitalize as part of the cost of an investment property the operating losses incurred before the investment property achieves the planned level of occupancy.

  false
• According to the GAM for NGAs, government entities may choose to use either the cost model or the fair value model to subsequently measure investment properties.

  false
• According to the GAM for NGAs, an entity shall not depreciate an asset while it is classified as investment property.

  false
• Recoverable amount is the lower of an asset’s fair value less costs to sell and value in use.


  false
• If an asset’s recoverable amount exceeds its carrying amount, the asset is impaired.


  false
• An investment property with carrying amount of PIO is determined to have a fair value less costs to sell of P7 and a value in use of P8. The impairment loss is P3.

  false
• An investment property with carrying amount of P10 is sold for P7. Transaction costs on the sale amounted to P1. The loss on derecognition is P4.

  true
• An investment property that was previously impaired is determined to have a new recoverable amount of P10. Right now, the asset’s carrying amount is P7. However, if no impairment loss had been recognized in the prior year’ the asset would have a carrying amount of P9 by now. The gain on reversal of impairment, therefore, is P1.

  false
• According to the GAM for NGAs, a government entity shall, at each reporting date, determine the recoverable amount of an investment property and compare it with its carrying amount.

  false
• An entity need not compute for the value in use of an asset if the entity has no reason to believe that the value in use exceeds the fair value less costs to sell.


  true
• Which of the following is considered an investment property? A. Owner-occupied property awaiting disposal. B. Property that is leased to another entity under a finance lease. C. Property held for use in the production or supply of goods or services or for administrative purposes. D. A building held by the entity under a finance lease and leased out under one or more operating leases on a commercial basis.


  d
• Which of the following would not be reported as investment property? a. Property owned by the entity and leased out under one or more operating leases. b. Property head by the entity to be leased out under one or more operating leases. c. Real estate held with an undetermined future use. d. Property owned by the entity and leased out to another entity under a finance lease.


  d
• Which of the following costs may properly be included in the carrying amount of an investment property? a. Start-up costs, such as opening costs. b. Operating losses incurred before the investment property achieves the planned level of occupancy. c. Abnormal amounts of wasted materials, labor or other resources incurred in constructing or developing the property. d. Accrued taxes prior to acquisition date that the entity assumes an obligation to pay.


  d
• Which of the following is an investment property? a. Property held to provide a social service and which also generate cash inflows. b. Property held for strategic purposes. c. Property occupied by employees. d. Property that is being constructed or developed for future use as investment property.


  d
• Which of the following is not an investment property? a. Land held for long-term capital appreciation rather than for short-term sale in the ordinary course of operations. b. Land held for a currently undetermined future use. c. A building owned by the entity (or held by the entity under a finance lease) and leased out under one or more operating leases on a commercial basis. d. Equipment held to be leased out under one or more operating leases on a commercial basis to external parties.


  d
• According to the GAM for NGAs, government entities shall measure an investment property as follows: Initial Subsequent a. cost ; Cost model or Fair value Model b. cost ; Cost Model c. fair value ; Fair value Model d. fair value ; Cost Model or Fair value Model

  b