government accounting part 3

39問 • 1年前

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Means farming of the process of producing crops and raising livestock.

Agriculture

Is the management by an entity of the biological transformation and harvest of biological assets for sale, including exchange or non-exchange transactions, or for conversion into agricultural produce, or into additional biological assets.

agricultural activity

Common features of agricultural activities

1. Capability to change 2. Management of change 3. Measurement of change

Living animals and plants are capable of biological transformation

capability to change

Management facilities biological transformation by enhancing, or at least stabilizing, conditions necessary for the process to take place. Such management distiguishes agricultural activity from other activities.

management of change

The change in quality or quantity brought about by biological transformation or harvest is measured and monitored as a routine management function.

measurement of change

Comprises the following processes that cause quantitative or quantitative changes in biological asset

biological transformation

Asset changes through

1. growth 2. procreation 3. degeneration

Is an increase in quantity or improvement in quality of an animal or plant

growth

Is the creation of additional living animals or plants

procreation

Is a decrease in the quantity or deterioration in quality of an animal or plant

degeneration

Is a living animal or plant

biological asset

Is the harvested product of the entity’s biological assets.

agricultural produce

Is the detachment of produce from a biological asset or the cessation of a biological asset’s life processes.

Harvest

Biological asset or agricultural produce is recognized when

it meets the asset recognition criteria, including the reliable measurement of its fair value or cost

Biological assets are initially and subsequently measure at

fair value less costs to sell

The gain or loss arising from initial measurement and subsequent changes in fair value less costs to sell are recognized in

surplus or deficit

Biological assets whose fair value cannot be reliably determined on initial recognition are initially measured at_______ and subsequently measured at_____________

cost cost less accumulated depreciation and accumulated impairment losses

Agricultural produce is initially measured at

fair value less costs to sell at the point of harvest

Are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income taxes

costs to sell

Fair value is determined as

quoted price in an active market less: transaction costs = fair value

Is a market in which all the following condition exist: The items traded in the market are homogeneous Willing buyers and sellers can normally be found at any time Prices are available to the public

active market

If there are more than one active markets, the entity shall use the _____

price in the market expected to be used

If there is no active market, the entity shall estimate the market price based on the following The_______________ provided that there is no significant change in economic circumstances between the date of that transaction and the reporting date.

most recent market transaction price

With adjustment to reflect differences

market prices for similar assets

Such as the value of an orchard expressed per export tray, bushel, or hectare, and the value of cattle expressed per kilogram of meat.

sector benchmarks

From the asset discounted at a current market-determined rate, in circumstances where market-determined prices or values are not available for a biological asset in its present condition.

Present value of expected net cash flows

Are irrelevant when determining fair value

contract prices

Refer to all costs necessary in getting the asset to the market for the sale

transport costs

The determination of fair value may be facilitated by grouping biological assets or agricultural produce according to

significant attributes

Cost may sometimes approximate fair value, particularly when

1. little biological transformation has taken place since initial cost incurrence 2. the impact of the biological transformation on price is not expected to be material

May not have a separate market but an active market may exist for the combined assets as a package.

biological assets attached to land

A biological asset that is previously measured at fair value less costs to sell shall be measured at fair value less costs to sell until

it is disposed

Are those that are to be harvested as agricultural produce or to be sold or distributed as biological assets.

consumable biological assets

Are those that are self-generating and are used repeatedly for more than one year.

bearer biological assets

Are those that have attained harvestable soecifications (for consumable biological assets) or are able to sustain regular harvests (for bearer biological assets)

mature biological assets

Illustration 1. Journal Entry Entity A purchases five breefing stocks at ₱3,000 each, equal to the fair value less costs to sell (FVLCS) at the acquisition date. The journal entry is as follows

dr. breeding stocks. 15k cr. cash in bank-local currency, current 15k

Ten breeding stocks are born. The FVLCS on date of birth is ₱2,000 each. The journal entry is as follows:

dr. breeding stocks. 20k cr. gain on initial recognition of biological assets. 20k

Illustration 2. On January 1, 2021, Entity A has five 2-year old breeding stocks with total carrying amount of ₱25,000. The following transactions occured during the period: a. On July 1, 2021, ten breeding stocks were born. The FVLCS on this date is ₱2,000 each. b. On July 1, 2021, two-year old breeding stocks were purchased for ₱5,100 each, equal to the FVLCS on this dateZ c. On december 31, 2021, three breeding stocks were born. The FVLCS on this date is ₱2,100 each. The FVLCS on December 31, 2021 are as follows Age. FVLCS new born. ₱2,100 0.5 yr. Old. ₱2,150 2 yrs old. ₱5,200 2.5 yrs old. ₱5,400 3 years. ₱5,700 Requirements: compute for the change in FVLCS (a) due to price change (b) due to physical change

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Charles Jaojao · 26問 · 1年前

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