a) Prepare the related journal entries for livestock farming for the financial year 2020. b) Prepare an extract of the Statement of Comprehensive Income for the year ended 30 June 2020 relating to livestock farming
QUESTION 3
Farming Bhd is an agriculture company that operates in Cameron Highlands. The company ventures into livestock farming and closes its accounts on 30 June each year. Miss Eda, the finance manager, requires your assistance in accounting for the farming transactions.
Farming Bhd raises a herd of sheep and lambs on the hill. The lamb becomes a sheep at the age of 13-month-old and female sheep (ewe) gives birth to the lamb when it reaches the age of 15-month-old. The company usually sells the sheep in the principal market at the age of 15-month-old, whereas the lambs could be sold when they turn into 7-month-old.
On 30 June 2019, Farming Bhd had 50 sheep aged above 2-year-old, 10 lambs aged 2-month-old, and 15 lambs borne three days ago. The information below is related to the fair value less cost to sell of the sheep and lamb at the respective dates:
| 30 June 2019 (per unit) | 30 June 2020 (per unit) | |
| Sheep ( above 2 year old) | 840 | 885 |
| Sheep (below 2 year old) | 800 | 835 |
| Lamb ( below 13 month old) | 400 | 420 |
On 30 April 2020, the company managed to sell 15 sheep aged above 2-year-old at RM885/unit and 5 lambs aged at 12-month-old at RM420/unit. The feeding and operating expenses incurred for livestock farming during the year was RM3,500. On 30 June 2020, the ewes gave birth to 12 lambs.
3
REQUIRED:
(Round all numbers to the nearest RM)
a) Prepare the related
b) Prepare an extract of the Statement of Comprehensive Income for the year ended 30 June 2020 relating to livestock farming.
c) Miss Eda heard that farming entities treat grants from the government in a different manner than other types of entities. She is interested to know whether the accounting treatment of MFRS 141 Agriculture on government grants differ from other MFRS. Discuss the concern raised by Miss Eda.
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