Fairyland Company purchased dairy cattle at an auction for ₱300,000 on July 1, 2014. Cost of transporting the cattle to the company’s farm was ₱3,000 and the company would have to incur cost similar amount of transportation cost if it was to sell the cattle in the auction, in addition to the auctioneer’s fee of 2% of sales price. On December 31, 2014, after taking into account and location, the fair value of the biological assets had increased to ₱500,000 (that is, the market price including the cost of transporting the asset). What amount should the biological assets be initially recognized?
Fairyland Company purchased dairy cattle at an auction for ₱300,000 on July 1, 2014. Cost of transporting the cattle to the company’s farm was ₱3,000 and the company would have to incur cost similar amount of transportation cost if it was to sell the cattle in the auction, in addition to the auctioneer’s fee of 2% of sales price. On December 31, 2014, after taking into account and location, the fair value of the biological assets had increased to ₱500,000 (that is, the market price including the cost of transporting the asset). What amount should the biological assets be initially recognized?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Fairyland Company purchased dairy cattle at an auction for ₱300,000 on July 1, 2014. Cost of transporting the cattle to the company’s farm was ₱3,000 and the company would have to incur cost similar amount of transportation cost if it was to sell the cattle in the auction, in addition to the auctioneer’s fee of 2% of sales price.
On December 31, 2014, after taking into account and location, the fair value of the biological assets had increased to ₱500,000 (that is, the market price including the cost of transporting the asset).
What amount should the biological assets be initially recognized?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education