On July 1, KAW Inc. purchased 75 cows which, at that time were 2.5 years old for a total cost of P1,350,000. On December 31, the cows gave birth to 15 calves. The following information on fair value less cost of disposal of biological assets is made available: (Refer to image) What amount of gain from biological assets will KAW Inc. report in its December 31 Income Statement? * 2.5 years old cow on December 31 3 years old cow on December 31 Newborn calf on July 1 20,000 25,000 5,000 Newborn calf on December 31 6,500

On July 1, KAW Inc. purchased 75 cows which, at that time were 2.5 years old for a total cost of P1,350,000. On December 31, the cows gave birth to 15 calves. The following information on fair value less cost of disposal of biological assets is made available: (Refer to image) What amount of gain from biological assets will KAW Inc. report in its December 31 Income Statement? * 2.5 years old cow on December 31 3 years old cow on December 31 Newborn calf on July 1 20,000 25,000 5,000 Newborn calf on December 31 6,500

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Description: On July 1, KAW Inc. purchased 75 cows which, at that time were 2.5 yearsold for a total cost of P1,350,000. On December 31, the cows gave birth to15 calves. The following information on fair value less cost of disposal ofbiological assets is made av

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion

Section: Chapter Questions

Problem 38P

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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Question

On July 1, KAW Inc. purchased 75 cows which, at that time were 2.5 years
old for a total cost of P1,350,000. On December 31, the cows gave birth to
15 calves. The following information on fair value less cost of disposal of
biological assets is made available: (Refer to image) What amount of gain
from biological assets will KAW Inc. report in its December 31 Income
Statement? *
2.5 years old cow on December 31
20,000
3 years old cow on December 31
Newborn calf on July 1
25,000
5,000
Newborn calf on December 31
6,500

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