Accounting Theory 9

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ACCT3003 Issues in Accounting Theory
SP5 2010

Topic 4: Heritage and biological assets.

The following question has some minor changes due to amendments to AASB 141 which removed reference to ‘estimated point of sale costs” and replaced it with “costs to sell”.

9.22In 2005, Nambour Limited established and commenced operation of a mango farm. The trees were planted in 2005 and began producing saleable mangoes in 2011. On 30 June 2012, 90% of the mangoes are sold, one week after they were picked, for a sales price of $210,000. Selling costs were $3,000. The remaining 10% of the picked mangoes are recognised as inventories at the end of the reporting period, this being 30 June 2012.

The fair value less costs to sell of the mango trees at 30 June 2011 (the end of the previous reporting period) was $480,000 and, at 30 June 2012, $550,000. During the reporting period ending 30 June 2012 employee expenses, fertilisers, lease expenses and other expenses amounted to $50,000. The fair value less costs to sell of the mangoes immediately after picking and packing amounted to $220,000.

Required
Prepare the journal entries to record:
(a)The costs incurred to maintain the biological assets
(b)The harvesting of the agricultural produce from the biological asset (c)The sale of the agricultural produce and
(d)The changes in the fair value of the biological assets between the ends of the 2 reporting periods ACCT3003 Issues in Accounting Theory
SP5 2010

Topic 4: Heritage and biological assets.

The following question has some minor changes due to amendments to AASB 141 which removed reference to ‘estimated point of sale costs” and replaced it with “costs to sell”.

9.22In 2005, Nambour Limited established and commenced operation of a mango farm. The trees were planted in 2005 and began producing saleable mangoes in 2011. On 30 June 2012, 90% of the mangoes are sold, one week after they were picked, for a sales price of $210,000. Selling...
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