CHAPTER 21

BIOLOGICAL ASSETS

Question 21-1 Multiple choice (PAS 41)

1. Biological assets

a. Are found only in Biotech entities.

b. Are living animals or living plants and must disclosed as a separate line item in the statement
of financial position.

c. Must be measured at cost.

d. Do not generally have future economic benefit.

2. It is the management by an entity of the biological transformation and harvest of biological assets for
sale or for conversion into agricultural produce or inti additional biological asset.

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a. Agricultural activity

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b. Biological activity

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c. Economic activity
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d. Development activity

3. Agricultural activity results in which of the following type of asset?

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a. Biological asset
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b. Agricultural produce
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c. Biological asset and agricultural produce

d. Neither biological asset nor agricultural produce

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4. Agricultural activity includes all of the following, except

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a. Raising livestock

b. Perennial cropping
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c. Aquaculture
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d. Ocean fishing

5. Which statement is true about biological assets?

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a. Biological assets are measured at fair value less cost of disposal

b. When fair value cannot be determined reliably, the biological asset shall be measured at cost

less accumulated depreciation and impairment losses.

c. Where there is production cycle of more than one year for biological asset, separate

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 disclosure is encouraged for physical change and price change.

d. All of these statements are true about biological assets.

6. Agricultural produce is

a. The harvested product from biological asset.

b. Measured at the time of harvest at the cost of production.

c. Measured at each reporting period at fair value less cost of disposal.

d. All of the choices are correct regarding agricultural produce.

7. Agricultural produce as it grows on bearer plant is measured at the end of each reporting period prior
to harvest at

a. Fair value

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b. Fair value less cost of disposal

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c. Fair value plus cost of disposal

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d. Fair value less cost of disposal at the point of harvest

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8. Agricultural produce harvested from bearer plant is measured at
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a. Fair value

b. Fair value less cost disposal at the point of harvest

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c. Cost
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d. Fair value plus cost of disposal at the point of harvest

ANSWER 21-1

1. a 5. d 2. a 6. a 3. c 7. b 4. d 8. b
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QUESTION 21-2 Multiple choice (IFRS)

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1. A bearer plant is a living plant that

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a. Is used in the production or supply of agricultural produce.

b. Is used to bear produce for more than one period.

c. Has a remote likelihood of being sold as agricultural produce, except for incidental scrap
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sales.

d. Must possess all of these characteristics.

2. All of the following can be considered bearer plant, except

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 a. Coconut tree

b. Grape vine

c. Rubber tree

d. Tree in a forest plantation to be harvested and sold as log or lumber

3. A living plant with a dual use is classified as

a. Bearer plant

b. Biological asset

c. Investment property

d. Inventory

4. Which statement is true in relation to bearer plant?

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a. The bearer plant and the related agricultural produce are accounted as two separate assets.

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b. The bearer plant is a non-current asset

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c. The agricultural produce is usually presented as current asset unless it takes more than one

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year to mature. rs e
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d. All of these statements are true about bearer plant.

5. According to IASB, bearer plants are accounted for as

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a. Biological assets with disclosure

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b. Biological assets without disclosure

c. Property, plant and equipment

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d. Noncurrent investment
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6. Mature bearer plant is measured using

a. Cost model
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b. Revaluation model
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c. Either cost model or revaluation model

d. Either cost model or fair value model

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7. According to IASB, bearer animals are accounted for as

a. Biological assets

b. Property, plant, and equipment

c. Investment property

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 d. Agricultural produce

8. Animals related to recreational activities are accounted for under what standard?

a. IAS 41 - Agriculture

b. IAS 16 - Property, plant and equipment

c. IAS 40 - Investment property

d. Either IAS 41 or IAS 16

ANSWER 21-2

1. d 5. c 2. d 6. c 3. b 7. a 4. d 8. b

QUESTION 21-3 Multiple choice (IFRS)

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1. Generally speaking, biological assets relating to agricultural activity shall be measured using

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a. Historical cost

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b. Historical cost less depreciation less impairment

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c. A fair value approach
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d. Net realizable value

2. Which of the following is unlikely to be used in fair value measurement of biological asset?
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a. Quoted market price

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b. The most recent market transaction price

c. The present value of the expected net cash flows

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d. External independent valuation

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3. An entity had a plantation forest that is likely to be harvested and sold in 30 years. The income shall be
accounted for in which of the following?
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a. No income shall reported annually until first harvest and sale in 30 years
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b Income shall be measured annually and reported using a fair value approach that recognizes
and measures biological growth.

c. The eventual sale proceeds shall be estimated and matched to the profit and loss account over
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the 30-year period.

d. The plantation forest shall be valued every 5 years and the increase in value shall be
recognized as component of other comprehensive income.

4. Which of the following statements is true regarding agricultural produce?

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 a. In all cases, an entity shall measure agricultural produce at fair value less coat of disposal at
the point of harvest.

b. The prevailing view is that the fair value of agricultural produce at the point of harvest can
always be measured reliably.

c. The fair value measurement of agricultural produce stops at the time of harvest

d. All of these statements are true regarding agricultural produce.

5. Which of the following information shall be disclosed in relation to biological asset and agricultural
produce?

a. Separate disclosure of the gain or loss relating to biological asset and agricultural produce.

b. The aggregate gain or loss arising on the initial recognition of biological asset and agricultural
produce and from the change in fair value less cost of disposal of biological asset.

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c. The total gain or loss from biological asset, agricultural produce, and from changes in fair value

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less cost of disposal of biological asset.

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d. There is no requirement in the standard to disclose separately any gain or loss.

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6. Where there is a long aging or maturation process after harvest, the accounting for such products shall
be dealt with by rs e
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a. PAS 41, Agriculture

b. PAS 2, Inventories
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c. PAS 16 , Property, Plant and Equipment

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d. PAS 40, Investment property

7. When agricultural produce is harvested, the harvest shall be accounted for as inventory. For the
purpose, cost at the date of harvest is deemed to be
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a. The fair value less cost of disposal at the point of harvest

b. the historical cost of the harvest

c. The historical cost less accumulated impairment losses

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d. Market value
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ANSWER 21-3 1. c 5. b 2. d 6. b 3. b 7. a 4. D
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QUESTION 21-4 Multiple choice (IFRS)

1. Which of the following criteria must not be satisfied before a biological asset can be recognized?

a. The entity controls the asset as a result of past event.

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 b. It is probable that future economic benefits relating to the asset will flow to the entity.

c. An active market for the asset exists

d. The fair value can be measured reliably

2. Land that is related to agricultural activity is measured

a. At fair value

b. in accordance with PAS 16, Property, Plant and Equipment, or PAS 40, Investment Property

c. At fair value in combination with the biological asset.

d. At the resale value separate from biological asset.

3. An unconditional government grant related to a biological asset shall be recognized as

a. Income when the grant becomes receivable

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b. A deferred credit when the grant becomes receivable

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c. Income when the grant application has been submitted

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d. A deferred credit when the grant has been approved

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4. If a government grant related to a biological asset is conditional, the grant shall be recognized as
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a. Income when the conditions to the grant are met.

b. Income when the grant has been approved.

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c. A deferred credit when the conditions are met.

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d. A deferred credit when the grant is approved.

ANSWER 21-4
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1. c 2. b 3. a 4. a
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