Sample/practice exam 2020, questions and answers PDF

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BIOLOGICAL ASSETS ACTIVITY Which of the following statement is incorrect? I. Fair value is the amount for which a liability settled, between knowledgeable, willing parties in an arm’s length transaction. II. Agricultural activity is any activities that a business or organization undertakes to build ...

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BIOLOGICAL ASSETS ACTIVITY 1. Which of the following statement is incorrect? I. Fair value is the amount for which a liability settled, between knowledgeable, willing parties in an arm’s length transaction. II. Agricultural activity is any activities that a business or organization undertakes to build brand awareness. III. Costs to sell are the incremental costs directly attributable to the disposal of an asset, including finance costs A. I, II and III

B. II and III only

C. II only

D. III only

2. An entity shall recognize a biological asset or agricultural produce when and only when: A. the fair value or cost of the asset can be measured reliably B. it is probable that future economic benefits associated with the asset will flow to the entity C. the entity controls the asset as a result of future commitments D. All of the above 3. Which of the following statements is true about biological assets? 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 production cycle of more than one year exists for biological asset, separated disclosure is encouraged for physical change and price change. D. All of these statements are true about biological assets 4. Agricultural produce as it grows on bearer plant is measured at the end of each reporting period prior to harvest at: A. Fair value B. fair value less estimated point-of-sale costs C. Fair value less estimated point-of-conversion costs D. Fair value less estimated direct attributable acquisition cost 5. Agricultural produce harvested from bearer plant is measured, at the point of harvest A. Fair value B. fair value less estimated point-of-sale costs C. Fair value less estimated point-of-conversion costs D. Fair value less estimated direct attributable acquisition cost 6. PAS 41 contains a rebuttable presumption that fair value can be established for all biological assets and agricultural produce. Only on the initial recognition of such assets can the presumption be rebutted because of (choose the incorrect one): A. the lack of market-determined prices B. values that are not otherwise available C. alternative estimates of fair value that is clearly unreliable D. there is no disposal cost for the biological asset 7. The estimation of fair value can be determined by reference to the following except: A. the quoted price in an active market for the particular biological asset or agricultural produce B. market-determined prices or values when an active market does not exist or C. a future sales contract when the present value of expected net cash flows may not be available in its present condition D. All of the following may be referred to determine the fair value 8. PAS 41 does not apply to: A. cultivated plants

B. fish farming

C. forestry

D. natural gas

9. Bearer plant is a living plant that: A. Is used in the production process of agricultural produce, C. Has a remote likelihood of being sold

B. Is expected to bear produce for more than one period D. Is not degenerating

10. PAS 41 does not apply to except: A. The land on which the biological assets grow C. Agricultural produce at the point of harvest

B. Any intangible asset associated with the agricultural activity D. Agricultural activity that is not managed

11. Biological assets A. are only found in Biotech companies C. must be valued at cost.

B. living animals or plants and must be disclosed as a separate item on the balance sheet D. Do not generally have future economic benefits

12. Agricultural activity includes all of the following except: A. Raising livestock C. Floriculture and aquaculture, including fishing

B. Annual perennial cropping D. Ocean fishing

13. Which of the following is a biological asset? A. Leaf B. Wool

C. Bushes

D. Picked fruit

14. For PAS 41, biological transformation includes: A. production B. degeneration

C. procreation

D. all of the above

15. An active market is a market where all the following conditions exist except: A. the items traded within the market are homogeneous B. willing buyers and sellers can normally be found at any time C. prices are available to the public D. farm to market road exists PROBLEM I: ABC Company reported the following information involving its biological assets on December 31, 2016:

Biological assets, at cost on December 31, 2014 Fair value surplus on initial recognition at fair value December 21, 2015 Change in fair value to December 31, 2016

₱6,000,000 7,000,000 1,000,000...