Answered Essay: Cow Co is a company that farms dairy cattle. Cow Co owns the farmland on which the cattle are located, having purchased it for

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29) Cow Co is a company that farms dairy cattle. Cow Co owns the farmland on which the cattle are located, having purchased it for $1.5 million in 2011. The land is measured at cost under AASB 116/IAS 16. Details of cattle at 30 June 2013 were as follows: Cows 900 $790 Heifers 200 S310 Number Fair value (less estimated costs to sell) During the year ended 30 June 2014 the following occurred 200 new cows were purchased at $810 each4 50 heifers matured into cows 5 heifers died 100 cows were sold for $830 each The price change between a heifer and a cow at the time of maturity during the year was estimated to be $500 The following is relevant at 30 June 2014: The land has been valued at $5.6 million Fair value less estimated costs to sell are as follows (Cow Co has determined that these are the appropriate fair values to use for the purposes of transfers and deaths of heifers) Cows $860 /head Heifers- S340/head The increase in fair value of livestock attributable to price change is a) $77 000 b) $76 000 c) $25 000 d) $6 000 Answer: b Learning Objective 10: Apply the recognition and measurement requirements of AASB 141/IAS 41 to a simple statement of profit or loss and other comprehensive income and statement of financial position

Cow Co is a company that farms dairy cattle. Cow Co owns the farmland on which the cattle are located, having purchased it for $1.5 million in 2011. The land is measured at cost under AASB 116/IAS 16. Details of cattle at 30 June 2013 were as follows: During the year ended 30 June 2014 the following occurred: 200 new cows were purchased at $810 each4 50 heifers matured into cows 5 heifers died 100 cows were sold for $830 each The price change between a heifer and a cow at the time of maturity during the year was estimated to be $500 The following is relevant at 30 June 2014: The land has been valued at $5.6 million Fair value less estimated costs to sell are as follows (Cow Co has determined that these are the appropriate fair values to use for the purposes of transfers and deaths of heifers): Cows – $860 /head Heifers – $340/head The increase in fair value of livestock attributable to price change is: a) $77 000 b) $76 000 c) $25 000 d) $6 000.

Expert Answer

 

Increase in fair value attributable to price
Cows Heifers
Opening A 900 200
Purchases B 200
Total(A+B) C 1100 200
Sales D 100 0
Death E 5
Closing(C-D-E) F 1000 195
Ending price G 860 340
Beginning Price H 790 310
Price change(G-H) I 70 30
Total change(F*I) 70000 5850
Grand total 75850
76000 Rounded
Details Ref Cows Heifers
Opening livestock A 900 200
Purchases B 200
Total (A + B) C 1100 200
Sales D 100
Death E 5
Closing livestock (C-D-E) F 1000 195
Ending Price G 860 340
Beginning Price H 790 310
Price increase (G-H) I 70 30
Fair value increase due to price(F * I) 70,000 5,850

Total = $70,000+$5,850 = $75,850

Rounded off to $76,000

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