Question

Greenview Farm grows pears for distribution to wholesalers. The following information relates to the financial year ending 30 June 2019:

• The fair value of the pears immediately after harvesting was $432 000. Harvesting costs totaled $12 000.

• As at 30 June 2019, 90 per cent of the pears were sold for a sales price of $470 000. Costs to sell were $10 000. The remaining 10 per cent of the harvested pears was recognised as inventory on balance date.

• Total costs incurred to maintain the pear trees amounted to $20 000.

• The fair value less the estimated costs of the pear trees was $1 200 000 as at 30 June 2019, and was $1 050 000 as at 30 June 2018.

Required:

Prepare all journal entries required to account for the biological asset and agricultural product for Greenview Farm in accordance with AASB 141 Agriculture.

Answer 1

Account Title	Debit	Credit
Costs of production	444000
Cash		444000
Cash/accounts receivable	470000
Sales revenue		470000
Cost of goods sold	399600
Costs of production		399600
((432000+12000)*90%)
Selling expenses	10000
Cash		10000
Inventory	44400
Costs of production		44400
((432000+12000)*10%)
Maintenance expenses	20000
Cash		20000
Biological assets	150000
Gain on remeasurement		150000
(1200000-1050000)