Cost Model – NBC Institute

CR – May 2019 – L3 – Q7a – Fair Value Measurement (IFRS 13)

Explain the accounting treatment for land, plantation, and harvested produce for Agbinye Farms as at March 31, 2018.

Question

Agbinye Farms operates many plantations across Nigeria. The Company recently acquired a freehold land in Benue for a total of N12 million. The trees were planted with the company incurring an operating cost of N4 million up to 31 March 2018, which is the company’s year-end.

The fair value of the plantation (excluding the land) was determined to be N16.4 million as at 31 March 2018. Based on management assessment, the company is expected to get produce from the plantation for a period of 20 years.

The first harvest was done during the year ended 31 March 2018, and the fair value of the produce was estimated as N2.5 million. The Company incurred a total cost of N600,000 to complete the harvest.

The company uses the cost model when possible.

Required:
Discuss the accounting treatment of the above transactions, showing clearly the amount to be recognised in the statement of profit or loss and the statement of financial position as at 31 March 2018.

Answer

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Tags: Agriculture, Biological Assets, Cost Model, Harvesting, IAS 41, Plantation Accounting
Level: Level 3

Topic: Fair Value Measurement (IFRS 13)

FR – May 2018 – L2 – Q5c – Financial Reporting Standards and Their Applications

Identify two differences between the cost model and revaluation model for Property, Plant, and Equipment.

Question

Once an entity has recognized an item of Property, Plant, and Equipment as an asset in its books, the entity can choose between two models (or methods) to account for the asset in subsequent measurement periods, that is, the period(s) after the asset has been acquired and before its disposition. The two models are the cost model and the revaluation model. The entity shall apply the same model to the entire class of property, plant, and equipment to which that asset is of similar nature and use in the entity’s operations.

Required:
Identify TWO differences between the cost and revaluation model for the measurement of Property, Plant, and Equipment. (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: and Equipment, Cost Model, IAS 16, Plant, Property, Revaluation Model
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: MAY 2018

CR – May 2019 – L3 – Q7a – Fair Value Measurement (IFRS 13)

Explain the accounting treatment for land, plantation, and harvested produce for Agbinye Farms as at March 31, 2018.

Question

The first harvest was done during the year ended 31 March 2018, and the fair value of the produce was estimated as N2.5 million. The Company incurred a total cost of N600,000 to complete the harvest.

The company uses the cost model when possible.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agriculture, Biological Assets, Cost Model, Harvesting, IAS 41, Plantation Accounting
Level: Level 3

Topic: Fair Value Measurement (IFRS 13)

FR – May 2018 – L2 – Q5c – Financial Reporting Standards and Their Applications

Identify two differences between the cost model and revaluation model for Property, Plant, and Equipment.

Question

Required:
Identify TWO differences between the cost and revaluation model for the measurement of Property, Plant, and Equipment. (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: and Equipment, Cost Model, IAS 16, Plant, Property, Revaluation Model
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: MAY 2018

Question Tag: Cost Model

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CR – May 2019 – L3 – Q7a – Fair Value Measurement (IFRS 13)

Explain the accounting treatment for land, plantation, and harvested produce for Agbinye Farms as at March 31, 2018.

FR – May 2018 – L2 – Q5c – Financial Reporting Standards and Their Applications

Identify two differences between the cost model and revaluation model for Property, Plant, and Equipment.

CR – May 2019 – L3 – Q7a – Fair Value Measurement (IFRS 13)

Explain the accounting treatment for land, plantation, and harvested produce for Agbinye Farms as at March 31, 2018.

FR – May 2018 – L2 – Q5c – Financial Reporting Standards and Their Applications

Identify two differences between the cost model and revaluation model for Property, Plant, and Equipment.

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CR – May 2019 – L3 – Q7a – Fair Value Measurement (IFRS 13)

Explain the accounting treatment for land, plantation, and harvested produce for Agbinye Farms as at March 31, 2018.

You're reporting an error for "CR – May 2019 – L3 – Q7a – Fair Value Measurement (IFRS 13)"

FR – May 2018 – L2 – Q5c – Financial Reporting Standards and Their Applications

Identify two differences between the cost model and revaluation model for Property, Plant, and Equipment.

You're reporting an error for "FR – May 2018 – L2 – Q5c – Financial Reporting Standards and Their Applications"

CR – May 2019 – L3 – Q7a – Fair Value Measurement (IFRS 13)

Explain the accounting treatment for land, plantation, and harvested produce for Agbinye Farms as at March 31, 2018.

You're reporting an error for "CR – May 2019 – L3 – Q7a – Fair Value Measurement (IFRS 13)"

FR – May 2018 – L2 – Q5c – Financial Reporting Standards and Their Applications

Identify two differences between the cost model and revaluation model for Property, Plant, and Equipment.

You're reporting an error for "FR – May 2018 – L2 – Q5c – Financial Reporting Standards and Their Applications"

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