Question 1

SECTION A

Verdant Vineyards owns a large grape plantation. At the year-end, the grapes are still growing on the vines. The fair value of the unharvested grapes is estimated at $80,000. If Verdant were to sell the grapes immediately, they would incur transport costs to the market of $2,000 and auctioneer fees of $3,000.

At what amount should the biological asset (the growing grapes) be measured in the Statement of Financial Position under IAS 41 Agriculture?

Accepted Answer

Apply the IAS 41 measurement rule: Fair Value less estimated costs to sell. Costs to sell include commissions, levies, and transport costs.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Excluding transport costs from 'costs to sell'. Under IFRS 13, transport costs adjust fair value, but under IAS 41, all costs necessary to sell are deducted.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FR — Financial Reporting Practice Exam 3

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