Question 1

SECTION B

CASE SCENARIO: BioHarvest Ltd is an agricultural biotech firm. At 31 December 20X8, BioHarvest has growing crops with a historical cost of $100,000. The fair value of these crops is $150,000, and estimated costs to sell are $10,000. During the year, BioHarvest harvested seeds. At the point of harvest, the seeds had a fair value of $50,000 and costs to sell of $5,000. On 1 January 20X8, BioHarvest signed a contract granting a customer a 3-year right to access its patented seed technology, receiving $300,000 upfront. BioHarvest also spent $500,000 developing a new drought-resistant seed variant; $200,000 was spent before the project met the IAS 38 capitalization criteria on 1 July 20X8, and $300,000 was spent after.

QUESTION: At what amount should the growing crops be recognized in the Statement of Financial Position at 31 December 20X8?

Accepted Answer

Apply the IAS 41 measurement rule for biological assets: Fair value less costs to sell.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Leaving the asset at historical cost, confusing IAS 41 with IAS 16 or IAS 2.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FR — Financial Reporting Practice Exam 3

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