ExpertACCA · Question 22 · Accounting for Transactions
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: What is the initial cost of the harvested seeds for the purpose of subsequent inventory valuation under IAS 2?
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: What is the initial cost of the harvested seeds for the purpose of subsequent inventory valuation under IAS 2?
Answer options:
$50,000
$45,000
$0
$55,000
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