Accounting Information System

Accounting

[pic]

Question 1

1) Agricultural Produce as defined in AASB 141 :‘the harvested product of the entities biological assets’

E.g. from the article

• Timber

• Logs

2)Two Features

• Biological assets growing cycle may be particularly long and great deal of increase in value of resource may be input of free goods such as sun, air and water. The pine forest took 25 years to produce millable timber and the pine trees grew using the free goods such as sun air and water.

• For biological assets, large proportion of cost is incurred early in the life of the asset. Here, the pine forest may incur cost to plant the pine trees and the trees are left to grow by themselves for years. Hence very little of no expense incurred later in the life of the asset.

3)

Under IAS 41 an item To be recognized as a biological assets should satisfy:

• The entity controls the asset as a result of past events;

• It is probable that future economic benefits associated with the asset will flow to the entity; and

• The fair value or cost of the asset can be measured reliably.

|Asset |Lekutu `qoliqoli’ |

|Control |It is unmanaged and maintained for sustenance sake (not for sale in the|[pic] |

| |market) | |

|Probability that future economic |No future economic benefits |[pic] |

|benefits will flow to the entity |...