Below is an extract from NZ King Salmons 2019 annual report. Record the journal entries for the
Question:
Below is an extract from NZ King Salmon’s 2019 annual report. Record the journal entries for the recognition of any changes in fair value gain from biological assets for the 2019 financial year. Mortality is expensed directly and does not affect fair value gains or losses.
1. Biological transformation fair value is impacted by volume increases and fish weight at reporting date relative to the target fish harvest weight of 4 kgs (proportional recognition).
2. Harvested fair value is included in cost of goods sold in the statement of comprehensive income and is calculated by multiplying the current years harvest (biomass) by the prior years estimated gross margin per kg (recognised at 100%).
3 .Mortality cost is expensed directly to the statement of comprehensive income in the period which it occurs and is not subject to a fair value uplift.
4 .Changes in fair value are impacted by movements in margin primarily being changes in sales price and costs to sell (fish cost, harvest, processing and freight to market).
Taxes and Business Strategy A Planning Approach
ISBN: 9780132752671
5th edition
Authors: Myron Scholes, Mark Wolfson, Merle Erickson, Michelle Hanlon