A. 1. Entity A raises cattle, slaughters them at its abattoirs, and sells the carcasses to the local meat market. How do we classify the cattle and its carcass, after slaughtering? Cite the appropriate standard to classify it.

2. Entity B grows vines, harvest the grapes, and produces wine. How do we classify the vines, the harvested grapes, and the wine? Cite the appropriate accounting standards to classify it.

B.

True or False:

______________ 1. In calculating the cost to sell of a biological asset, transportation expenses is included. ______________

2. When agricultural produce is harvested, the harvest shall be accounted for by using PAS 2, Inventories. The cost at the date of harvest is deemed to be the accumulated costs.

______________ 3. The gross profit method of inventory is not valid or useful when the gross margin rate is predictable or constant over time.

______________ 4. If the gross profit is based on cost, the sales are multiplied by the cost ratio.

______________ 5. A major advantage of the retail inventory method is that it gives a more accurate amount of inventory than other methods.

ACTIVITY 5

explain further the differences between a price change and physical change in relation to the changes in the value of the biological asset at reporting period.

ACTIVITY 6

explain the purpose of inventory estimation.