The entity is considering the valuation of its harvested coffee beans. Industry practice is to value the coffee beans at market value and uses it as a reference to a local publication.
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Althea Nicole Company is a producer of coffee. The entity is considering the valuation of
its harvested coffee beans. Industry practice is to value the coffee beans at market value and uses it
as a reference to a local publication.
On December 31, 2020, the entity has harvested coffee beans costing P1,500,000 and with a fair value
less cost to sell of P1,900,000 at the point of harvest. Because of the long aging and maturation process
after harvest, the harvested coffee beans were still on hand on December 31, 2021. On that date, the
fair value less cost to sell is P2,000,000, and the net realizable value is P1,850,000.
Requirements:
1. How much is the cost of the inventory of coffee beans?
2. What is the LCNRV of the inventory of coffee beans on Dec. 31, 2021?
3. Prepare the
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- Blue & Grey Company is a producer of coffee. The entity is considering the valuation of its harvested coffee beans. Industry practice is to value the coffee beans at market value and uses as reference a local publication "Accounting for Successful Farms". On December 31, 2018, the entity has harvested coffee beans costing P3,000,000 and with fair value less cost to sell of P3,500,000 at the point harvest. Because of long aging and maturation process after harvest, the harvested coffee beans were still on hand on December 31,2018. On such date, the fair value less cost to sell is P3,900,000 and the net realizable value is P3,200,000. The coffee beans inventory shall be measured at? A. P3,200,000 B. P3,000,000 C. P3,900,000 D. P3,500,000Laffy Farms Corp. (Laffy), a publicly accountable entity, is growing half an acre of cannabis in its east field. Laffy incurred costs of planting in May 2020, including seedlings and labour, of $28,000. At the time of planting, the cannabis seedlings had a fair value of $18,000. The cannabis are expected to be harvested and sell for $90,000 in August 2020 and Laffy expects to incur additional costs of $12,000 prior to harvest. There are no costs to sell. Assuming that cannabis seedlings are a biological asset, how should the seedlings be measured at initial recognition? Question 21 options: a) Capitalized for $28,000. b) All costs related to the planting should be expensed. c) Capitalized for $50,000. d) Capitalized for $18,000.During 2019, R Corp., a manufacturer of chocolate candies, contracted to purchase 100,000 pounds of cocoa beans at 1.00 per pound, delivery to be made in the spring of 2020. Because a record harvest is predicted for 2020, the price per pound for cocoa beans had fallen to 0.80 by December 31, 2019. Of the following journal entries, the one that would properly reflect in 2019 the effect of the commitment of R Corp. to purchase the 100,000 pounds of cocoa is:
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- Super Soups, Inc. is a Chicago based company that produces soup. Super Soups is publicly traded and has a February 28, 2022 fiscal year end. The demand for Super Soup’s products has increased significantly during COVID-19 (primarily to the number of people working from home). Super Soups did an analysis of the capabilities of the old production equipment and all but one machine were determined to be in superior condition. Machine #111 was assessed to be operating at only 50% of the necessary production level and would be able to generate $120,000 from production and a sale of the machine in the next fiscal year. As a result of this analysis Super Soups decided to sell Machine #111. The company was able to locate a buyer immediately and sold Machine #111 on February 21, 2022. The sales price of the machine was $105,000. The carrying Value of Machine #111 was $145,000. Accordingly Super Soups is recognizing a $40,000 loss. In planning for the year end financial statements the…Super Soups, Inc. is a Chicago based company that produces soup. Super Soups is publicly traded and has a February 28, 2022 fiscal year end. The demand for Super Soup’s products has increased significantly during COVID-19 (primarily to the number of people working from home). Super Soups did an analysis of the capabilities of the old production equipment and all but one machine were determined to be in superior condition. Machine #111 was assessed to be operating at only 50% of the necessary production level and would be able to generate $120,000 from production and a sale of the machine in the next fiscal year. As a result of this analysis Super Soups decided to sell Machine #111. The company was able to locate a buyer immediately and sold Machine #111 on February 21, 2022. The sales price of the machine was $105,000. The carrying Value of Machine #111 was $145,000. Accordingly Super Soups is recognizing a $40,000 loss. In planning for the year end financial statements the…Jojo LtdJojo Ltd manufactures products, Abbisha and Babbisha, from raw material, Zaro. The raw material is imported at a cost of R15 per kilogram from Garwe Limited, a foreign company. As a result of a fire that destroyed the warehouse of the supplier, the 2020 import of Zaro will be limited to 80% of the quantity imported in 2019.Following the restrictions on raw material imports, labour hours will, according to estimate, reduce by 10 000 hours in comparison with those worked in 2019. The management of the company, however, has decided to maintain a minimum wage rate of R6 per hour.The following is an extract from the budget for the 2020 financial year based on 95% of the available machine hours.Abbisha BabbishaSales volume in units 12 000 16 000Sales volume in rands R348 000 R512 000R RStandards per unitRaw material - Zaro 12.00 7.50Labour 4.50 3.00Overheads 3.00 5.00The budgeted, fixed manufacturing overheads for the year amount to R63 800. Overheads are allocated to production at a…