Question 1

What is the appropriate accounting treatment for agricultural produce at initial recognition and subsequent measurement dates?

Accepted Answer

The appropriate accounting treatment for

Question 2

One of the arguments against recording heritage assets as assets in the financial statements is that they typically generate negative net cash flows.SAC 4 argues in response to this that:

Accepted Answer

A)  Economic benefits as defined in SAC 4 extend beyond the mere financial benefits that an entity chooses to extract from its assets. 
B)  These assets benefit the reporting entities, enabling them to meet their objectives of providing the needed services to beneficiaries. 
C)  Meeting the needs of beneficiaries in a broad sense provides an economic benefit to society as a whole that should be captured through financial measurement in the annual reports of the entity. 
D)  Heritage assets may in many cases not meet the definition of generating future economic benefits for the entity that controls them; however, in the cases where there is evidence of positive future cash flows these should be recorded as assets. 
A)  Economic benefits as defined in SAC 4 extend beyond the mere financial benefits that an entity chooses to extract from its assets. 
B)  These assets benefit the reporting entities, enabling them to meet their objectives of providing the needed services to beneficiaries. 
C)  Meeting the needs of beneficiaries in a broad sense provides an economic benefit to society as a whole that should be captured through financial measurement in the annual reports of the entity. 
D)  Heritage assets may in many cases not meet the definition of generating future economic benefits for the entity that controls them; however, in the cases where there is evidence of positive future cash flows these should be recorded as assets.

Question 3

AASB 141 covers agricultural activities such as deep sea fishing.

Accepted Answer

A) True 
 B)False

Question 4

Features common to heritage assets are that they typically:

Accepted Answer

A)  are unique, are aspects of the natural environment (for example, parks) and cannot be replaced. 
B)  have no alternative use, cannot be replaced and generate negative net cash flows. 
C)  are self-generating, individually unique and generate negative net cash flows. 
D)  have no alternative use, cannot be replaced and generate positive net cash flows. 
A)  are unique, are aspects of the natural environment (for example, parks) and cannot be replaced. 
B)  have no alternative use, cannot be replaced and generate negative net cash flows. 
C)  are self-generating, individually unique and generate negative net cash flows. 
D)  have no alternative use, cannot be replaced and generate positive net cash flows.

Question 5

Margaret Ltd has a vineyard and at the end of reporting period 30 June 2012 the following information is available: $$\begin{array} { | l | r | } 
\hline \text { Carrying amount of the vineyard } 30 \text { June } 2011 & 7500000 \
\hline \text { Fair value of harvested grapes on } 29 \text { June } 2012 & 600000 \
\hline \text { Estimated point-of-sale costs of grapes } & 20000 \
\hline \text { Estimated point-of-sale costs of vines as at 30 June 2012 } & 50000 \
\hline \text { Fair value of the vineyard before harvest of grapes on 29 June 2012 } & 7800000 \
\hline
\end{array}$$ What is the change in fair value less estimated point-of-sale costs of the vines for the reporting period 30 June 2012 in accordance with AASB 141 Agriculture?

Accepted Answer

A)  ($350 000) 
B)  ($300 000) 
C)  $250 000 
D)  $350 000 
A)  ($350 000) 
B)  ($300 000) 
C)  $250 000 
D)  $350 000

Question 6

One approach to revenue recognition proposed for self-generating and regenerating assets is to recognise volume changes as revenue or expense but to treat price changes as an adjustment to equity through a reserve.AASB 141 requires that:

Accepted Answer

A)  the combined gain or loss arising be included in profit or loss for the period in which it arises. 
B)  There is no precedent in accounting standards for the recognition of changes in market values as adjustments to equity. 
C)  The total increase in value is the production for the period and it should be available for distribution to owners. 
D)  The revenue for the period would not reflect the performance of management. 
A)  the combined gain or loss arising be included in profit or loss for the period in which it arises. 
B)  There is no precedent in accounting standards for the recognition of changes in market values as adjustments to equity. 
C)  The total increase in value is the production for the period and it should be available for distribution to owners. 
D)  The revenue for the period would not reflect the performance of management.

Question 7

Margaret Ltd has a vineyard and at the end of reporting period 30 June 2012 the following information was available. $$\begin{array} { | l | r | } 
\hline \text { Carrying amount of the vineyard } 30 \text { June } 2011 & 8000000 \
\hline \text { Fair value of harvested grapes on } 25 \text { June } 2012 & 600000 \
\hline \text { Estimated point-of-sale costs of grapes } & 20000 \
\hline \text { Estimated point-of-sale costs of vines as at 30 June 2012 } & 50000 \
\hline \text { Fair value of the vineyard before harvest of grapes on 25 June 2012 } & 7800000 \
\hline
\end{array}$$ There was no material change in the condition of vineyard from last appraisal to 30 June 2012.In accordance with AASB 141 Agriculture ,what is the journal entry to recognise the harvest of grapes on 25 June 2012?

Accepted Answer

A) 
$$\begin{array} { | c | l | c | c | } 
\hline \mathrm { Dr } & \text { Biological asset-vines } & 600000 & \
\hline \mathrm { Cr } & \text { Gain arising on recognition of harvested grapes } & & 600000 \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | c | l | c | c | } 
\hline \mathrm { Dr } & \text { Agricultural produce -grapes } & 600000 & \
\hline \mathrm { Cr } & \text { Gain arising on recognition of harvested grapes } & & 600000 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | c | l | c | c | } 
\hline \mathrm { Dr } & \text { Biological asset-vines } & 580000 & \
\hline \mathrm { Cr } & \text { Gain arising on recognition of harvested grapes } & & 580000 \
\hline
\end{array}$$ 
D) 
$$\begin{array} { | c | l | c | c | } 
\hline \mathrm { Dr } & \text { Agricultural produce-grapes } & 580000 & \
\hline \mathrm { Cr } & \text { Gain arising on recognition of harvested grapes } & & 580000 \
\hline
\end{array}$$ 
A) 
$$\begin{array} { | c | l | c | c | } 
\hline \mathrm { Dr } & \text { Biological asset-vines } & 600000 & \
\hline \mathrm { Cr } & \text { Gain arising on recognition of harvested grapes } & & 600000 \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | c | l | c | c | } 
\hline \mathrm { Dr } & \text { Agricultural produce -grapes } & 600000 & \
\hline \mathrm { Cr } & \text { Gain arising on recognition of harvested grapes } & & 600000 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | c | l | c | c | } 
\hline \mathrm { Dr } & \text { Biological asset-vines } & 580000 & \
\hline \mathrm { Cr } & \text { Gain arising on recognition of harvested grapes } & & 580000 \
\hline
\end{array}$$ 
D) 
$$\begin{array} { | c | l | c | c | } 
\hline \mathrm { Dr } & \text { Agricultural produce-grapes } & 580000 & \
\hline \mathrm { Cr } & \text { Gain arising on recognition of harvested grapes } & & 580000 \
\hline
\end{array}$$

Question 8

Demand for financial information on heritage assets has not been clearly established.

Accepted Answer

A) True 
 B)False

Question 9

Discuss the alternatives that an entity may use to determine fair value of biological assets.

Accepted Answer

There are several alternatives that an e

Question 10

AASB 141 requires that a biological asset be recognised at cost until the asset is sold.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following items are not within the scope of AASB 141 Agriculture?

Accepted Answer

A)  apple trees in a commercial orchard 
B)  dried apples sold in supermarkets 
C)  pine trees in a plantation forest 
D)  harvested apples 
A)  apple trees in a commercial orchard 
B)  dried apples sold in supermarkets 
C)  pine trees in a plantation forest 
D)  harvested apples

Question 12

Discuss the controversy in the recognition of heritage assets in the statement of financial position.

Accepted Answer

The controversy in the recognition of he

Question 13

Which of the following items are not within the scope of AASB 141 Agriculture?

Accepted Answer

A)  pigs 
B)  carcass 
C)  sausages 
D)  cattle 
A)  pigs 
B)  carcass 
C)  sausages 
D)  cattle

Question 14

Net present value (NPV)method has been considered as an alternative valuation technique to historical cost for biological assets.The NPV method may be described as:

Accepted Answer

A)  an accounting method for projecting the revenues and expenses associated with an asset or entity. 
B)  an economic concept based on the notion that an asset's value can be determined from its future cash flows. 
C)  an accounting concept based on the statement of cash flows to determine the present value of investments. 
D)  a finance technique for testing the efficiency of the market by comparing share prices to the discounted cash inflows associated with the asset. 
A)  an accounting method for projecting the revenues and expenses associated with an asset or entity. 
B)  an economic concept based on the notion that an asset's value can be determined from its future cash flows. 
C)  an accounting concept based on the statement of cash flows to determine the present value of investments. 
D)  a finance technique for testing the efficiency of the market by comparing share prices to the discounted cash inflows associated with the asset.

Question 15

Jaenicke and Glazer (1992)suggest an alternative approach to the one in AAS 29 for disclosures by museums within a US context.The proposal is that:

Accepted Answer

A)  Museums should present a summary by classes of items held in the collection that shows the cost of items held, any purchases and the inflow of cash from sales of items from the collection and any grants received. 
B)  Museums should present a schedule of changes in the number of items in the collection, reconciling the beginning and ending figures. The dollar figures for total current-period purchases, contributions and sales of collection items should also be disclosed. 
C)  Museums should present a schedule of the nature and type of the heritage asset held and a summary of the cost to maintain the collection in its current condition. Disclosures about the amounts received from the sale of items and grants received should be provided as well as a statement of the number of items purchased and their cost. 
D)  Museums should present a summary statement showing how grants received and the proceeds from items sold during the period were allocated to the purchase of additional items and the maintenance of the existing collection. Amounts spent on administration and other overheads should be separately detailed to the extent that they are material. 
A)  Museums should present a summary by classes of items held in the collection that shows the cost of items held, any purchases and the inflow of cash from sales of items from the collection and any grants received. 
B)  Museums should present a schedule of changes in the number of items in the collection, reconciling the beginning and ending figures. The dollar figures for total current-period purchases, contributions and sales of collection items should also be disclosed. 
C)  Museums should present a schedule of the nature and type of the heritage asset held and a summary of the cost to maintain the collection in its current condition. Disclosures about the amounts received from the sale of items and grants received should be provided as well as a statement of the number of items purchased and their cost. 
D)  Museums should present a summary statement showing how grants received and the proceeds from items sold during the period were allocated to the purchase of additional items and the maintenance of the existing collection. Amounts spent on administration and other overheads should be separately detailed to the extent that they are material.

Question 16

Discuss the rationale for having a separate standard on accounting for agricultural activities.

Accepted Answer

The rationale for having a separate stan

Question 17

Arguments for the use of financial valuations of heritage assets to fulfil the accountability and performance evaluation functions of accounting statement preparation include:

Accepted Answer

A)  The funds contributed to government departments cannot be effectively tracked unless valuations of heritage assets are included in financial statements. 
B)  Managers of heritage assets need to ensure that they maximise the value of the collections and maintain them appropriately. Valuations of all assets provide an accurate performance measure in this regard. 
C)  In order to assess whether or not managers of collections have performed well it is necessary to have financial valuations of the heritage assets held at the beginning and end of the period. Decisions to buy and sell heritage assets can then be evaluated in the context of their impact on the quality of the entire collection. 
D)  Performance measurement will be more accurate because, for example, rate of return is calculated on total asset base. 
A)  The funds contributed to government departments cannot be effectively tracked unless valuations of heritage assets are included in financial statements. 
B)  Managers of heritage assets need to ensure that they maximise the value of the collections and maintain them appropriately. Valuations of all assets provide an accurate performance measure in this regard. 
C)  In order to assess whether or not managers of collections have performed well it is necessary to have financial valuations of the heritage assets held at the beginning and end of the period. Decisions to buy and sell heritage assets can then be evaluated in the context of their impact on the quality of the entire collection. 
D)  Performance measurement will be more accurate because, for example, rate of return is calculated on total asset base.

Question 18

Difficulties applying the net present value method to forests include the need to estimate:

Accepted Answer

A)  the time the trees will take to mature. 
B)  the volume yield and processing utility. 
C)  the costs associated with replanting should the forestry operation be considered a continuing activity. 
D)  all of the given answers. 
A)  the time the trees will take to mature. 
B)  the volume yield and processing utility. 
C)  the costs associated with replanting should the forestry operation be considered a continuing activity. 
D)  all of the given answers.

Question 19

Valuations of forestry assets in Australia have been undertaken on:

Accepted Answer

A)  a historical-cost basis. 
B)  a replacement and/or market-value basis. 
C)  using net present values. 
D)  a historical-cost basis and a replacement and/or market-value basis. 
A)  a historical-cost basis. 
B)  a replacement and/or market-value basis. 
C)  using net present values. 
D)  a historical-cost basis and a replacement and/or market-value basis.

Question 20

What treatment of revenue recognition is required by AASB 141?

Accepted Answer

A)  Revenue should be recognised in the statement of comprehensive income on the sale of the asset. Losses should be recognised as a result of a write-down to recoverable amount. 
B)  Changes in the net market values of biological assets that relate to volume changes must be recognised as revenues or expenses as appropriate in the profit and loss statement. 
C)  Changes in the current replacement cost of biological assets should be treated as adjustments to the asset revaluation reserve. Revenues should be recognised on the sale of the asset and matched against the replacement cost of the asset sold. 
D)  Increments and decrements in the net market values of biological assets must be recognised as revenues or expenses in the profit and loss statement for the financial year in which the increments or decrements occur. 
A)  Revenue should be recognised in the statement of comprehensive income on the sale of the asset. Losses should be recognised as a result of a write-down to recoverable amount. 
B)  Changes in the net market values of biological assets that relate to volume changes must be recognised as revenues or expenses as appropriate in the profit and loss statement. 
C)  Changes in the current replacement cost of biological assets should be treated as adjustments to the asset revaluation reserve. Revenues should be recognised on the sale of the asset and matched against the replacement cost of the asset sold. 
D)  Increments and decrements in the net market values of biological assets must be recognised as revenues or expenses in the profit and loss statement for the financial year in which the increments or decrements occur.

Exam 9: Accounting for Heritage Assets and Biological Assets

What is the appropriate accounting treatment for agricultural produce at initial recognition and subsequent measurement dates?

One of the arguments against recording heritage assets as assets in the financial statements is that they typically generate negative net cash flows.SAC 4 argues in response to this that:

AASB 141 covers agricultural activities such as deep sea fishing.

Features common to heritage assets are that they typically:

One approach to revenue recognition proposed for self-generating and regenerating assets is to recognise volume changes as revenue or expense but to treat price changes as an adjustment to equity through a reserve.AASB 141 requires that:

Demand for financial information on heritage assets has not been clearly established.

Discuss the alternatives that an entity may use to determine fair value of biological assets.

AASB 141 requires that a biological asset be recognised at cost until the asset is sold.

Which of the following items are not within the scope of AASB 141 Agriculture?

Discuss the controversy in the recognition of heritage assets in the statement of financial position.

Which of the following items are not within the scope of AASB 141 Agriculture?

Net present value (NPV)method has been considered as an alternative valuation technique to historical cost for biological assets.The NPV method may be described as:

Jaenicke and Glazer (1992)suggest an alternative approach to the one in AAS 29 for disclosures by museums within a US context.The proposal is that:

Discuss the rationale for having a separate standard on accounting for agricultural activities.

Arguments for the use of financial valuations of heritage assets to fulfil the accountability and performance evaluation functions of accounting statement preparation include:

Difficulties applying the net present value method to forests include the need to estimate:

Valuations of forestry assets in Australia have been undertaken on:

What treatment of revenue recognition is required by AASB 141?

An Overview of the Australian External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Accounting

An Overview of Accounting for Assets

Depreciation of Property, plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

An Overview of Accounting for Liabilities

Accounting for Leases

Accounting for Employee Benefits

Share Capital and Reserves

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Share-Based Payments

Accounting for Income Taxes

The Statement of Cash Flows

Accounting for the Extractive Industries

Accounting for General Insurance Contracts

Accounting for Superannuation Plans

Events Occurring After the End of the Reporting Period

Segment Reporting

Related Party Disclosures

Earnings Per Share

Accounting for Group Structures

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues IV: Accounting for Changes in the Degree of Ownership of a Subsidiary

Accounting for Equity Investments,including Investments in Associates and Joint Arrangements

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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