Question

Micks Mango Farm Limited.

The mangos were picked on May 30th, 2019.     The fair value less costs to sell the fruit immediately after picking and packing amounted to $250,000.  

On 22nd June 2019, 80% of the mangos are sold for a sales price of $205,000. Picking and packing costs amounted to $8,000. The remaining 20% of the picked fruit are recognized as inventories at the end of the reporting period, this being June 30, 2019.

During the reporting period ending June 30, 2019, employee expenses, fertilizers, lease expenses and other expenses amounted to $11,500.     

On July 1, 2018 the mango orchard had a value of $90,000 however at June 30, 2019 the value had increased to $113,000.

1. Provide the journal to record the harvesting of mangos. (3 marks)
2. Provide the journal entries to record the sale of mangos and the adjustment to inventory. (6 marks)

Provide the journal to record the change in the biological asset

Answer 1

	Micks Mango Farm Limited
	As per IFRS 41, Agriculture, the Products are recorded at Fair value, And Change is fair value is recorded in Income Statement.
	Here, simply Mangos are picked and Packaged will not change the attribute of the agricultural produce.
	Hence, Mangoes Picked and Packed shall be recorded at Fair Value.
a)	For Harvest of Mangos
	The Inventory for Mangos shall be recorded at Fair Value less Cost to Sale.
	It means Shall be recorded at 250000$
	30.05.2019	Inventory A/c Dr.	250000
		To Gain arising on Harvesting of mangos A/c		250000
		( Being Harvest of the Mangos recorded)
b)	For Sale of Mangos:
	22.06.2019	Cash A/c Dr.	205000
		To Sale Revenue- Mangos		205000
		( Being Sale of 80% Mangos recorded)
	22.06.2019	Picking and Packing Expenses A/c Dr.	8000
		To Creditors/ Payable A/c		8000
		( Being Expenses incurred thereof)
	22.06.2019	Cost of Goods Sold A/c Dr.	200000
		To Inventory A/c		200000
		( Being Inventory Sold)
	30.06.2019	Other Administrative Expenses A/c Dr.	11500
		To Creditors/ Payable A/c		11500
		( Being Expenses Stand Payable )
c)	As Mango Orchard is Bearer Plant- which is scope out of IFRS 41- Agriculture specifically,
	Shall be treated as IFRS 16 - PPE.
	Hence, as the Mango Orchard is valued at 90000 on 01.07.2018
	However, The Value on 30.06.2019 is 113000
	Hence ,
	30.06.2019	Mango Orchards A/c Dr.	23000
		To revealuation Reserve A/c		23000
		( Being Increase in the Value of Mango Orchads)