Q5ISTQ. - Intermediate Accounting (Kieso)

Question

Under IFRS, agricultural activity results in which of the following types of assets? I. Agricultural produce II. Biological assets (a) I only. (b) II only. (c) I and II. (d) Neither I nor II.

Step-by-Step Solution

Answer

The correct option is “c.”

Step1: Estimation of inventory value

(c) The agricultural activity results include agricultural produce and biological assets. Biological asset refers to the animals or plants such as cattle, fruit trees, etc. Agricultural produce refers to the assets harvested from nature, such as milk, cotton, etc.

Step2: Explanation of incorrect options

(a) Biological assets (II) are also part of agricultural activity results.

(b) Agricultural produce (I) is also part of agricultural activity results.

(d) Both Agricultural produce (I) and Biological assets (II) are part of agricultural activity results.

Thus, the correct option is the third.