Chapter 9 - Inventories Additional Valuation Issues-LO 2-Comput

Dub Dairy produces milk to sell to local and national ice cream producers. Dub Dairy began operations on January 1, 2022 by purchasing 840 milk cows for £1,176,000. The company controller had the following information available at year end relating to the cows:

            Milking cows

            Carrying value, January 1, 2022                                             £1,176,000

            Change in fair value due to growth and price changes               365,000

            Decrease in fair value due to harvest                                            (42,000)

            Milk harvested during 2022                                                  $54,000  

            At December 31, 2022, what is the value of the milking cows on Dub Dairy’s statement of financial position?

• £1,176,000

• £1,541,000

• £1,134,000

• £1,499,000

Dub Dairy produces milk to sell to local and national ice cream producers. Dub Dairy began operations on January 1, 2022 by purchasing 840 milk cows for £1,176,000. The company controller had the following information available at year end relating to the cows:

            Milking cows

            Carrying value, January 1, 2022                                            £1,176,000

            Change in fair value due to growth and price changes               365,000

            Decrease in fair value due to harvest                                           (42,000)

            Milk harvested during 2022 but not yet sold                                $54,000 

            On Dub Dairy’s income statement for the year ending December 31, 2022, what amount of unrealized gain on biological assets will be reported?

• £ -0-

• £365,000

• £323,000

• £54,600

Dub Dairy produces milk to sell to local and national ice cream producers. Dub Dairy began operations on January 1, 2022 by purchasing 840 milk cows for £1,176,000. The company controller had the following information available at year end relating to the cows:

            Milking cows

            Carrying value, January 1, 2022                                            £1,176,000

            Change in fair value due to growth and price changes               365,000

            Decrease in fair value due to harvest                                           (42,000)

            Milk harvested during 2022 but not yet sold                                $54,000 

            On Dub Dairy’s income statement for the year ending December 31, 2022, what amount of unrealized gain on harvested milk will be reported?

• No gain is reported until the milk is sold.

• £12,000

• £54,000

• £311,000

Braum Dairy produces milk to sell to local and national ice cream producers. Braum Dairy began operations on January 1, 2022 by purchasing 650 milk cows for €780,000. The company controller had the following information available at year end relating to the cows:

            Milking cows

            Carrying value, January 1, 2022                                               €780,000

            Change in fair value due to growth and price changes               242,000

            Decrease in fair value due to harvest                                           (28,000)

            Milk harvested during 2022 but not yet sold                                $36,200

            On Braum Dairy’s income statement for the year ending December 31, 2022, what amount of unrealized gain on biological assets will be reported?

• € -0-

• €214,000

• €242,000

• €36,200

Braum Dairy produces milk to sell to local and national ice cream producers. Braum Dairy began operations on January 1, 2022 by purchasing 650 milk cows for €780,000. The company controller had the following information available at year end relating to the cows:

            Milking cows

            Carrying value, January 1, 2022                                               €780,000

            Change in fair value due to growth and price changes               242,000

            Decrease in fair value due to harvest                                           (28,000)

            Milk harvested during 2022 but not yet sold                                $36,200 

            On Braum Dairy’s income statement for the year ending December 31, 2022, what amount of unrealized gain on harvested milk will be reported?

• No gain is reported until the milk is sold.

• €8,200

• €205,800

• €36,200.

Lucy’s Llamas purchased 1,000 llamas on January 1, 2022. These llamas will be sheared

            semiannually and their wool sold to specialty clothing manufacturers. The llamas were purchased for €148,000. During 2022 the change in fair value due to growth and price changes is €9,400, the wool harvested but not yet sold is valued at net realizable value of €18,000, and the change in fair value due to harvest is (€1,150). What is the value of the llamas on Lucy’s Llamas statement of financial position on June 30, 2022?

• €156,250

• €148,000

• €146,850

• €128,850

Lucy’s Llamas purchased 1,000 llamas on January 1, 2022. These llamas will be sheared semiannually and their wool sold to specialty clothing manufacturers. The llamas were purchased for €148,000. During 2022 the change in fair value due to growth and price changes is €9,400, the wool harvested but not yet sold is valued at net realizable value of €18,000, and the change in fair value due to harvest is (€1,150). On Lucy’s Llamas income statement for the year ending December 31, 2022, what amount of unrealized gain on biological assets will be reported?

• €26,250

• €27,400

• €9,400

• €8,250

Lenny’s Llamas purchased 1,500 llamas on January 1, 2022. These llamas will be sheared semiannually and their wool sold to specialty clothing manufacturers. The llamas were purchased for £222,000. During 2022 the change in fair value due to growth and price changes is £14,100, the wool harvested but not yet sold is valued at net realizable value of £27,000, and the change in fair value due to harvest is (£1,750). What is the value of the llamas on Lenny’s Llamas statement of financial position on June 30, 2022?

• £234,350

• £222,000

• £220,250

• £193,250

Lenny’s Llamas purchased 1,500 llamas on January 1, 2022. These llamas will be sheared semiannually and their wool sold to specialty clothing manufacturers. The llamas were purchased for £222,000. During 2022 the change in fair value due to growth and price changes is £14,100, the wool harvested but not yet sold is valued at net realizable value of £27,000, and the change in fair value due to harvest is (£1,750). On Lenny’s Llamas income statement for the year ending December 31, 2022, what amount of unrealized gain on biological assets will be reported?

• £39,350

• £41,100

• £14,100

• £12,350

Turner Corporation acquired two inventory items at a lump-sum cost of €50,000. The

acquisition included 3,000 units of product LF, and 7,000 units of product 1B. LF normally sells for €15 per unit, and 1B for €5 per unit. If Turner sells 1,000 units of LF, what amount of gross profit should it recognize?

• €1,875

• €5,625.

• €10,000.

• €11,875.