Solution for PWC Case Essay Sample free essay sample

Review and Discuss the General Rules for Agricultural Produce Using US GAAP and IFRS Under International Accounting Standard ( IAS ) 41. we presume just value can be faithfully measured for a biological plus. or a life animate being or works. and IAS 41 requires measuring at just value less costs to sell ( FVLCTS ) from initial acknowledgment of biological assets up to the point of crop. The lone outlook to the given is when initial acknowledgment for a biological plus for which quoted market monetary values are non available every bit good as for which alternate carnival value measurings are determined to be clearly undependable. Under this state of affairs. IAS 41 requires an entity to mensurate that biological plus at its cost less any accrued depreciation and any accrued damage losingss. After the just value of such a biological plus becomes faithfully mensurable. the entity should mensurate the plus at its just value less costs to sell ( FVLCTS ) . Additionally. biological assets that are physically attached to land are measured at their FVLCTS individually from the land. Furthermore. an entity shall supply information related to biological assets. such as a description of each group of biological assets. the footing for doing any such differentiations. and the nature of its activities affecting each group of biological assets. For inquiry figure three. we use just value less costs to sell ( net realizable value ) to value the stock list of biological assets. Under US GAAP. turning harvests and developing animate beings shall be valued at the lower of cost or market ( LCM ) ; animate beings available and held for sale and harvested harvests can be reported by this attack. excessively. These two points can besides be valued at gross revenues monetary value less estimated costs of disposal. if all the undermentioned conditions exist. harmonizing to the FASB Accounting Standards Codification: †¢The merchandise has a dependable. readily determinable. and realizable market monetary value. †¢The merchandise has comparatively undistinguished and pr edictable costs of disposal. †¢The merchandise is available for immediate bringing. For inquiry figure three. we apply LCM attack straight to each point of TFI’s agribusiness stock list ( Except for wheat. which we should utilize the 2nd method under ASC905-330-35-3 to enter it. The conditions have been listed above. ) Explanations that are attached above tabular array1. The agribusiness stock list entering under GAAPCorn: There is no dependable and realizable market value or related information about maize. so there is no manner for us to foretell the Market Value for Corn. Therefore. in this instance we should merely enter the cost for maize. which is $ 95. 000. Wheat: In this instance. wheat is the harvested harvests ; under GAAP we should enter wheat on initial acknowledgment and at the terminal of the period. When we compare the market value of wheat and historical cost of it. harmonizing to GAAP. we should set to mensurate the stock list at the terminal of the period. so we should utilize the market value at the measuring day of the month. which is $ 6. 1 per bushel. and so subtract estimated cost of disposal 5 cents per bushel. We get: NRV=MV= gross revenues monetary value less estimated cost of disposal= ( 6. 1-0. 5 ) *600= $ 36. 300 Harmonizing to ASC905-330-35-3a/b and ASC905-330-35-4. si nce the wheat has a dependable and realizable market monetary value. and the cost of disposal is comparatively undistinguished and predictable ( comparing with its market value $ 6. 1. $ 0. 05 should be considered to be undistinguished ) . besides the wheat stored in TFI’s grain bins is clearly available for immediate bringing. It meets all the conditions that are listed in ASC905-330-35-3b. So we could utilize â€Å"sales monetary value less estimated cost of disposal ( SPLESD ) † to cipher to value the harvested crop—wheat that TFI has. ( Under this status. we choose to utilize SPLESD to mensurate the wheat instead than utilize LCM. because it can maximise the combination of relevancy and representational fidelity of our accounting study. while it meets all the conditions that are listed on ASC905-330-35-3b. Even the market monetary value changed after the clip of crop that implied the â€Å"selling price† we used here is merely â€Å"estimated price† ( the monetary value is non really stable. it may alter over clip ) . Since the â€Å"estimates are common. and some inaccuracy is likely. Equally long as this estimation is represented dependably. We could see that the current market monetary value ( $ 6. 1 ) is the dependable and realizable market price) Heifer: Since some of cowss that TFI has. hold non yet been weaned. Harmonizing to ASC905-330-35-2. heifers and tips that TFI have are developing animate being. Therefore we should enter it by utilizing lower the cost or market method. NRV=MV=70000-2000= $ 68. 000. which is greater than its cost $ 50. 000. so we need to enter the original cost ( $ 50. 000 ) of heifer. Hibiscus: Harmonizing to this instance. there is no local market for this merchandise at all. And TFI does non believe that the market for this merchandise has changed well ( which means it still has no local market now ) . Therefore. we can non foretell the dependable and realizable market value for hibiscus workss that TFI has. Since we can non cipher its market value. we should merely enter the cost for hibiscus works that TFI has. which is 500*10= $ 5. 000. 2. The agribusiness stock list entering under IFRS Corn: There is no dependable and realizable market value or related information about maize. so there is no manner for us to foretell the Market Value for Corn. That is. we are â€Å"inability to mensurate just value for maize reliably† . Harmonizing to 30th paragraph of IAS 41. In the instance of â€Å"inability to mensurate just value reliably† . biological plus shall be measured at its cost less any accrued depreciation and any accrued damage losingss. Therefore. in this instance. we should merely enter the cost for maize. which is $ 95. 000. Wheat: In this instance. wheat is the harvested harvests. Harmonizing to the 13th paragraph in IAS 41. â€Å"agricultural green goods harvested from an entity’s biological assets shall be measured at its just value less costs to sell at the point of harvest† . Therefore we should enter wheat by utilizing FVLCTS ( just value less costs to sell ) . and the just value should be the market merchandising monetary value when we harvested wheat. which is $ 6 per bushel. The cost to sell here is merely the transit cost. which is $ 0. 05 ( 5 cents ) per bushel. So the sum we should enter on balance sheet for the point wheat should be: FVLCTS=6*6000-0. 05*6000= $ 35. 700 Heifer: Harmonizing to the fifth paragraph in IAS 41. â€Å"a biological plus is a life animate being or plant† . So heifers and tips that TFI have are biological plus. Therefore. when we record the value of heifers we should utilize 12th paragraph in IAS 41 to find the sum that we should enter. â€Å"The biological plus shall be measured on initial acknowledgment and at the terminal of each coverage period at its just value less costs to sell. † And we already have the local market monetary value for heifers and tips for $ 70. 000 ( the just value of heifers ) . and the expected merchandising cost ( which refer to be the cost to sell ) is $ 2. 000. So we have. FVLCT=70000-2000= $ 68. 000. and this figure is the 1 that we should enter. Hibiscus: Harmonizing to this instance. there is no local market for this merchandise at all. And TFI does non believe that the market for this merchandise has changed well ( which means it still has no local market now ) . Therefore. there is no dependable market-based monetary value for hibiscus workss. However. harmonizing to the twentieth paragraph in IAS 41 ( which is deleted in the new version of IAS 41 ) . â€Å"if dependable market-based monetary value is non available. the present value of expected net hard currency flows from the plus should be used. discounted at a current market-determined rate† . we could utilize selling monetary value of two month ago hibiscus works sell as â€Å"the present value of expected net hard currency flows from the asset† to find the just value for hibiscus. Then we get the just value for hibiscus works is 500*25= $ 12. 500 Then harmonizing to the 12th paragraph in IAS 41. we should utilize â€Å"fair value less costs to sellâ⠂¬  to mensurate the biological plus. But there is no dependable cost to sell in this instance. so we should enter $ 12. 500 ( FVLCTS=12500-0=12500 ) for hibiscus works.