CHAPTER 13

PAS 41 - AGRICULTURE
Objective and scope
1. According to PAS 41 this refers to the management by an entity of the
biological transformation of biological assets for sale, into agricultural
produce, or into additional biological assets.
a. Agricultural activity c. Biological transformation
b. Agricultural management d. Biological activity

2. Agricultural activity covers a diverse range of activities. Such diverse range

of activities have common features which includes all of the following
except
a. Capability to change c. Recognition of change
b. Management of change d. Measurement of change

3. It is the detachment of produce from a biological asset or the cessation of

a biological asset’s life processes.
a. Harvest b. Death c. Decease d. Cultivation

4. When there is a long aging or maturation process after harvest, the

accounting for such products should be dealt with by
a. PAS 41 b. PAS 2 c. PAS 16 d. PAS 40

5. According to PAS41 Agriculture, which of the following would be classified

as a product that is the result of processing after harvest?
a. Cotton b. Wool c. Bananas d. Cheese
(ACCA)

6. Which of the following items would be classified as agricultural produce,

according to PAS41 Agriculture?
a. Tree b. Bush c. Butter d. Apple
(ACCA)

7. According to PAS41 Agriculture, which of the following items would be

classified as biological assets?
I. Oranges
II. Chickens
III. Eggs
IV. Trees
a. I, II b. III, IV c. II, IV d. I, IV
(ACCA)

8. Are the following statements about classification according to PAS 41

Agriculture true or false?
I. Sugar should be classified as agricultural produce.
II. Wool should be classified as agricultural produce.
a. False, False b. False, True c. True, False d. True, True
(ACCA)
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PAS 41 - AGRICULTURE
9. Which of the following is not dealt with by PAS 41?
a. The accounting for biological assets.
b. The initial measurement of agricultural produce harvested from the
entity’s biological assets.
c. The processing of agricultural produce after harvesting.
d. The accounting treatment of government grants received in respect of
biological assets.
(Adapted)

10. Which of the following is correct regarding the applicability of PAS 41?
a. PAS 41 applies to biological assets and agricultural produce at the
point of harvest even if they do not relate to agricultural activities.
b. PAS 41 applies to unconditional government grant related to biological
assets measured at cost.
c. PAS 41 applies to land on which tree recognized as biological assets
are planted.
d. PAS 41 applies to living plants and animals only when such items
relate to agricultural activity.

11. PAS 41 applies to which of the following when they relate to

agricultural activity
I. Biological assets
II. Agricultural produce after the point of harvest
III. Agricultural produce at the point of harvest
IV. An unconditional government grant related to a biological asset
measured at its fair value less costs to sell
V. An unconditional government grant related to a biological asset
measured at cost land related to agricultural activity
VI. Intangible assets related to agricultural activity
a. I, II, IV b. I, III, IV c. I, II, III, IV, V d. I, II, IV, VI

12. According to PAS 41 this refers to the harvested product of the entity’s
biological assets.
a. biological produce c. agricultural produce
b. agricultural products d. biological assets

13. It is a living animal or plant

a. biological product c. agricultural product
b. biological asset d. mutant assets

14. It comprises the processes of growth, degeneration, production, and

procreation that cause qualitative or quantitative changes in a biological
asset.
a. agricultural activity c. genetic mutation
b. biological activity d. biological transformation

15. Agricultural activity covers a diverse range of activities which includes

all of the following except
a. processing of grapes into wine by a vintner who has grown the grapes.
b. raising livestock, forestry, and annual or perennial cropping
c. cultivating orchards and plantations
d. floriculture and aquaculture (including fish farming).

16. Agricultural activity may include

a. ocean fishing c. animal hunting in the forest
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PAS 41 - AGRICULTURE
b. deforestation d. fish pond operation

Initial and subsequent measurement

17. According to PAS41 Agriculture, which of the following criteria must be
satisfied before a biological asset can be recognized in an entity's financial
statements?
I. The entity controls the asset as a result of past events
II. It is probable that economic benefits relating to the asset will flow to the
entity
III. An active market for the asset exists
IV. The asset forms a homogenous biological group
a. I, II b. I, II, IV c. I, II, III d. I, II, III, IV
(ACCA)

18. Biological assets and agricultural produce are initially recognized at

a. cost c. fair value less costs to sell
b. fair value d. lower of cost or fair value less costs to sell

19. According to PAS41 Agriculture, which of the following expenses would

be classified as costs to sell when valuing biological assets and agricultural
produce?
I. Commissions to brokers
II. Transport costs
III. Transfer taxes and duties
IV. Advertising costs
a. I, II, III b. III, IV c. I, III d. I, III, IV
(ACCA)

20. Regarding the choice of measurement basis used for valuing biological
assets, PAS 41
a. Sets out several ways of measuring fair value.
b. Recommends the use of historical cost.
c. Recommends the use of current cost.
d. Recommends the use of present value.
(Adapted)
21. Where the fair value of the biological asset cannot be determined
reliably, the biological asset is measured at
a. Cost.
b. Cost less accumulated depreciation.
c. Cost less accumulated depreciation and accumulated impairment
losses.
d. Net realizable value.

22. Generally speaking, biological assets relating to agricultural activity

should be measured using
a. Historical cost.
b. Historical cost less depreciation less impairment.
c. A fair value approach.
d. Net realizable value.
(Adapted)

23. Which of the following values is unlikely to be used in fair value

measurement of a biological asset?
a. Quoted price in a market.
b. The most recent market transaction price.
c. The present value of the expected net cash flows from the asset.
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PAS 41 - AGRICULTURE
d. External independent valuation.
(Adapted)

24. The Plants Vs. Zombies Company owns a number of herds of cattle.
Where should changes in the fair value of a herd of cattle recognized in the
financial statements, according to PAS 41 Agriculture?
a. In profit or loss only
b. In other comprehensive income only
c. In profit or loss or other comprehensive income
d. In the statement of cash flows only
(ACCA)

25. An entity had a plantation forest that is likely to be harvested and sold
in 30 years. The income should be accounted for in which of the following
way?
a. No income should reported annually until first harvest and sale in 30
years
b. Income should be measured annually and reported using a fair value
approach that recognizes and measures biological growth.
c. The eventual sale proceeds should be estimated and matched to the
profit and loss account over the 30 year period.
d. The plantation forest should be valued every 5 years and the increase
in value should be shown in the statement of recognized gains and
losses
(Adapted)

26. When agricultural produce is harvested, the harvest should be

accounted for by using PAS 2 Inventories, or another applicable PFRS. For
the purpose of that Standard, cost at the date of harvest is deemed to be
a. the fair value less cost to sell at point of harvest.
b. the historical cost of the harvest.
c. the historical cost less accumulated impairment losses.
d. market value.

27. A gain or loss arising on the initial recognition of a biological asset and
from a change in the fair value less costs to sell of a biological asset should
be included in
a. The net profit or loss for the period.
b. The statement of recognized gains and losses.
c. A separate revaluation reserve.
d. A capital reserve within equity.
(Adapted)

28. Land that is related to agricultural activity is valued

a. At fair value.
b. In accordance with PAS 16, Property, Plant and Equipment, or PAS 40,
Investment Property
c. At fair value in combination with the biological asset that is being
grown on the land.
d. At the resale value separate from the biological asset has been grown
on the land.
(Adapted)

29. Which of the following costs are not included in costs to sell?
a. Commissions to brokers and dealers.
b. Levies by regulatory agencies.
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PAS 41 - AGRICULTURE
c. Transfer taxes and duties.
d. Transport and other costs necessary to get the assets to a market.

30. In relation to PAS 41, which of the following is the least desirable
choice of income recognition?
a. Recognition of income during production
b. Recognition of income when a sale occurs
c. Recognition of income only when cash is collected
d. Recognition of income when production is completed

Government grants
31. An unconditional government grant related to a biological asset that
has been measured at fair value less cost to sell should be recognized as
a. Income when the grant becomes receivable.
b. A deferred credit when the grant becomes receivable.
c. Income when the grant application has been submitted.
d. A deferred credit when the grant has been approved.
(Adapted)

32. Under PAS 41, which of the following statements is untrue?

a. Contract prices are not necessarily relevant in determining fair value,
and the fair value of a biological asset or agricultural produce is not
adjusted because of the existence of a contract.
b. An unconditional government grant related to a biological asset
measured at FVLCS shall be recognized in profit or loss when, and only
when, the government grant becomes receivable.
c. A conditional government grant related to a biological asset measured
at FVLCS, including a government grant that requires an entity not to
engage in specified agricultural activity, shall be recognized in profit or
loss when the conditions attaching to the government grant are met.
d. If the terms of a conditional grant allow part of it to be retained according
to the time that has elapsed, the entity recognizes that part in profit or
loss only upon fulfillment of the condition.

33. If the terms of a conditional government grant allow part of the grant
to be retained according to the time that has elapsed, the entity recognizes
income from grant
a. using the straight line method
b. only when the condition is fulfilled
c. in full as time passes
d. using the effective interest method

34. If a government grant is conditional on certain events, then the grant

should be recognized as
a. Income when the conditions attaching to the grant are met.
b. Income when the grant has been approved.
c. A deferred credit when the conditions attached to the government
grant are met.
d. A deferred credit when the grant is approved.
(Adapted)

Disclosures
35. Where there is a production cycle of more than one year for a
biological asset, PAS 41 encourages separate disclosure of the
a. Physical change only. c. Total change in value
b. Price change only d. a and b
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PAS 41 - AGRICULTURE
36. Which of the following is a required disclosure under PAS 41?
a. a quantified description of each group of biological assets,
distinguishing between consumable and bearer biological assets
b. a quantified description of each group of biological assets,
distinguishing between mature and immature biological assets
c. the amount of change in fair value less costs to sell included in profit or
loss due to physical changes and due to price changes.
d. the depreciation method used if an entity measures biological assets at
their cost less any accumulated depreciation and any accumulated
impairment losses
e. a, b and c

37. Which of the following information should be disclosed under PAS 41?
a. Separate disclosure of the gain or loss relating to biological assets and
agricultural produce.
b. The aggregate gain or loss arising on the initial recognition of biological
assets and agricultural produce and the change in fair value less cost to
sell of biological assets.
c. The total gain or loss from biological assets, agricultural produce, and
from changes in fair value less cost to sell of biological assets.
d. There is no requirement in the Standard to disclose separately any
gains or losses.
(Adapted)

38. These refer to those that are to be harvested as agricultural produce or

sold as biological assets.
a. consumable biological assets c. agricultural produce
b. bearer biological assets d. biological assets

39. The following relate to consumable biological assets

I. livestock intended for the production of meat
II. livestock held for sale
III. trees from which firewood is harvested while the tree remains
IV. crops such as maize and wheat
V. trees being grown for lumber
VI. VI fish in farms
a. IV, V, VI b. II, IV, V, VI c. I, II, IV, V, VI d. all of these

40. These biological assets are not agricultural produce but, rather, are
self-regenerating.
a. consumable biological assets c. agricultural produce
b. bearer biological assets d. biological assets

41. The following relate to bearer biological assets

I. livestock from which milk is produced
II. grape vines
III. fruit trees
IV. trees from which firewood is harvested while the tree remains
V. trees being grown for lumber
VI. fish in farms
a. I, II, III, IVb. II, IV, V, VI c. I, II, III, IV, V d. all of these

42. These are biological assets that have attained harvestable

specifications (for consumable biological assets) or are able to sustain
regular harvests (for bearer biological assets).
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PAS 41 - AGRICULTURE
a. mature biological assetsc. harvestable biological assets
b. immature biological assets d. completely mutated biological assets