Accounting for Sanitary Landfills: Answer to the Illustrative Problem

SOLUTIONS AND DISCUSSIONS:
[See Accounting for Sanitary Landfills: Illustrative Problem]
http://theaudituniverse.blogspot.com/2016/05/accounting-for-sanitary-landfill.html

Generally, land has an unlimited useful life and therefore is not depreciated. In some cases, the land itself may have a limited useful life (in case of QUARRIES AND LANDFILLS), in which case it is depreciated in a manner that reflects the benefits to be derived from it. [International Accounting Standards 16, paragraphs 58-59]

If the cost of land includes the costs of site dismantlement, removal and restoration, that portion of the land asset is depreciated over the period of benefits obtained by incurring those costs. [International Accounting Standards 16, paragraph 59]

Thus, using these provisions from IAS 16, the following entries shall be provided by the RICH KIDS HOSPITAL for the year 2016:

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Accounting for Sanitary Landfill: Illustrative Problem

In 2014, the Private Hospital Regulatory Board (PHRB) passed a new resolution (effective January 2015) requiring all private hospitals to create its own sanitary landfill for its health care wastes.

As a response to this new regulation, RICH KIDS HOSPITAL (RKH) purchased a land P 20,000,000 to be used as a sanitary land fill. The hospital also incurred the following expense in relation to the construction of the land fill:

RKH estimated that the land fill can hold up to 175,000 cubic feet of compacted health care wastes. PHRB also requires that all landfill sites must be cleaned up and restored after reaching its maximum capacity. RKH provided a reasonable estimate of P 5,000,000 for the restoration costs. The actual compacted health care wastes for 2015 were 5,000 tons. 

How should the company account for the foregoing costs / expenses?

Note: See the Next post for the complete solution and discussion.

http://theaudituniverse.blogspot.com/2016/05/accounting-for-sanitary-landfills_27.html

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Accounting for Living Animals: IAS 16 or IAS 41: Answer to the Illustrative Problem

SOLUTIONS AND DISCUSSIONS:

[See Accounting for Living Animals IAS 16 or IAS 41: Illustrative Problem]
http://theaudituniverse.blogspot.com/2016/04/accounting-for-living-animals-ias-16-or.html

The following chart summarizes the accounting treatment on Living Animals:

Using the chart above it is appropriate for the entity (MEOW Philippines Corporation) to classify and present their living animals (tigers) Property, Plant and Equipment (IAS 16) rather than as Biological Assets under IAS 41

Under IAS 16, these living animals will be measured initially at COST. Subsequently, these items will be measured using either Cost Model (cost less any accumulated depreciation and any accumulated impairment losses) or Revaluation Model (Revalued amount less any subsequent accumulated depreciation and subsequent accumulated impairment losses), depending on the entity’s accounting policy.


Thus, assuming the entity chose COST MODEL to account for their Property, Property and Equipment, the following entries shall be provided by the MEOW Philippines Corporation for the current year:

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Accounting for Living Animals: IAS 16 or IAS 41 Illustrative Problem

MEOW Philippines Corporation formed a joint venture with TIGERWORLD Africa, the largest wild cat park in the world, to create TIGERWORLD Philippines that will be located in Palawan. MEOW purchased 25 tigers from TIGERWORLD Africa. Each tiger costs P 2,000,000.

These wild cats were all approximately five years old at the time of purchase and have an expected total lifespan of 25 years. Meow also paid P 750,000 for marine insurance, P 1,500,000 for veterinary costs, and P 5,000,000 to transport the animals from to Palawan.

MEOW also purchased a 15-hectare land for P 20,000,000 and spent P 10,000,000 to create the exhibit, which is expected to last 30 years and have no salvage value.

How should the company account for the foregoing costs / expenses?

Note: See the Next post for the complete solution and discussion.
http://theaudituniverse.blogspot.com/2016/05/accounting-for-living-animals-ias-16-or.html

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Accounting for Bearer Plants Answer to the Illustrative Problem

SOLUTIONS AND DISCUSSIONS:

[See Accounting for Bearer Plants: Illustrative Problem]

http://theaudituniverse.blogspot.com/2016/04/accounting-for-bearer-plants.html 

In June 2014 the IASB amended the scope of IAS 16 to include bearer plants related to agricultural activity. This amendments are mandatory effective starting January 1, 2016.

IAS 16.6 defines a bearer plant as a living plant that is: (1) is used in the production or supply of agricultural produce; (2) is expected to bear produce for more than one period; and (3) has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.

Under IAS 16, bearer plants will be measured initially at COST. Subsequently, these items will be measured using either Cost Model (cost less any accumulated depreciation and any accumulated impairment losses) or Revaluation Model (Revalued amount less any subsequent accumulated depreciation and subsequent accumulated impairment losses), depending on the entity’s accounting policy.

The following chart summarizes the accounting treatment on Living Plants:

Thus, using the amendments to IAS 16 and IAS 41, the following entries shall be provided by the RENATA DE COCO CORPORATION for the year 2016:

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Accounting for Bearer Plants: Illustrative Problem

RENATA DE COCO Corporation is engaged in the production of coconut water concentrate, virgin coconut oil, and coconut milk. On January 2, 2016, the entity purchase a 15-hectare coconut plantation in Davao City, Philippines. The costs associated with this acquisition are as follows:

It is expected that these coconut trees will provide fruits for 12 years. On the reporting date (December 31, 2016) the company conducted an assessment and found no any signs of deterioration in value.

How should the company account for the coconut trees applying the Amendments to IAS 41 Agriculture and IAS 16 Property Plant and Equipment on bearer plants during 2016?

Note: See the Next post for the complete solution and discussion. 

http://theaudituniverse.blogspot.com/2016/04/accounting-for-bearer-plants-answer-to.html

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Master of Science in Accountancy (MSA)

Master of Science in Accountancy is a graduate program designed to enhance the skills and knowledge of Accountancy Graduates. Furthermore, this program is built upon the critical thinking and technical skills needed to analyze and resolve complex accountancy issues and provide for depth and breadth in the accounting discipline otherwise not attainable in the undergraduate or MBA.

This program prepares individuals for professional certifications beyond the CPA title, such as Certified Internal Auditor (CIA), Certified Fraud Examiner (CFE), Certified Information Systems Auditor (CISA), Certified Financial Services Auditor, Certified Government Auditing Professional (CGAP), and Certified Management Accountant (CMA).

Currently, there are only 8 schools in the Philippines that offer Master of Science in Accountancy.

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