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2 - Highlands plc Highlands plc rears cattle. The cattle herd comprises: Dairy cows, whose milk is sold by Highlands plc to supermarkets, and Beef
2 - Highlands plc Highlands plc rears cattle. The cattle herd comprises: Dairy cows, whose milk is sold by Highlands plc to supermarkets, and Beef cattle which Highlands plc sells to slaughterhouses for meat processing. Required: a) Explain (maximum 120 words) whether Highlands plc should account for its herd according to IAS 41 Agriculture or according to IAS 16 Property, Plant and Equipment. (6 marks) On 31 December 20X1 Highlands plc's herd comprised 850 animals whose total fair value less costs to sell was 1,402,500. The following events took place during the year ending 31 December 20X2: 388 calves were born. 36 animals died. Highlands plc purchased 200 animals at their fair value of 300,000. Highlands plc sold 450 animals at their fair value of 720,000, incurring a cost of 22,500 for auctioneer's commissions. At 31 December 20X2, the average fair value less costs to sell of one animal in Highlands plc's herd was 1,600. Required: b) Compute the fair value gain or loss to be recognised in Highland plc's financial statements for the year ending 31 December 20X2 in relation to the herd. Show all workings. (9 marks) c) Provide an extract from Highlands plc's income statement for the year ending 31 December 20X2. Show all workings
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