April Ltd acquired a flock of alpaca goats. By the end of the year the fair value less cost to sell of the flock of alpaca goats had increased by $5000. When the goats were shorn, the fair value less costs to sell of the fleece was $25 000.

In accordance with AASB 141AgricultureApril Ltd should:

Recognise income of $25 000 in profit or loss and nil in Other comprehensive income.

Recognise income of $30 000 in profit or loss.

Recognise income of $5000 in Other comprehensive income and nil in profit or loss.

Recognise income of $25 000 in profit or loss and a valuation adjugment of $5000 in Other comprehensive income.

2.May Ltd commenced business with $2000 and purchased 10 phones at $200 each.

At the end of the first year, May Ltd sold 8 of the phones for $300 each, receiving $2400 in cash.

However, due to advancing technologies, the replacement cost of the phones was only $150 each at the end of the year.The rate of inflation was 5% during the year.

May Ltd has no other income or expenses.

May Ltd uses historical cost measurement and nominal financial concept of capital.

May Ltd's profit for the first year of operations is:

$1100

$800

$1200

$700