Question
In 2018, a farmer purchased an apple plantation at P100,000, which approximates its fair value less costs to sell at that time. On December 31,
In 2018, a farmer purchased an apple plantation at P100,000, which approximates its fair value less costs to sell at that time. On December 31, 2018, the plantation is valued at P182,500 (fair value less costs to sell). On December 31, 2019, the value of the trees has not improved, but the trees has apples on it worth P42,500.
On June 30, 2020, the farmer harvests, at a cost of P1,500, the apples, at which stage the apples are valued P57,500 (fair value less costs to sell).
The farmer incurred costs of growing and cultivating the trees (e.g., fertilizer, water, etc.) amounting to P7,500, P5,000 and P2,500 in the years 2018, 2019 and 2020, respectively. On December 31, 2020, the farmer also incurs P20,000 direct costs in processing the apples into delicacies ready for sale to its customers.
The cost of inventory, if any, as of December 31, 2020 is?
a. 59,000
b. 0
c. 77,500
d. 79,000
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