Problem No-1 MILK'I" INC. produces milk on its farm. it produces 30% ofthe country's milk that is consumed. Milky owns 450 farms and has a stock of 21,000 cows and 10,500 heifers. The farms produce 8 million kilograms of milk a year, and the average inventory held is 150.000 kilograms of milk. However, the company is currently holding stocks of 500,000 kilograms of milk in powderform. At October 31, 2016. the herds are'. I 21.000 cows [ 3 years old :I, all purchased on or before November 1, 2015 - 1500 heifers. average age 1.5 years. purchased on April 1. 2016 .- 3,000 heifers, average age 2 years. purchased on November 1, 2015 No animals were born or sold in the year. The unit fair values less estimated point-of-sale cost were: 1-year-old animal at October 31. 2016 P3200 2-yearold animalat October 31,2016 4.500 1.5-year-oid animal at October 31, 2016 3.600 3-yearold animalat October 31,2016 5.000 1-year old animal at November 1.2015 and April 1. 2016 3.000 2-yearold animal at November 1, 2015 4.000 The company has had problems during the year: Contaminated mill: was sold to customers. As a result, milk consumption has gone down. The government has decided to compensate farmers for potential loss in revenue from the sale of milk. This fact was published in the national press on September 1, 2016. Milky received an official letter on October 3i. 2016, stating that P5 million would be paid to it on January 2. 201?. The company's business is spread over different parts ofthe country. The only region affected by the contamination was Central Visayas, where the government curtailed milk production in the region. The cattle were unaffected by the contamination and were healthy. The company estimates that the future discounted cash flows income from the cattle in the Central 1v'isayas region amounted to P4 million, after taking into account the government restriction order. The company feels that it cannot measure the fair value of the cows in the region because of the problems created by the contamination. There are 6,000 cows and 2,000 heifers in the region. All these animals had been purchased on November 1, 2015. A rival company had offered Milky P3 million for these animals after point-of-sale costs and further offered P6 million for the farms themselves in that region. Milky has no intention of selling the farms at present. The company has been applying PAS 41 since November 1, 2015. 1. What is the fair value of the cattle {excluding Central 1iiisayas region ] at November 1, 2015? 2. What is the fair value ofthe cattle {excluding Central 1Ill'isayas region ]| at October,31.2016? 3. What is the increase in fair value ofthe cattle { excluding Central Visayas region Jdue to price change? 4. What is the increase in fair value of the cattle {excluding Central Visayas region ] due to physical change? 5. On October 31, 2016, the cattie in the Central Visayas region would be valued at