Question 3 Recognition of Biological Assets [IAS41] [10 Marks] Entity A owns pigs whose market value as of the reporting date is $100,000. In order to sell the pigs, they (the pigs) have to be transported to the agricultural trader for the estimated cost of $10,000. 'Entity A' has promised for the transportation. The agricultural trader also asked for a commission of $5,000 for the sale of pigs. Required: Using the knowledge of LAS 41, (i) Calculate the expected earnings for the company from the sale of pigs. [2 marks) (ii) Calculate the fair value of (pigs) biological assets at the point of sale. [2 marks] (iii) Determine the fair value amount if Entity A uses the FVLCTS method to record its biological assets (pigs) in the Balance Sheet. [2 marks] (iv) Discuss two arguments against the use of 'fair value' as the measurement basis for biological assets and agricultural produce. [4 marks] ACC702 Semester 1, 2024 Page 5 of 7