QUESTION 4 (20 MARKS) Kacang Agrislture Bhd. owns a mini petting zoo with small animals such as hedgehogs, rabbits and guinea pigs, and birds like parrots, owls and hummingbirds. The mini zoo is meant for the employees of Kacang Agriculture Bhd. and their families as well as open to the locals for a very small fee, three times a month. It claims that the mini zoo is a therapy for its employees and a socialising park for families. In January 2020, Karang Agriculture Bhd. has acquired a durian orchard at a value of RM750,000. At the acquisition date, the orchard has mature trees with buds of flowers awaiting to bear fruits sometime within the year. At the end of financial year 2020: the total costs incurred to manage the orchard including bracing, pruning and nurturing the trees in the orchard to ensure the flowers could be transformed into fruits was RM200,000. The fruits could be ready to be harvested in two months. the value for a similar size orchard with similar condition of durian fruits on the trees was RM1,000,000 while the value of the orchard without fruits is similar to the value of the orchard when it was acquired. Assume that all transactions were by cash. Required: a) Discuss whether Kacang Agriculture Bhd. could treat the management of the mini petting zoo under MFRS 141 Agriculture. (6 marks) b) Discuss the treatment of the orchard and everything in it by Kacang Agricultre Bhd. under MFRS 141 Agriculture. (10 marks) c) Show the journal entries for all transactions, recognition of assets and changes in value for the durian orchard and everything in it by Kacang Agriculture Bhd., for the year 2020 and the extract from Income Statement for the year ending 31 December 2020, showing the net amount from agricultural activities from the orchard. (4 marks) QUESTION 4 (20 MARKS) Kacang Agrislture Bhd. owns a mini petting zoo with small animals such as hedgehogs, rabbits and guinea pigs, and birds like parrots, owls and hummingbirds. The mini zoo is meant for the employees of Kacang Agriculture Bhd. and their families as well as open to the locals for a very small fee, three times a month. It claims that the mini zoo is a therapy for its employees and a socialising park for families. In January 2020, Karang Agriculture Bhd. has acquired a durian orchard at a value of RM750,000. At the acquisition date, the orchard has mature trees with buds of flowers awaiting to bear fruits sometime within the year. At the end of financial year 2020: the total costs incurred to manage the orchard including bracing, pruning and nurturing the trees in the orchard to ensure the flowers could be transformed into fruits was RM200,000. The fruits could be ready to be harvested in two months. the value for a similar size orchard with similar condition of durian fruits on the trees was RM1,000,000 while the value of the orchard without fruits is similar to the value of the orchard when it was acquired. Assume that all transactions were by cash. Required: a) Discuss whether Kacang Agriculture Bhd. could treat the management of the mini petting zoo under MFRS 141 Agriculture. (6 marks) b) Discuss the treatment of the orchard and everything in it by Kacang Agricultre Bhd. under MFRS 141 Agriculture. (10 marks) c) Show the journal entries for all transactions, recognition of assets and changes in value for the durian orchard and everything in it by Kacang Agriculture Bhd., for the year 2020 and the extract from Income Statement for the year ending 31 December 2020, showing the net amount from agricultural activities from the orchard. (4 marks)
