Margaret Ltd Has a Vineyard and at the End of Reporting

question 27

Multiple Choice

Margaret Ltd has a vineyard and at the end of reporting period 30 June 2012 the following information was available. $$\begin{array} { | l | r | } \hline \text { Carrying amount of the vineyard } 30 \text { June } 2011 & 8000000 \\\hline \text { Fair value of harvested grapes on } 25 \text { June } 2012 & 600000 \\\hline \text { Estimated point-of-sale costs of grapes } & 20000 \\\hline \text { Estimated point-of-sale costs of vines as at 30 June 2012 } & 50000 \\\hline \text { Fair value of the vineyard before harvest of grapes on 25 June 2012 } & 7800000 \\\hline\end{array}$$ There was no material change in the condition of vineyard from last appraisal to 30 June 2012.In accordance with AASB 141 Agriculture ,what is the journal entry to recognise the harvest of grapes on 25 June 2012?

• A)
• \[\begin{array} { | c | l | c | c | }
• \hline \mathrm { Dr } & \text { Biological asset-vines } & 600000 & \\
• \hline \mathrm { Cr } & \text { Gain arising on recognition of harvested grapes } & & 600000 \\
• \hline
• \end{array}\]
• B)
• \[\begin{array} { | c | l | c | c | }
• \hline \mathrm { Dr } & \text { Agricultural produce -grapes } & 600000 & \\
• \hline \mathrm { Cr } & \text { Gain arising on recognition of harvested grapes } & & 600000 \\
• \hline
• \end{array}\]
• C)
• \[\begin{array} { | c | l | c | c | }
• \hline \mathrm { Dr } & \text { Biological asset-vines } & 580000 & \\
• \hline \mathrm { Cr } & \text { Gain arising on recognition of harvested grapes } & & 580000 \\
• \hline
• \end{array}\]
• D)
• \[\begin{array} { | c | l | c | c | }
• \hline \mathrm { Dr } & \text { Agricultural produce-grapes } & 580000 & \\
• \hline \mathrm { Cr } & \text { Gain arising on recognition of harvested grapes } & & 580000 \\
• \hline
• \end{array}\]

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Definitions:

Labor Efficiency Variance

The discrepancy in the actual worked hours versus the expected standard hours, multiplied by the standard rate for labor.

Direct Labor

The labor costs directly associated with the manufacture of specific goods or the provision of services, typically consisting of wages paid to production workers or technicians.

Fixed Overhead Budget Variance

The difference between the budgeted fixed overhead costs and the actual fixed overhead incurred during a period.

Fixed Manufacturing Overhead

The total of all manufacturing costs that do not change with the level of production, including salaries of permanent employees and rent.