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What amount should biological assets be initially recognized

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Question - Fortune Company purchased Diary cattle at an auction for P300,000 on July 1, 2024. Cost of transporting the cattle back to the company's farm was P3,000 and the company would have to incur similar transportation cost if it was to sell the cattle in the auction, in addition to an auctioneer's fee of 2% of sales price.

On December 31, 2024, after taking into account the location, the fair value of the biological assets had increased to P500,000 (that is the market price including the cost of transporting the asset).

Required - What amount should the biological assets be initially recognized?

a. P291,000

b. P300,000

c. P297,000

d. P294,000

Reference no: EM132770141

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