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At point of harvested we debited the inventory and

credited unrealized gain or loss. But somehow at point of sales, we credited the inventory (this makes sense because the inventory will decrease at point of sales) So my question will be what is the accounting treatment for unrealized gain or loss at point of sales? because if we also record sales and unrealized gain or loss it will makes double entry for income


ction, we discuss two common sit
valuing inventory:
gricultural produce).
cows .
Bancroft makes the following entry to record the change in carrying value of the milking
Biological Asset (milking cows) (493,800 - (460,000)
Unrealized Holding Gain or Loss-Income
Inventory ( productof
Linot yet realisasikan but somehow U e have to recognize it
inventory when the inventory
As a result of this entry, Bancroft's statement of financial position reports Biological
ly results in two types of agricul
Asset (milking cows) as a non-current asset at fair value less costs to sell (net realizable
at the point of harvest. [6]
value). In addition, the unrealized gains and losses are reported as "Other income and
expense" on the income statement. In subsequent periods at each reporting date, Bancroft
living animal or plant, such as
continues to report Biological Asset at net realizable value and records any related unre-
ace is the harvested product of a
alized gains or losses in income. Because there is a ready market for the biological assets
y cow, picked fruit from a fruit
(milking cows), valuation at net realizable value provides more relevant information about
sets is as follows.
these assets.
In addition to recording the change in the biological asset, Bancroft makes the following
he end of each reporting period
summary entry to record the milk harvested for the month of January.
ies record a gain or loss due to
Inventory (milk)
come when it arises.
Unrealized Holding Gain or Loss-Income
assets) are measured at fair
harvest Once harvested, the
The milk inventory is recorded at net realizable value at the time it is harvested and
s cost, and this asset is ac
Unrealized Holding Gain or Loss-Income is recognized in income. As with the biological
ormal course of business.
assets, net realizable value is considered the most relevant for purposes of valuation at harvest.
What happens to the milk inventory that Bancroft recorded upon harvesting the milk from the
cows? Assuming the milk harvested in January was sold to a local cheese-maker for E38,500,
izable Value
Bancroft records the sale as follows.
ssets, assume that Bancroft
gan operations on January
Cost of Goods Sold
on 9.9 presents Bancroft'
Inventory (milk)
Sales Revenue
Thus, once harvested, the net realizable value of the harvested milk becomes its cost, and
the milk is accounted for similar to other inventories held for sale in the normal course of
A final note: Some animals or plants may not be considered biological assets but would be
classified and accounted for as other types of assets (not at net realizable value). For example,
a pet shop may hold an inventory of dogs purchased from breeders that it then sells. Because
the pet shop is not breeding the dogs, these dogs are not considered biological assets. As a
result, the dogs are accounted for as inventory held for sale (at LCNRV).
of milking cows is deter
Commodity Broker-Traders (Pengepul)
Commodity broker-traders also generally mess
their inventories at fair value less costs to sell
value reco
wed in income in the period
king, The fair value of milk
( net realizable value), with changes in net
ed corn, wheat, precious
of the change. Broker-traders buy or sell

Top Answer

Points to be noted: At the point of harvested we debit the inventory and credit unrealized... View the full answer


Following transactions took place: l "come Statement
a} Milk harvested which has a net realizable value 36,000 Particulars Amount Amount
b} Harvested milk is sold at a price of 38,500...

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