Question 1

**Section A**

Highland Dairies owns a herd of cattle. At the year-end, the fair value of the herd at the local market is $150,000. Auctioneer fees would be 5% of the sales price, and it would cost $5,000 to transport the herd to the market.

At what amount should the herd be measured in the statement of financial position under IAS 41?

Accepted Answer

Apply the IAS 41 measurement rule: Fair value less costs to sell. Remember that transport costs are deducted to arrive at fair value, and then costs to sell (like auction fees) are deducted.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Forgetting to deduct transport costs, or calculating the 5% fee on the post-transport amount.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FR — Financial Reporting Practice Exam 4

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