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Agriculture

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8 views11 pages

Agriculture

Uploaded by

Alex
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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IAS 41

Agriculture
Agriculture
• Biological asset is a living plant or animal
• Agricultural produce is the harvested product of the entity biological
assets
• Harvest is the detachment of produce from a biological asset or
cessation of biological assets life processes
Biological assets
A biological asset should be recognized if:
• Probable that future economic benefits will flow to the entity
• The cost of fair value of asset can be reliably measured
• The entity controls the asset
Initial recognition
• Biological assets are initially measured at fair value less (-) estimated
costs to sell

Gains and losses may arise in profit or loss when biological asset if first
recognized:
• A loss can arise because estimated selling costs are deducted from fair
value
• A gain can arise when a new biological asset (such as lamb or calf) is
born
Subsequent measurement
• At each reporting date, biological asset are revalued to fair value less
(-) costs to sell
• Gains and losses arising from changes in fair value are recognized in
profit or loss
• Any change in fair value of biological due to such as age, should be
disclosed separately
• Biological assets are presented separately on SOFP within non current
assets
Inability to measure fair value
• If market prices are not readily available then the biological asset
should be measured at Cost less (-) accumulated depreciation and
accumulated impairment losses
• Once the asset fair value can be measured reliably, it should be
measured to fair value less (-) costs to sell
Agricultural produce
• At the date of harvest, agricultural produce should be recognized and
measured at fair value less (-) estimated costs to sell
• Gains and losses on initial recognition are included in profit or loss
(operating profit)
• After produce has been harvested, it becomes an item of inventory
and therefore IAS 41 will cease to apply.
Assets outside scope of IAS 41
IAS 41 does not apply to:
• Intangible assets
• Bearer plants that are used to produce agricultural produce more
than one period, they are accounted per IAS 16
• Land is not biological asset and treated per IAS 16 – when valuing
forest, trees and land must be accounted seperately
Agriculture and Government Grants
If a government grant relates to biological asset measured at cost lee (-)
accumulated depreciation and impairment, it is accounted per IAS 20

If a government grant relates to biological asset measured at its fair


value less (-) costs to sell, it is accounted per IAS 41
• Unconditional government grant will be recognized in profit or loss
when it becomes receivable
• Conditional government grant will be recognized in profit or loss
when conditions attaching government grant are met
Disclosures
IAS 41 says an entity must disclose:
• Description of each group biological assets
• Methods and significant assumptions used when determining fair
value
• Reconciliation of carrying amount of biological assets between
beginning and end of reporting period
Journal Entry
Debits Credits

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